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Source link: http://archive.mises.org/10439/economics-of-oblivion/

Economics of Oblivion

August 11, 2009 by

Albert Jay Nock believed Gresham’s Law operated in ideas as surely as in economics, with error displacing reason from men’s minds as inexorably as bad money drives good money from men’s markets. Nock’s theory seems fast on the way to proof a posteriori, especially in our colleges and universities and particularly in the teaching and textbooks of the “new economics.”

The “new economics” — as propounded by Professors Samuelson, Tarshis, Bowman and Bach in these textbooks used in hundreds of America’s best-known colleges and universities — is nothing more than Keynesianism, which, in turn, has many points of similarity to Marxism and the theories of that hyperinflationist, John Law. In sum, the “new economics” is simply socialism, not “new” at all, but the same old bird dressed up in the feathers of “compensatory fiscal policy,” “national income approach,” and the “mixed economy.” FULL ARTICLE

{ 12 comments }

Brad August 11, 2009 at 9:31 am

To my mind, socialism is really a secular religion. At its core, and in its embryonic state, it is set of people who have somehow mastered an understanding beyond everyone else. There’s is the simple path by which everyone will prosper and be secure. And it does start out simply, to navigate between the “bad” within individualism and the “bad” within pure statism. And so it pats itself on the back at its own genius, not realizing that from the very start it is simply imposing a system of value judgements of its own over the same finite resources. That it rewards those who they like and punish those who they don’t. They use Force to make this happen.

But since it is so soft and fuzzy (being soft Statist – i.e. not building camps just yet) that its own lack logic is its undoing. Its efforts are only to make for an equality of outcome for everyone, so the game of musical chairs begins as those who may have been left out of previous calculations of transfer cry loudly and enter the game. And it expands and expands. And more promises are made, and more entitlement vouchers are mailed out, and by magic there are infinitely more claims to economic production than can possibly by made by the resources and laborers at hand.

And then it MUST devolve into what we have today. A self serving apparatus and those that derive some benefit to it and are beholden to it. It is a system that rides its miscalculations as long as it can (which can be decades) until the piper must be paid, or the music stops and those without chairs to sit in are revealed to the dupes that they are. And the system will be maintained at all costs – cue the camps/gulags.

But all this is swept under the rug. GOOD is being done. There is Caring going on. And so crudely drawing lines under the list of figures and adding them up and making value judgements is BAD. We just have to keep having faith – faith in government and the State. It will all work out.

The reality as I see it is there are plenty of individuals who live their lives without care. They live out a life of “oblivion”. Some of these people are driven by the desparate straights they find themselves in to act dangerously toward others. Some believe that if they controlled the economy, with simple catechisms and parables, that they can drive out this desparation. Reality says they cannot, so they adopt just as oblivious social policies, and steer everyone toward mutual oblivion. Don’t think, FEEL.

But its a hard system to contradict. It’s hard to caution someone when they’ve got a shiny new credit card and the rush of wealth that comes with it. There’s an addictive quality to consuming before you have produced. And you can get away with it for a while. Then the clouds of reality begin to form – past due notices and struggling to pay a tiny portion off with any payment. And eventually financial collapse. But it feels so damn good at the beginning – true of any vice. And just like any vice, a free individual is at liberty to explore the boundaries of behavior. The core problem is when vice becomes an enforced system of public policy.

Sword of Damocles August 11, 2009 at 9:38 am

Brad said:
“But all this is swept under the rug. GOOD is being done. There is Caring going on. And so crudely drawing lines under the list of figures and adding them up and making value judgments is BAD. We just have to keep having faith – faith in government and the State. It will all work out.”

As CS Lewis said, “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

I couldn’t agree more.

Just my thoughts,
SOD

Magnus August 11, 2009 at 10:10 am

Marxism is, in many ways, simply the tactics and methods of mercantilism, converted to serve the interests of a corporate state, rather than serve a hereditary oligarchy.

And, of course, mercantilism is merely the nationalist adaptation of imperialism.

And imperialism is merely a slightly more sophisticated version of the practice of warlords invading, conquering and enslaving one’s neighbors — essentially a state built on the practice of liquor store robberies, writ large.

They’re all just theft and slavery, dressed up in different kinds of rhetoric and pomp.

N. Joseph Potts August 11, 2009 at 11:28 am

Mainstream economics, like mainstream climate science, is an artifact of government and its inherent propensity for expanding.

There is nothing good or noble about the intentions of any of the actors in the government/economics nexus – their intentions are (consciously or otherwise) AMBITIOUS and, in that their arena is government, the legal monopolist on the use of force, their intentions are a noxious mixture of fraudulent and murderous.

Nock’s application of Gresham’s Law is far too gentle for this situation – it overlooks the unholy alliance that has arisen between those who have hijacked the science of production and service (economics) and those practicing politics (the legalized use of force).

EIS August 11, 2009 at 12:32 pm

Keynes and Marx practically have nothing in common. The only shared belief between them was that falling prices are a problem (they both used productivity theories of capital, but that’s the same thing as saying falling prices are a problem), but this was (is) an error made by many economists throughout the last century, and even in this one. To say Keynes was a Marxist is simply wrong, but he definitely was a socialist, a Fabian.

Eric August 11, 2009 at 2:14 pm

On the side bar ad for Rothbard’s econ 101, I am guessing that these are simply a package of the recordings available elsewhere on this site. I’ve listened to them all and as the reviewer says, they are wonderful stuff but the audio quality is terrible.

I would like to see either a written transcript of those lectures, or have Jeff R. the voice of Mises.org speak these lectures.

billwald August 11, 2009 at 3:13 pm

It didn’t take Americans long to shape up. The savings rate went from a negative number to 2 or 3% in one year. I think it will be a long time for people to restart buying toys on credit.

Russ August 11, 2009 at 3:33 pm

Brad wrote:

“To my mind, socialism is really a secular religion.”

I have to concur completely with the above statement. It is interesting to compare the “Five Warning Signs of Corruption in Religion” from Charles Kimball’s book “When Religion Becomes Evil” with socialism. The five sign are:

1) Absolute truth claims.

Well, socialism certainly has this one. They believe that socialism is the only rational way to run a country, in the face of overwhelming evidence to the contrary, as well as what should be overpowering arguments such as Mises’ “Socialism”.

2) Blind obedience.

Yep. This is why the Soviets lasted as long as they did, and why the Democratic party is more successful right now. They have much better party discipline than the Republicans do. If you step out of line, you get slapped down, hard!

3) Establishing the “Ideal” Time.

By this, Kimball means immanentizing the eschaton, furthering the “end times”. Socialism believes in the end time when capitalism destroys itself (with a little help from socialists), and the remaking of man as the New Socialist Man results in a paradise on earth. Yep, this has been part and parcel of socialism since the beginning, in one way or another.

4) The End Justifies the Means.

*snort* ‘Nuff said.

5) Declaring Holy War.

If they haven’t gotten to this point yet, they’re close. They’ve declared that anybody who opposes nationalized health care is a Nazi (Delicious irony, that; accusing people who *oppose* nationalization and socialism of being National Socialists. It would be funny if it weren’t for the fact that so few people seem to see the idiocy of it.) They declare military veterans, those who believe in the Constitution, and those who take their Christianity seriously as being potential domestic terrorists. So-called departments of “humanities” in the higher education system are 30 to 1 socialist, and show no interest in any sort of balance or “diversity” in these institutions. They have basically declared an ideological holy war already; they just haven’t gotten to the point of actually shooting people or putting them to the stake. Yet.

So, not only would I say that socialism is a secular religion, I would say that it is a very dangerous religion; every bit as dangerous, if not more so, than radical Islam.

I leave as an interesting excercise for the reader the problem of seeing how many of these points fit various groups of libertarians.

buz August 11, 2009 at 5:41 pm

Just last week, I made an online purchase for a used copy of the 1967 econ textbook by Lorie Tarshis. I want to read, in original wording, the presentation of Keynesian ideas, in one of the first two textbooks to teach it in a basic principles of econ text.

I think there are parts of this article that oversimplify and exaggerate the connection between the economic ideas mentioned here, and one’s overall political views. It is possible to have Keynes-influenced views about macro, and to be a classical liberal or small government conservative overall. Econ professors tend to be more laissez-faire than people and academics in general (at least according to Bryan Caplan) and I suspect many econ professors have been in this category. The “laissez-faire Keynesians” would tend to want their tax cuts when recessions begin and spending cuts when they are over. They would tend not to be big fans of tax or spending increases, except maybe for managing deficits and debts, to the extent that they consider that necessary.

I got the impression from his blog that Greg Mankiw might be somewhere in this category. In 2009, it is Mankiw’s free-market-friendly, not-resembling-physics textbook that seems to define official mainstream economics more than any other. More so than Samuelson, Tarshis, Krugman, Stiglitz, Blinder or any of those guys with intro textbooks.

I believe it is possible to have economics views highly influenced by Mises and Hayek, and to have overall political views that qualify as a leftish “big government” sort. This would be true for people whose political/moral philosophy requires high taxation, welfare and redistribution. There are some people who are in favor of high taxation, welfare, social security, public education et cetera, who want the redistributed money to be spent with minimal regulation and planning, don’t favor central planning, and only favor the government interventions for which the government can get information well enough to implement them effectively. There are large, important government interventions for which the real-world limitations on the government’s ability to get and use information, and to achieve other things by intervention, do not seem to prevent the program from doing what it set out to do quite well. Social Security, from which old people are free to spend the money as they choose, is an example. Another is the basic idea of maintaining a military for national defense, using tax revenue. I’m not denying that military spending has diminishing benefits or that the military can be used unwisely. I’m just talking about having a military, instead of having none while all the other countries and groups have one.

Russ August 11, 2009 at 6:18 pm

buz wrote:

“I believe it is possible to have economics views highly influenced by Mises and Hayek, and to have overall political views that qualify as a leftish “big government” sort.”

Since Mises believed that the free market / price system is the best way to allocate resources, and since forced taxation & redistribution bypass the price mechanism, and thus reduce the accumulation of capital that alone can result in a true increase in wealth, I think that anybody who calls honestly himself a big government Misesian is horribly confused, to say the least. He should read chapter 35 of Human Action, entitled “The Welfare Principle Versus the Market Principle” to get Mises’ take on the matter.

newson August 11, 2009 at 7:26 pm

to eis:
i don’t know whether this article on keynes the “liberal” may interest you – it shows him as more as a fan of fascism (corporativism).
http://www.independent.org/pdf/tir/tir_13_02_1_raico.pdf

J. Cuttance August 12, 2009 at 5:51 am

10 points for that excellent link, newson

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