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Source link: http://archive.mises.org/9321/crisis-and-leviathan/

Crisis and Leviathan

January 27, 2009 by

If you’ve never read Bob Higgs’s brilliant Crisis and Leviathan (Oxford, 1987), you’re missing one of the great social-science books of our time. Higgs demonstrates, in meticulous detail, how the growth of the American state in the twentieth century has followed a regular pattern: a national or international “crisis,” real or imagined, followed by a massive slate of new government programs supposedly designed to alleviate the crisis, programs that are never eliminated or even scaled back after the alleged crisis has abated. The nature of government is to grow, but its growth is normally constrained by public opinion. Government takes advantage of — and sometimes manufactures — “crisis” situations in which those constraints can be lifted. A critical ingredient is fear: state functionaries and their allies in academia and the media work hard to create a climate of panic among the public, a sense that only the state can avert a grave calamity.

I agree with Thom Lambert and Steve Horwitz that Obama’s “stimulus” package is another example of the Higgs effect. Just as the Bush Administration and its house intellectuals seized the opportunity of the 9/11 attacks to stoke public fear of terrorism, all to bully opponents into supporting its “War on Terror,” both the Bush and Obama Administrations have taken advantage of the recession (and the much needed credit-market correction) to stoke public fear of a global economic collapse, all to bully opponents into supporting a major expansion of the state. Just as the USA Patriot Act had little to do with national security, the proposed stimulus package has little to do with economic stimulus. People like Paul Krugman and Brad DeLong have long wished for a massive increase in government spending, the nationalization of credit markets, czars for each major industry, and the like; now they have their justification. Let’s not confuse the issue by pretending that the current debate has much to do with the economy itself.

{ 13 comments }

I Hate Taxes January 27, 2009 at 10:29 am

You fear Leviathan ? I don’t and here’s why:

Let the monster grow big and large. Then when that happens: STARVE the monster. The bigger they are the faster they starve and the harder they fall.

Look at large corporations, size is their achille’s heel. The first thing they do in hard times is scale down. Government’s can’t scale down, so they end up starving.

The bigger the government is, the more he will need taxes and input to survive and therefore the easier he will be to starve.

Also, governments, especially BIG governments suffer what we call INERTIA.

This means that big governments are incapable of adapting to new situations and are obsessed by their own narrow ideologies.

Even the largest and biggest and most powerful government is just a drop in the ocean compared to the rest of the world and the market forces.

Therefore, the government cannot adapt to the hostile 21st century environment of new technologies and new ways of doing commerce and ever increasing pace of change. The more such technologies and changes take place, the more it will be possible to hide or encrypt transactions and avoid taxes, thereby starving the monster.

Also, the government spends too much money into military equipment and empire building and foreign nation building and obsolete doctrines.

Such expenses are of no use to help their propaganda a home.

A cannon or $5Million howitzer will be of no use to prevent tax evasion on the internet using millions of computers used to fragment the transaction and blurr it’s traces.

Fear not, I feel that in the 21st century, we will see the end of the nation-state and the beginning of free commerce capitalism.

Governments are too big, too slow and too dumb to survive the 21st century. The extremely ascetic environment of fast paced changes in the 21st century will completely dissolve the nation-state.

Because governments refuse to adapt, they will perish in the 21st century.

Rick January 27, 2009 at 11:51 am

@I Hate Taxes |January 27, 2009 10:29 AM
You are right citizens do not want big governments and so they will not be able to stay for long, UNLESS they use violence to stay and so totalitarian regimes arise. I would not be so sure about your “end of the nation-state and the beginning of free commerce capitalism” as it can go two ways. Let’s hope the outcome will be as you predict it will be.

Deefburger January 27, 2009 at 12:56 pm

Who was it who said, and I paraphrase, “Create a problem, offer a solution, take control”.

This is and has been the MO for power grabbing for millenia. The pattern is undeniably repeated over and over again throughout history. Some see it and point it out and are called “Conspiracy Theorists” or quacks. Yet, the historical record shows this pattern over and over again.

It’s true that many of the theories remain unprovable by direct causality, but the common needs and desires of the various players form connections of similar directions and cooperative incentives.

There was an article recently here on Mises that pointed out the Feds iminent failure to suppress the prices of the monetary metals. It makes sense that this should be so, IF the private owners of the central bank(s) have been hording the stuff. Once the supply is gone and in thier coffers, the price can then be allowed to rise, putting the intrinsic wealth in their hands and passing the debt on to the “People” who have been removed from their ability to posses it.

I predict, that the new “solution” when the fiat currencies finally fail, will be to create a “New” central bank, with these monetary metals as the new standard for wealth. The model will use the same model that some gold traders are already trying to use, that is, the gold etc. will stay put in the vaults, and they will be bought and sold “Virtually” by weight. Only the banks will be able to claim ownership of any part of these assets, and the price manipulations will continue as before.

Later, when the need arises to manipulate the economy, some of the reserve will be funneled back in to the open market, and then bought back with newly printed fiat currencies. This will artificially increase the supply of monetary metal, even though the actual amount held is much less than the amount claimed. Inflation will continue, total control over the actual wealth will remain in the hands of those who control the banks, and governments will continue to kneel before the alter of the bank and pray for loans.

I know, dosen’t sound very pleasant, but that is the only direction the central banks can go in a global, internet connected world.

That’s my two bucks worth. Whatever that means.

Egosumabbas January 27, 2009 at 2:02 pm

This is what bothers me particularly about Naomi Klein and her thesis of “Disaster Capitalism”. The reality is “Disaster Socialism” if anything, as you correctly point out that government grows in spurts with each crisis in which people demand a “fix”. Though somehow I doubt that Naomi Klein has reconciled this discrepancy in her thesis.

Bruce Koerber January 27, 2009 at 2:34 pm

January 27, 2009
Reversing The Outcome Of The Collapse Of The Dollar.

So what we know is that the unConstitutional coup uses contemporary events to expand its control and its power: Examples being 9/11, and this ‘global economic collapse.’

And we also know that the next crisis on the horizon is the destruction of the dollar. We know that and so does the unConstitutional coup. In fact they are doing things that make the collapse of the dollar inevitable.

Why? Because a system of national fiat monies is unstable. The only way the unConstitutional coup can achieve its goal of worldwide monetary hegemony is by destroying national fiat currencies and replacing them with a one world fiat currency under their control.

Our counterattack is to rekindle the common knowledge that all of the people in the world have known for perhaps a thousand years, that gold is already the worldwide currency but without all the corruption of the ego-driven interventionists. The majority of the people in the world in numbers, armed with this economic truth, can easily overthrow and crush the few economic terrorists who are part of the inner circle of the unConstitutional coup.

I Hate Taxes January 27, 2009 at 2:57 pm

Rick,

Violence is a direct cost and political cost. The first cost is political cost the second cost is material and logistical costs.

It’s better to brandish the weapon and make threats than to use it. If you have to use your weapon, you have in fact failed and you are now bearing the full cost of the bullet, the weapon, of making new enemies etc.

Governments will react violently to an imminent violent threat, such as terrorism.

But will not react violently to a small but growing fiscal leak untill it’s too late, which buys us time to slowly starve the monster and organize our own violent resistance.

Violence should be kept last, for the die-hard narrow core of tyrants. At this point their forces will be greatly reduced and their political clout will be reduced to zero. It will be then easy to take them down.

I Hate Taxes January 27, 2009 at 3:11 pm

Bruce,

A one world fiat currency will still be toilet paper and will still suffer inflation versus commodities.

Even if there was only ONE currency in the whole wide world, from USA to Zimbabwe, let’s call this currency Earths.

Well, Earths would still suffer the mis-management and malevolent mis-uses of the printing press and monetary creation by banks and central banks and still suffer inflation, albeit a bit slower.

It would still lose it’s value over time versus gold and other commidities and people would still have worthless pieces of toilet paper.

Bruce Koerber January 27, 2009 at 3:51 pm

No doubt, the one world fiat currency will become increasingly worthless. And the cause of liberty will still rise up against this tyranny eventually but the unConstitutional coup will have become even more powerful and its stage will be the world which would make their demise more difficult.

As it is now the relative confines of the U.S. and the sharp sword of the Constitution pose an immediate threat to their designs.

Now is the time to find out the names of the members of the inner circle, but then those names need to be broadcast to all of the people in the world since they have been victimized by these economic terrorists. The worldwide desire for retribution against these ego-driven, hegemony-seeking interventionists will speed up justice!

Deefburger January 27, 2009 at 4:28 pm

Who actually posses the majority of the specie? That is who is in control. No one who wishes to have true wealth would be holding anything else. My guess is that they are the same ones promoting fiat currencies. How much better for them, if they can print up some money, place a debt on the backs of those who must “pay the piper”, and in exchange, they get to hold the only thing that can be used when the fiat system has a crisis.

What else could a majority of non-specie holding people use besides the gold, silver, platinum, and paladium that store real intrinsic value? Real Estate is not a real option, because the value of it is removed when the loan is taken out, and the time it takes to pay off the loan is also a time of substantial inflation. Even though the price of the property rises over that same period, the intrinsic value doen’t change, and the cost to purchace becomes higher and higher because of inflation and interest.

Oil and other such consumables appear to be good in the short term, but not for long term wealth building. Without a proper medium of exchange, that has lasting and unchanging intrinsic value, we have nothing to trade with that we can also save with. The Fiat system is designed to prevent the masses from saving their labor. This is why the central banks will sequester the monetary metals and replace them in the economy with fiat paper.

Betrian January 27, 2009 at 7:03 pm

Great Indian, Roman, African and other civilizations vanished, because they arrived at the end of the Road to Serfdom. It is just a vicious circle! Who can stop it from happening again?

N. Joseph Potts January 27, 2009 at 9:04 pm

Until this credit crunch/global meltdown/economic thing reared its ugly head, Leviathan had to make do with global warming for advancing its hegemony.

Now, it’s got something demonstrably more-urgent and MUCH more under its control (but only in that it caused it, NOT that it can in fact control it with much precision).

And the best part is, it STILL has the global warming thing to use AT THE SAME TIME!

Government: If you like the problems we cause, just wait ’til you see our solutions!

Marc Sheffner January 30, 2009 at 6:35 am

I Hate Taxes wrote: “A one world fiat currency will still be toilet paper and will still suffer inflation versus commodities.
Even if there was only ONE currency in the whole wide world, from USA to Zimbabwe, let’s call this currency Earths.
Well, Earths would still suffer the mis-management and malevolent mis-uses of the printing press and monetary creation by banks and central banks and still suffer inflation, albeit a bit slower.”

Would this still be true if the “currency” was purely digital and encoded on a micro-chip contained on an ID card that everyone was required by law to keep on them at all times (a tiresome chore that could be avoided simply by having the chip implanted directly into their body)?

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