PrintJune 19, 2009
Conservatives & The Austrian School of Economics (Part 2)
Conservatives would do well to arm themselves for the debate over national economic policy by stocking up on ammunition from the Austrian School of Economics.
Ludwig von Mises (1881-1973) is the recognized founder of the Austrian School. His book Planned Chaos (1947) was first published over 60 years ago, but remains relevant today.
Here are several excerpts from it:
[Socialism vs. Interventionism] "The system of the hampered market economy, or interventionism, differs from socialism by the very fact that it is still market economy. The authority seeks to influence the market by the intervention of its coercive power, but it does not want to eliminate the market altogether. It desires that production and consumption should develop along lines difference from those prescribed by the unhindered market, and it wants to achieve its aim by injecting into the working of the market orders, commands, and prohibitions for whose enforcement the police power and its apparatus of coercion and compulsion stand ready." (p. 20)
By this definition, the Obama administration is engaged in aggressive and expanding interventionism, particularly in the auto industry, perhaps eventually in the health care industry. Interventionism, if left unchecked, morphs into full blown socialism.
"Our age has to face great economic troubles. But this is not a crisis of capitalism. It is the crisis of interventionism, of policies designed to improve capitalism and to substitute a better system for it." (p. 21)
The boundary between interventionism and socialism is only a measure of the range of intervention. Interventionism is to the adolescent as socialism is to the adult.
During his speech before the American Medical Association (AMA), President Obama implicitly ridiculed, by voice inflection, the notion that his Health Care plan represents socialism.
"Many advocates of interventionism are bewildered when one tells them that in recommending interventionism they themselves are fostering antidemocratic and dictatorial tendencies and the establishment of totalitarian socialism. They protest that they are sincere believers in democracy and opposed to tyranny and socialism. What they aim at is only the improvement of the condition of the poor. They say that they are driven by considerations of social justice and favor a fairer distribution of income precisely because they are intent upon preserving capitalism and its political corollary or superstructure, viz., democratic government.
What these people fail to realize is that the various measures they suggest are not capable of bringing about the beneficial results aimed at. On the contrary they produce a state of affairs which from the point of view of their advocates is worse than the previous state which they were designed to alter." (p. 23)
The following quote brings to mind the debate that centered around Joe the Plumber.
"The most absurd justification of interventionism is provided by those who look upon the conflict between capitalism and socialism as if it were a contest over the distribution of income. Why should not the propertied classes be more compliant? Why should they not accord to the poor workers a part of their ample revenues? Why should they oppose the government's design to raise the share of the underprivileged by decreeing minimum wage rates and maximum prices and by cutting profits and interests rates down to a "fairer" level?...
However, this mode of reasoning is entirely vicious. It takes for granted that the various measures of government interference with business will attain those beneficial results which their advocates expect from them....
The conflict between capitalism and socialism is not a contest between two groups of claimants concerning the size of the portions to be allotted to each of them out of a definite supply of goods. It is a dispute concerning what system of social organization best serves human welfare." (pp. 32-33)
The current administration is provoking a choice in America. Obama would say we made that choice with his election. But 52% of the vote, particularly considering those who did not realize the full intent of his promise to bring change, does not signal a decided issue.
"Men must choose between the market economy and socialism. The state can preserve the market economy in protecting life, health and private property against violent or fraudulent aggression; or it can itself control the conduct of all production activities. Some agency must determine what should be produced. If it is not the consumers by means of demand and supply on the market, it must be the government by compulsion." (p. 34)
