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Pyromania

With the discussion and debate over the future of social security, I'm starting to feel happily connected again to my "libertarian" roots. I regret that a concomitant of that may be that I alienate some with whom I was (and am) in sympathy regarding the merits of dethroning Saddam Hussein - and may further alienate those patient souls who suffer my ramblings, with yet another reason to doubt my sanity - but, hey ... as I say in my "About Me" section: "I don't believe that a greater sphere of personal liberty would by any means be a painless or perfect curative for various societal ills, but I am strongly drawn to a system which weds maximal rights to responsibilities (consequences), and creates a protected sphere for the culturally antinomian individual"; and, "I err on the side of the individual and the private, vs. the collective and the public."

Consequently, I err on the side of liberty in the great, perennial tension between liberty and equality. In fact, I'd argue that if that ever-elastic epithet, the signatum of which everyone loves to hate, "fascism," has any stable meaning in the common parlance, it connotes a modern regime in which liberty is heedlessly traded for security - in a collective frenzy.

The welfare state (the natural domain of "social security") is not, of course, socialism - though according to Von Mises' celebrated dictum, "Middle of the road policy leads to socialism" (in my view he's correct, in terms of the logic of economic intervention, though certainly is incorrect, existentially). I take serious Leftism very seriously - especially orthodox Marxism, which though considered to be a dead letter by many, is still a doctrine of great explanatory power and comprehensiveness (I don't believe this accounts for its "evangelical" potency during much of the 20th century, by the way, but that's another matter). Thus I often think about socialism vs. the market order, and find that opposition to be absolutely fascinating, in terms of the presuppositions and entailments of each allegiance.

The historical "dialectic," if you will, of the relation of the "free market" - or, rather, the cosmos in which it historically was situated, "Liberalism" - to Socialism was brilliantly encapsulated by one of my heroes, the great English Catholic historian, Christopher Dawson.

"[T]he Socialist criticism of Liberalism was at least in its early form a product of Liberal ideology. It was the extension to a wider class of the ideal which had been at first limited to the politically conscious minority. The fundamental appeal of Socialism lay in its assertion of real social rights against abstract political ones. It is a recall to the same principle which has inspired English Liberalism and which was stated so admirably by one of the spokesmen of Cromwell's army when he declared, 'The poorest he that is in England hath a life to live as the richest he.' ...

"This assertion of the right of every man to live a full human life is the essence of Socialism, and thus far from being in opposition to the Liberal Tradition [namely, the wider tradition of which 19th century Liberalism was a manifestation - Ed.] it is an extension of that tradition from the sphere of law and politics to economics and culture."

Despite this sympathetic reading, Dawson adds,

"Yet it is impossible to ignore the existence of an anti-liberal element in Socialism which has contributed more than any other factor to the breakdown of freedom in the modern world."

(The Judgement of the Nations, "The Failure of Liberalism," 1943)

Why might that be? Putting Dawson's account aside, for a moment, it's instructive to consider the view of Robert Heilbroner - no orthodox Marxist, admittedly, but long a foe of the market order, and a Socialist of a kind - who wrote in 1978:

"Socialism...must depend for its economic direction on some form of planning, and for its culture on some form of commitment to the idea of a morally conscious collectivity....

"If tradition cannot, and the market system should not, underpin the socialist order, we are left with some form of command as the necessary means for securing its continuance and adaptation. Indeed, that is what planning means...

"The factories and stores and farms and shops of a socialist socioeconomic formation must be coordinated...and this coordination must entail obedience to a central plan...

"The rights of individuals to their Millian liberties [are] directly opposed to the basic social commitment to a deliberately embraced collective moral goal... Under socialism, every dissenting voice raises a threat similar to that raised under a democracy by those who preach antidemocracy."

(quoted at The Man who Told the Truth)

While it would be a mistake to assume that this pronunciamento of a once-prominent Leftist is authoritative-normative for all thinkers on the Left, it was the view of a sympathetic theorist.

Ergo, putting the historical record of avowedly "communist" regimes aside, it would be good to know which factors allow simultaneously to square the expected benevolence, "liberation" even, of a society in which private ownership of the means of production has been entirely abolished with the consequent "... revolutionary dictatorship of the proletariat, the use of the power of the state as a weapon to destroy every social element which is opposed [to the proletariat], the substitution of the mass for the individual as the centre of all cultural and moral values ..."
(Dawson, ibid.).

In other words, on what reasonable grounds could one expect that this alleged interrugnum would indeed be just that - a temporary, albeit extreme, series of measures, which will eventuate in the evanescence of the state's coercive apparatus, of the "state" itself, even? Is this not, rather, "the idolatry of the state"?

January 26, 2005 | Permalink

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Comments

Paul, a very fine post. Finally you are back in the swing of things!

Now of course to my hopped up criticisms.

This sentence, I think, sums up why I disagree with you:

"The welfare state (the natural domain of "social security") is not, of course, socialism - though according to Von Mises' celebrated dictum, "Middle of the road policy leads to socialism" (in my view he's correct, in terms of the logic of economic intervention, though certainly is incorrect, existentially)."

I take existentially to mean: the real outcome of the political economy. The hope of social democrats was that Mises was exactly right. However, if we take Mises dictum and we tried to predict, in 1950, where the political economy would be in fifty years, we'd be exactly wrong.

Why?

This is where I think the use of some notion of equilibrium should come in. Without having a notion of equilibrium, you have simply a disconnected population and these inexplicable organizations -- businesses, the State -- and no sense of the pattern created in the course of their historical relationships. Your notion of 'security' is, to my mind, a distorted reading of equilibrium. Social security, I would say, contra vous, was an actual generator of capitalist activity: it promoted the kind of risk taking by middle class people, after 1950, particularly in the sphere of taking on debt, that just wasn't there in the pre-Social Security period.

Posted by: roger at Jan 29, 2005 9:37:05 AM

Roger,

Thanks very much for the words of praise, and the comment. It's always dicey to take a while to reply to a comment/challenge, since it seems to suggest that a well-deliberated riposte is in the offing, which isn't the case here, I'm afraid.

Your notion is an interesting one - the apparent guarantee of security motivates economic agents to assume risks that they wouldn't otherwise hazard. I'm not sure why you're focusing on 1950 onwards, though I can think of a reason which is plausible to me personally: the means in extremis of War Socialism had helped to lift the nation out of depression, as the latter had been prolonged thanks precisely to "nonconformable" market interventions such as social security and other programs of public assistance.

As usual, when there's an argument in the economic domain between a Left and a non-Left view, the perennial short-term vs. long-term antinomy comes into play. I can hardly think of a clearer instance of the long-term unworkability of the Keynesian vision than delighting in "priming the pump" with supposed future guarantees, the guaranteeing of which is actually unsustainable - or only "sustainable" on terms which are themselves unsustainable: seeing ever higher rates of taxation, or reducing benefits to levels which will inspire little confidence in their actually providing "security."

Hence, the long-term is enervated at the expense of the shorter-term - and thus (if I may slightly mix my metaphors) we behold a flash in the pan, as opposed to a long, slow burn.

Posted by: Paul Craddick at Jan 31, 2005 9:40:02 PM

Ah, Paul, the long term vs short term should actually appear in trends. And I don't see the trends you are talking about. I chose 1950 since it is, approximately, the beginning of the real Keynsian period in the American political economy. Today I don't think there are any competitors. One has merely to note that the Republicans have moved on from their dour clutching to Austrian economics to delight in deficits ("deficits," as our vice president said, "don't matter.") And I think the Repubs, here, are doing precisely the right thing. Cheney is right. At a certain point deficits do matter -- but what is overlooked by the improbable heirs of Herbert Hoover -- the Clintonite deficit hawks -- is that the extent to which they matter can change over time. This change is marked, as I said, by equiblibria -- and I don't think those equilibria have been kind to your prediction of long term damage resulting from state interventions in the economy. Just as the p/e ratio of stocks can change from its 1930s ratio of 1: 13 to 1:20, in the current market, so, too, the government can take on more debt to run its intrusive programs because those programs have made it more investment worthy. The economy of scarcity and savings, so important to the whole ideology of the Austrian school, has vanished. Self reliance now means -- how much debt can you take on? rather than-- how much have you saved?

Since this has produced the Great Boom, as Robert Sobel called it -- and as Austrian economic practices inevitably cause great contractions (see the small period of time, after WWI, when Austria actually let the likes of Schumpeter, who had still not shed the orthodox ideology, take over the ministry of the treasury), we have a good economic argument against the Austrian school. Ironically, it is upended by the same thing that upends Marxism -- a radical misunderstanding of the demand part of suppy and demand.

Posted by: roger at Feb 1, 2005 12:09:34 PM

Roger,

A couple quick points and assertions in an enjoyable debate ...

If you want historical vindication of "Austrian" economics, West Germany Economic "Miracle" post WW2 is Exhibit A. The intellectual inspirations for the policy's architect, Ludwig Erhard, were Walter Eucken, and my great mentor, Wilhelm Roepke. While other European nations chose the dead-end of soft-socialism and suckled from the teats of the Marshall Plan, Germany under Erhard's tutelage restored reasonably free markets - especially a supple price mechanism - and sound/stable currency. Britain's current strength, economically, is clearly the inheritance of the Thatcherite reforms, which were inspired by Hayek; it's not for naught that the pound is strong and stable (though galling to "easy money" Keynesians).

The Keynesianism of economic policy in the U.S. began in the 30's, not the '50's. The "New Deal" is vintage Keynesianism and, as I said, only made the depression worse. (And the Marshall Plan was Keynesian).

As far as long term "trends" go, you've begged a few important questions - not least, that there haven't been vicissitudes in economic policy as the existential situation changed over time (no doubt in response, in part, to earier policy and predations). What would one have thought of Keynesian policy's "successes" in, say, 1973/74?!

To come back to where we started, the long-term "trend" - viz., the logical trajectory - of social security is pretty clear, the denials of Lefty Ostriches notwithstanding: tax hikes and/or benefit reductions. Hardly "security."

Posted by: Paul Craddick at Feb 2, 2005 10:37:36 AM

Ah, those long term trends. The German miracle, with the sound money policy, was wonderful for a while (and wonderful, too, an industrial arrangement that gave a much larger share of economic policymaking power to unions -- I applaud your choice!)

Alas, German economic stagflation has succeeded the miracle, with the inevitable finger pointing, by the Austrian economists and the neo-classical crowd, at labor costs. Give me a break. The obvious problem is that Germans save too much. They need a looser mortgage market so they, too, can lose that dross we used to call savings, and borrow up to ten times their yearly incomes for more garages, Christmas presents, and general folderol that they make in Chinese factories.

No, it isn't labor costs but a monetarist central bank and a cosy relationship between banks and corporations that stifle the Mittelstand which is the problem in Germany -- the German central bank has treated the mark to the kind of severe soup and water regime that Austrian economists love to dole out to kill a growing economy.

As for 1950, I chose that because: a., I obviously disagree with your tendentious idea that Keynsian economics extended the depression -- and b., 1950 is a good international point. About the last point: name me an economy that did well in the thirties. Name me a western economy that did badly in the 50s. Even the Brits did well -- they just didn't do as well. However, part of that was due to the reasons that, compared to the U.S., they did better in the thirties -- as Ferguson has shown, the Commonwealth, and the cartel philosophy that was adopted in contravention of free trading orthodoxy, actually kept Britain afloat during the thirties.

As for countries that did really well, we have Sweden in the fifties, the States, the Soviet Union --best economic performance ever on the part of the monolith.

Upshot is, in the West, the problem of affluence has been solved. It's a mix of state and private economic organizations, and it has the best record ever, worldwide, historywide. The real problems, now, are about distribution. There is a problem with social security -- your average person should get a lot more of the national wealth, and the investing class should get a lot less. The latter wastes it in unproductive currency trading and such other yucky stuff. They spend their time cooking the books and taking vacations on the company yacht. I say, let's all take vacations on the company yacht. Workers of the world, throw off your chains and paaarteee -- as the Beastie boys once almost said.

As for my larger Keynsian appreciation of the V.P., I'm shocked that I didn't get a rise out of you. You won't hear me praising Cheney very often. So, you see -- I can be fairminded at times.

Posted by: roger at Feb 2, 2005 4:19:09 PM

Paul, I can see that replying at large to me has had an opportunity cost -- you aren't posting, man! Actually, I think your two replies are the equivalent of a post, and maybe would interest more people than your Lefty Tonto here. Just a thought.
... not Tonto -- what was the name of Clouseau's judo partner in the Pink Panther movies?

Posted by: roger at Feb 3, 2005 7:58:27 AM

Paul, I'm a first time visitor to this site. I found this blog searching for libertarians who quoted Christopher Dawson.
This particular piece is great writing.
I found Dawson because of my reading the works of von Mises, and Murray Rothbard. I'm interested in knowing why Dawson is one of your heroes, which I'm very glad to see.
I hope you keep on publishing. I hope a book written by you isn't totally out of the question.
Thank you.

Posted by: Bubba at Mar 27, 2009 1:12:09 PM