One of the fields of historical study is the history of ideas. In almost all cases I have ever read, an author concentrates only on the ideas; he does not describe the historical circumstances in which a particular idea faded, or triumphed, or never had any effect at all.
Robert Nisbet once had a great phrase: “Ideas do not beget ideas the way that butterflies beget butterflies.” To discuss the history of ideas, the author should in all cases discuss the historical settings of those ideas. He has to ask and then answer the basic questions: what, when, where, who, and why — in that order. To do this, he needs to do four things:
Follow the confessions. Follow the organizations. Follow the money. Follow the media.
This is virtually never done. It is extremely hard work, and people who write about the history of ideas want to deal only with the ideas. To explain how and why a particular idea either became dominant or else faded, the historian must be able to understand the historical setting of the ideas. Those people who specialize in the history of ideas are rarely capable of doing this, or else have no intention of doing it.
This is not simply an academic debate. If any group or movement wants to counter a bad idea, its planners had better have some awareness of the historical conditions of the day. They must plan a strategy for dealing with the Where Keynes Went Wron... Best Price: $2.13 Buy New $8.00 (as of 05:30 EST - Details) reigning ideas. But activist groups rarely plan strategies for refuting ideas. Groups are interested in the practical means of changing the hierarchies of power, but they assume that the ideas will take care of themselves.
Ideas never take care of themselves. People come up with ideas, defend them, extend them, and then gain followers who are prepared to implement them.
There must be sound theory and sound practice. They must be consistent with each other. A Bible with no church has no lever. A church with no Bible has no fulcrum.
EVANGELISM AND THE CORRELATION OF FORCES
This is why anybody who wants to change the thinking of a society has to understand the broad picture, meaning the social, economic, intellectual, and especially religious forces that are dominant in that society.
Then the individual revolutionary or evangelist has to devise a plan that will work within the context of the existing social order. This will vary, nation to nation, and culture to culture. It involves hard work. It involves taking risks. It involves applying the general theory to specific cases. If the general theory is wrong, the plan will not work. If the plan does not deal with important social forces, the plan will not work. It is hard work to devise a plan Against the State: An ... Best Price: $5.02 Buy New $5.52 (as of 11:35 EST - Details) that is both consistent with a general theory and is also relevant in the prevailing social context.
Foreign missionaries have done this for centuries. This is what the missionary has to do. Missions organizations have become very good at doing this, especially in backward societies. They commit money to this. Young men and young women commit their lives to it. They labor in difficult circumstances. Many of these missionary efforts fail. But every once in a while, there is a major triumph.
We are living in an era of economic evangelism. There are multiple theories out there. But none of the alternatives to Keynesian orthodoxy has a visible edge in the minds of the intellectuals, let alone the voters.
THE COMMUNISTS: BAD THEORY, FUTILE PLAN
The Communists did attempt to understand what they called the correlation of forces. They did try to infiltrate organizations, and then change the minds of leaders. But the Communists were unique in this regard.
What ruined the Communists was this: they were incapable of understanding the correlation of forces. They never really understood historical cause-and-effect. They thought that organizing among the proletariat was going to change the West, and it never did. The whole theory was wrong. Progressivism: A Prime... Check Amazon for Pricing.
The one Communist understood this thoroughly was Antonio Gramsci. He was an Italian, and he spent most of the last years of his life in prison. Mussolini had him locked up, and he never got out. But he had to abandon Marxism in order to provide a new strategy of revolution. Marx had taught that the mode of production is central: the substructure of society. He regarded ideas as simply window dressing for class interests: the superstructure. But the labor unions of the West made it obvious to Gramsci that there was not going to be a Communist revolution. Union members just wanted a larger piece of the capitalist pie. Therefore, he said, the only way to undermine capitalism in the West is to undermine the moral foundations of capitalism. When the moral foundations collapse, the mode of production will collapse, and the Communist revolution will have a transforming effect on society. This was not Marxism. This was the repudiation of Marxism. The problem with the students of Gramsci is that they never talk about the fact that he ceased being a Marxist when he came up with this theory.
Marx was wrong, and so was Gramsci. So, for that matter, were all of the anti-Communists who took Marx’s scenario seriously. There never was going to be a proletarian revolution in the West. Marxist theory was wrong from start to finish, from top to bottom. There could be revolutions in the name of Marx, and Lenin successfully pursued one of them. So did Mao. Marxism was window dressing. Both of those tyrants tacked Marxist theory onto a system of total control. Economics in One Lesso... Best Price: $2.43 Buy New $7.43 (as of 12:35 EST - Details)
Marx offered his famous ten steps on how to build a pre-Communist society after the revolution. This was to be in preparation for the final triumph of Communism. He never went into any detail about how Communism would work. It was all theoretical. It was all a justification of revolution. It was one long justification of revolution. It was a religion of revolution, as I argued in my 1968 book, Marx’s Religion of Revolution. But the theory didn’t matter. The theory was always wrong. But the two Communist empires took over about a third of the world.
Marxism is a classic case of a bad idea that came to fruition in the minds of dedicated revolutionaries, who then used techniques that had nothing to do with Marxism to promote revolutions and then to pull them off. Marxism was used as superstructure. Marx called the foundation the substructure, and he said this was the mode of production. But it never was. The only places where Communism took over any society were in rural societies, where Marx said the Communist revolution would not come. He said it would come only in capitalist societies. It never did.
Marxism is the best modern example of a comprehensive world-and-life view that was adopted by Western intellectuals, but which never produced the Communist revolution which the theory said was inevitable. The only place in the West where Marxism ever took root was in the minds of intellectuals. So, when Soviet Communists tried to explain the correlation of forces in the West, they always got it wrong. They could extend the system by means of military power, as Stalin did in World War II, or they could extend it in rural societies where it wasn’t supposed to take place, as Mao and Ho Chi Min and Pol Pot did, but they always failed to extend Marxism within the proletariat of Western capitalist countries. This baffled them. They never figured it out.
THE KOCH BROTHERS’ MARGINAL REVOLUTION
The media argue that the Koch brothers have both money and a plan. There is no doubt that they have spent a lot of money. But will their plan ever work? So far, it has not produced any comprehensive theory of economics, any theoretically unified graduate economics department, or any think tank with a theoretically consistent message. As for influencing Congress, there is nothing to show for it. The media see them as big wheels. I see them as big wheels spinning.
The Kochs made a strategic mistake exactly 40 years ago. They decided to change the climate of elitist economic opinion, but they bet the farm on the wrong horse: Hayek. They deliberately decided to bypass Mises, who was a system builder, but who had no leverage. Hayek had leverage: a Nobel Prize. But he suffered from a crucial intellectual defect. He was what he called a puzzler, in contrast to what he called a master of his subject. Hayek even cited Alfred North Whitehead’s designation of this type of mind: “muddleheaded.” Hayek wrote this in a 1975 article in Encounter: “Two Types of Mind.” This was a year after he had won the Nobel Prize. It is reprinted in volume 3 of his Collected Works. Against the State: An ... Best Price: $5.02 Buy New $5.52 (as of 11:35 EST - Details)
The Kochs had funded the South Royalton conference on Austrian School economics in June 1974. They brought in four-dozen mostly young Austrians. I was one of them. The focus of that conference was on Mises, not Hayek. Mises had died in October 1973. That October — one year after Mises’ death — Hayek unexpectedly won the Nobel Prize. The Kochs switched horses. They brought Hayek to the 1975 conference, which was held in Hartford. I attended it.
The Kochs have never accepted this crucial social truth: no movement can transform a civilization if this movement is based on the writings of a puzzler. Men will not sacrifice their lives, wealth, and honor for the sake of implementing the vision of a puzzler.
Instead of starting in Wichita and moving outward, they started in Wichita and leapfrogged to the Washington Beltway and its immediate suburbs. They wanted to orchestrate a top-down revolution, but one that is based on a bottom-up theory of human action. They have yet to see that their institutional strategy is at cross-purposes with their economic theory. They are now too old to change horses — Hayek to Mises, Washington to Wichita — in mid-stream.
They made one other strategic mistake. They paid no attention to the New Christian Right, which alone had sufficient boots on the ground to spread the idea of a free market alternative to Keynes, if that program were presented in a Christian framework. This was off the Kochs’ radar. They based their plans on what economists call a marginal revolution: marginal professors, marginal universities, and marginal politicians. They forgot about ministers and deacons.
Nothing much will come of Charles Koch’s ideological efforts. He is an old man now: he turned 79 today. At age 79, you have either made your mark or you haven’t. Old dogs do not learn new tricks. The Mises Institute has more influence than all of the think tanks that Koch has funded, combined. The Mises Institute changes minds. Koch’s think tanks hire minds that have been changed. They are only occasionally Austrian School minds.
Koch bet the farm on a puzzler: Hayek. He will leave behind a pile of subsidized scattered pieces of a puzzle for which there was never a master image — just pieces.
INFILTRATION AND PREPARATION
Murray Rothbard observed remorsefully after 1991 that nobody in the libertarian movement had ever sat down and devised a transition program for the Soviet Union, on the assumption that the Soviet economy would collapse, and there ought to be a program to make the transition to free-market capitalism. That had never been attempted. It was not implemented. And so the Russian economic system is basically a version of Keynesianism. The central bank dominates. Bureaucracy dominates. The markets are not free. The system is rigged. It is simply Western crony capitalism superimposed onto the old Soviet bureaucracy, which was what Lenin imposed on the old Czarist bureaucracy. Russia is still essentially a top-down bureaucratic economy, with productivity coming from the bottom. What is different today is this: with capitalism, there is greater productivity in Russia than there ever was in the Soviet Union or Czarist Russia.
In planning to undermine the Keynesian establishment, there really needs to be somebody with money and vision who sits down and devises a plan to do it.
I have tried to do this with respect to Keynesian economics. I think it has to begin with a comprehensive, multimedia refutation of one book: Keynes’s General Theory. If this isn’t done, then the replacement effort is misguided. But this has never been done. Nobody has wanted to do it. Nobody wants to do it now. Nobody wants to make the personal commitment in his life, beginning around age 25, to do it.
So, when the economic crisis comes, it will be like it was in 1935. There will not be any systematic, comprehensive explanation by the Keynesians as to why the system has crashed. That becomes the point of vulnerability. Keynes had no plan, either, in 1934. He wrote a book that was published in 1936. The publisher, Macmillan, had a free market book: Lionel Robbins’s The Great Depression (1934). It had a manuscript in-house: Banking and the Business Cycle (1937). But Keynes’s book took hold in 1936. His disciples carried the ball. Keynes went into government service with the treasury in 1939, and he died a year after World War II ended. His disciples did the heavy lifting.
They don’t have any big plan, either. They are in control. Their plan initially was to capture university economics departments, and especially to capture the editorships of the professional academic journals. Keynes and then Roy Harrod ran The Economic Journal. Keynesians were successful in this strategy. They also told politicians what the politicians wanted to hear. Their opponents told politicians what politicians did not want to hear, and had no intention of implementing, namely, cost-cutting, reduced expenditures, and balanced budgets. Keynesians had the advantage in this respect. Keynesians had the correlation of forces on their side. They also had an incoherent book by Keynes, which could be interpreted any way that some economist wanted — and was, repeatedly. All this combined to give them dominance. Then Paul Samuelson wrote Economics in 1948, which became the dominant college textbook for a generation.
There is nothing even remotely resembling a systematic program to deal with Keynes, let alone Keynesianism. That’s why I devised one, but limited it tactically. It has to do what has not been done, namely, to bury Keynes’s major book. That is where the resistance must start; that is not where it should end.
There is plenty of widely scattered criticism of Keynesianism out there, but it is not systematic. It never has been. There is no dominant representative economist articulating it. When the Great Default comes, and Western governments are incapable of meeting their economic promises to retired oldsters, there will be lots of articulate people out there who have been critical of the Keynesian system. First, few of them will have a consistent theory of the free market. “You can’t beat something with nothing!” Second, of these few, fewer still — probably none — will have a comprehensive institutional plan and program to replace the existing Keynesian establishment and orthodoxy. This war will be fought out in the marketplace of ideas. It will be fought in the boardrooms of major corporations. It will be fought in economics departments where Keynesians are tenured.
Criticisms of the existing system are catch as catch can. They will remain as background noise until the Great Default. Then the war of ideas will escalate. There was Adam Smith in 1776: the beginning of compound economic growth, which no one perceived at the time. There was Keynes in 1936: the sixth year of the Great Depression, which everyone perceived at the time. There will be someone comparable after the Great Default.
When the Great Default comes, there will be a great scramble to explain why it happened, on both sides, or on all sides, and there would be a great scramble for influence in a decentralized media world. It is not clear who is going to win that debate. I don’t think it will be Keynesians.