The student of economics is invariably taught a certain mythology about the history of the study of business cycles. That mythology holds (a) that before 1913, nobody realized that there are cycles of prosperity and depression in the economy—instead, everyone thought only of isolated crises or panics, and (b) that this all changed with the advent of Wesley Mitchell’s Business Cycles in 1913.

Mitchell’s supposed achievement was to see that there are booms and then depressions, and that these cycles of activity stem from mysterious processes deep within the capitalist system. It is Part III of this work (the other parts being out-dated historical and statistical material) that is here reprinted for the second time, this time in paperback.

It is certainly true that the late Wesley Mitchell had an enormous influence on all later studies of the business cycle and that he revolutionized that branch of economics. But the true nature of this revolution is almost unknown. For there had been great economists who were not only aware of, but also discovered theories to explain, the dread phenomena of boom and bust. They did this much before Mitchell’s time, and went far beyond him. Read more

In the spring of 1979, a fateful – and fatal – shift took place in the direction and strategic vision of our leading libertarian institutions: foundations, youth movements, journals, etc. The shift was a classic leap into opportunist betrayal of our fundamental principles.

The early, pre-1976 days of the modern libertarian movement suffered from having no strategic vision at all. For that reason, it scarcely deserved the name of movement; the guiding concept was what I call "educationism": that libertarians write, lecture, teach, and spread the word, and that somehow the victory of liberty would one day magically be achieved. From 1976 on, in contrast, the movement began to flourish under a movement-building, or cadre-building, perspective; the idea was to concentrate on building a movement of knowledgeable libertarians, of men and women who would be deeply committed to hard-core libertarian principle. Read more

Why be libertarian, anyway? By this we mean, what's the point of the whole thing? Why engage in a deep and lifelong commitment to the principle and the goal of individual liberty? For such a commitment, in our largely unfree world, means inevitably a radical disagreement with, and alienation from, the status quo, an alienation which equally inevitably imposes many sacrifices in money and prestige. When life is short and the moment of victory far in the future, why go through all this? Read more

Anytime that a hard-nosed analysis is put forth of who our rulers are, of how their political and economic interests interlock, it is invariably denounced by Establishment liberals and conservatives (and even by many libertarians) as a "conspiracy theory of history," "paranoid," "economic determinist," and even "Marxist." These smear labels are applied across the board, even though such realistic analyses can be, and have been, made from any and all parts of the economic spectrum, from the John Birch Society to the Communist Party. The most common label is "conspiracy theorist," almost always leveled as a hostile epithet rather than adopted by the "conspiracy theorist" himself.

It is no wonder that usually these realistic analyses are spelled out by various "extremists" who are outside the Establishment consensus. For it is vital to the continued rule of the State apparatus that it have legitimacy and even sanctity in the eyes of the public, and it is vital to that sanctity that our politicians and bureaucrats be deemed to be disembodied spirits solely devoted to the "public good." Once let the cat out of the bag that these spirits are all too often grounded in the solid earth of advancing a set of economic interests through use of the State, and the basic mystique of government begins to collapse. Read more

1. Be open, friendly and courteous in presenting your ideas. Avoid any taint of fanaticism or infallibility. Just because other people disagree with you, don’t put them down as stupid or evil. Libertarian ideas are radical and shocking when first encountered. It takes most people some time to digest them.

2. Is a friend studying a specific subject – political science, economics, psychology? Recommend a book giving a libertarian perspective on… [editor's note: not finished]

3. If you have read a favorable review of a libertarian book, especially if in a professional journal, have copies xeroxed and distribute them to friends who might be interested in the review professionally.

4. Write a letter a week to some newspaper giving a libertarian viewpoint on some public issue. It will usually be published if short, topical and clearly not “cranky”. Keep it practical and to the point.

5. College libraries usually respond to faculty requests for new acquisitions. Regularly request libertarian titles, if you are on the faculty, or ask a friendly faculty member to do so, if you are a student.  Read more

The Failure of Utilitarianism
Toward a Theory of Justice in Property
Toward a Critique of Existing Property Titles
 

THE FAILURE OF UTILITARIANISM

Until very recently, free-market economists paid little attention to the entities actually being exchanged on the very market they have advocated so strongly. Wrapped up in the workings and advantages of freedom of trade, enterprise, investment, and the price system, economists tended to lose sight of the things being exchanged on that market. Namely, they lost sight of the fact that when $10,000 is being exchanged for a machine, or $1 for a hula hoop, what is actually being exchanged is the title of ownership to each of these goods. In short, when I buy a hula hoop for $1, what I am actually doing is exchanging my title of ownership to the dollar in exchange for the ownership title to the hula hoop; the retailer is doing the exact opposite.[1] But this means that economists’ habitual attempts to be wertfrei, or at the least to confine their advocacy to the processes of trade and exchange, cannot be maintained. For if myself and the retailer are indeed to be free to trade the dollar for the hula hoop without coercive interference by third parties, then this can only be done if these economists will proclaim the justice and the propriety of my original ownership of the dollar and the retailer’s ownership of the hula hoop. Read more

The Free market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between two people or between groups of people represented by agents. These two individuals (or agents) exchange two economic goods, either tangible commodities or nontangible services. Thus, when I buy a newspaper from a news dealer for fifty cents, the news dealer and I exchange two commodities: I give up fifty cents, and the news dealer gives up the newspaper. Or if I work for a corporation, I exchange my labor services, in a mutually agreed way, for a monetary salary; here the corporation is represented by a manager (an agent) with the authority to hire.

Both parties undertake the exchange because each expects to gain from it. Also, each will repeat the exchange next time (or refuse to) because his expectation has proved correct (or incorrect) in the recent past. Trade, or exchange, is engaged in precisely because both parties benefit; if they did not expect to gain, they would not agree to the exchange.

This simple reasoning refutes the argument against free trade typical of the "mercantilist" period of sixteenth- to eighteenth-century Europe, and classically expounded by the famed sixteenth-century French essayist Montaigne. The mercantilists argued that in any trade, one party can benefit only at the expense of the other, that in every transaction there is a winner and a loser, an "exploiter" and an "exploited." Read more

Liberals generally wish to preserve the concept of "rights" for such "human" rights as freedom of speech, while denying the concept to private property.

[1]

And yet, on the contrary the concept of "rights" only makes sense as property rights. For not only are there no human rights which are not also property rights, but the former rights lose their absoluteness and clarity and become fuzzy and vulnerable when property rights are not used as the standard.

In the first place, there are two senses in which property rights are identical with human rights: one, that property can only accrue to humans, so that their rights to property are rights that belong to human beings; and two, that the person's right to his own body, his personal liberty, is a property right in his own person as well as a "human right." But more importantly for our discussion, human rights, when not put in terms of property rights, turn out to be vague and contradictory, causing liberals to weaken those rights on behalf of "public policy" or the "public good." As I wrote in another work: Read more

Banking is a particularly arcane part of the economic system; one of the problems is that the word "bank" covers many different activities, with very different implications. During the Renaissance era, the Medicis in Italy and the Fuggers in Germany, were "bankers"; their banking, however, was not only private but also began at least as a legitimate, non-inflationary, and highly productive activity. Essentially, these were "merchant-bankers," who started as prominent merchants. In the course of their trade, the merchants began to extend credit to their customers, and in the case of these great banking families, the credit or "banking" part of their operations eventually overshadowed their mercantile activities. These firms lent money out of their own profits and savings, and earned interest from the loans. Hence, they were channels for the productive investment of their own savings.  Read more

I am honored and delighted to be here, and particularly happy that the theme of this convention is Turning Point, 1777/1977. For one thing, it means that the Libertarian Party is, to my knowledge, the only organization in the country that realizes that the Bicentennial does

not

merely apply to 1776/1976. The official governmental Bicentennial Commission has just shut up shop, convinced that its task is done.

The left-wing People's Bicentennial Commission has not been heard from for the entire year. It seems that only the Libertarian Party understands that the American Revolution did not end in 1776; in fact, the Revolution began a year before the official Bicentennial, in 1775, and it ended eight grueling years later, in 1783. We should be celebrating the bicentennial for eight years, and not just for a few months of hoopla.

But there is greater significance to the Libertarian commemoration of 1777 than the mere fact that we are better historians than everyone else. There is something unfortunately symbolic about confining one's celebration to 1776, the year of the Declaration of Independence. For as noble, as exciting, as profoundly libertarian as the Declaration was, it was still the necessary but not sufficient first step in the victory of what we have correctly identified as the First Libertarian Revolution. The Declaration was the rhetoric, the ideology, that set the stage; but the American revolutionaries, our libertarian forefathers, were not only interested in setting forth a glorious set of principles; having done that, they were also interested in action, in putting these principles into practice in the real world, in transforming the real world to give those principles life. Read more

I.

Once Upon a Time there was a peaceful valley. The people were happy in this valley; they worked, they traded, and they laughed together. No man exerted force upon his neighbor, and all lived and prospered.

One day there came to this valley a roaming band of marauders, led by a gang leader, whom we shall call Hector. This band came with machine guns, and, as was their custom, raped and looted at will among the people of the valley. As they were preparing, as usual, to put the whole valley to the torch ("for kicks," as one of Hector’s Gang put it, succinctly), one of their number, a brilliant young intellectual whom we shall call Iago, stopped them. "Look, chief," said Iago, "Why don’t we change our modus operandi? I’m getting pretty sick of all this roaming around, looking always for the next mark, the next victims, always on the run. This is an isolated spot, a beautiful spot. Let’s settle down here, and run these people’s lives. Then, we can milk them all the time, instead of killing them all and moving on." Hector was a shrewd gang chief, and he saw the wisdom of the idea. The gang settled down. Read more

In the midst of nationwide prosperity, some economic and social problems keep nagging at the public. All over the country, they take the same form. What are they? Traffic congestion, inadequate roads, overcrowded schools, juvenile delinquency, water shortages. Such matters have proven troublesome in many ways; above all, they seem to breed conflicts.

Fierce battles are raging between warring groups of Americans. Some want "progressive" education; others want varying blends of the traditional. Some want socialism taught in the schools; others favor free enterprise. Some want religion in the schools, and others proclaim separation of Church and State. Some Americans want water fluoridated, and others want it unmedicated. Read more

In the early part of the 20th century, the main indictment of the capitalist system by its intellectual critics was the alleged pervasiveness of "monopoly." In the 1930s, mass unemployment and poverty ("one third of a nation") came to the fore. At the present time [1962], growing abundance and prosperity have greatly dimmed the poverty and unemployment theme, and the only serious "monopoly" seems to be that of labor unionism.

Let it not be thought, however, that criticism of capitalism has died. Two seemingly contradictory charges are now rife: (a) that capitalism is not "growing" fast enough, and (b) that the trouble with capitalism is that it makes us too "affluent." Excess wealth has suddenly replaced poverty as the tragic flaw of capitalism.[1]

At first sight, these latter charges appear contradictory, for capitalism is at one and the same time accused of producing too many goods, and yet of not increasing its production of goods fast enough. The contradiction seems especially glaring when the same John Kenneth Galbraith (1908-2006) critic presses both lines of attack, as is true of the leading critic of the sin of affluence, Professor Galbraith.[2] Read more

Every "radical" creed has been subjected to the charge of being "utopian," and the libertarian movement is no exception. Some libertarians themselves maintain that we should not frighten people off by being "too radical," and that therefore the full libertarian ideology and program should be kept hidden from view. These people counsel a "Fabian" program of gradualism, concentrating solely on a gradual whittling away of State power. An example would be in the field of taxation: Instead of advocating the "radical" measure of abolition of all taxation, or even of abolishing income taxation, we should confine ourselves to a call for tiny improvements; say, for a two percent cut in income tax.

In the field of strategic thinking, it behooves libertarians to heed the lessons of the Marxists, because they have been thinking about strategy for radical social change longer than any other group. Thus, the Marxists see two critically important strategic fallacies that "deviate" from the proper path: one they call "left-wing sectarianism"; the other, and opposing, deviation is "right-wing opportunism." The critics of libertarian "extremist" principles are the analog of the Marxian "right-wing opportunists." Read more

The Conservative has long been marked, whether he knows it or not, by long-run pessimism: by the belief that the long-run trend, and therefore time itself, is against him. Hence, the inevitable trend runs toward left-wing statism at home and communism abroad. It is this long-run despair that accounts for the Conservative’s rather bizarre short-run optimism, for since the long run is given up as hopeless, the Conservative feels that his only hope of success rests in the current moment. In foreign affairs, this point of view leads the Conservative to call for desperate showdowns with communism, for he feels that the longer he waits the worse things will ineluctably become; at home, it leads him to total concentration on the very next election, where he is always hoping for victory and never achieving it. The quintessence of the practical man, and beset by long-run despair, the Conservative refuses to think or plan beyond the election of the day. Read more

We shall concentrate on the capitalist-entrepreneurs, economically the more important type of entrepreneur. These are the men who invest in "capital" (land and/or capital goods) used in the productive process. . . .

The capitalist-entrepreneur buys factors or factor services in the present; his product must be sold in the future. He is always on the alert, then, for discrepancies, for areas where he can earn more than the going rate of interest. Suppose the interest rate is 5 percent; Jones can buy a certain combination of factors for 100 ounces; he believes that he can use this agglomeration to sell a product after two years for 120 ounces. His expected future return is 10 percent per annum. If his expectations are fulfilled, then he will obtain a 10-percent annual return instead of 5 percent. The difference between the general interest rate and his actual return is his money profit (from now on to be called simply "profit," unless there is a specific distinction between money profit and psychic profit). In this case, his money profit is 10 ounces for two years, or an extra 5 percent per annum. Read more

Twenty years ago I was an extreme right-wing Republican, a young and lone "Neanderthal" (as the liberals used to call us) who believed, as one friend pungently put it, that "Senator Taft had sold out to the socialists." Today, I am most likely to be called an extreme leftist, since I favor immediate withdrawal from Vietnam, denounce U.S. imperialism, advocate Black Power and have just joined the new Peace and Freedom Party. And yet my basic political views have not changed by a single iota in these two decades!

It is obvious that something is very wrong with the old labels, with the categories of "left" and "right," and with the ways in which we customarily apply these categories to American political life. My personal odyssey is unimportant; the important point is that if I can move from "extreme right" to "extreme left" merely by standing in one place, drastic though unrecognized changes must have taken place throughout the American political spectrum over the last generation. Read more

How can anyone, finding himself surrounded by a rising tide of evil, fail to do his utmost to fight against it? In our century, we have been inundated by a flood of evil, in the form of collectivism, socialism, egalitarianism, and nihilism. It has always been crystal clear to me that we have a compelling moral obligation, for the sake of ourselves, our loved ones, our posterity, our friends, our neighbors, and our country, to do battle against that evil.

It has therefore always been a mystery to me how people who have seen and identified this evil and have therefore entered the lists against it, either gradually or suddenly abandon that fight. How can one see the truth, understand one's compelling duty, and then, simply give up and even go on to betray the cause and its comrades? And yet, in the two movements and their variations that I have been associated with, libertarian and conservative, this happens all the time. Read more

It was almost twenty years ago that I first met Frank Chodorov. It was at one of those luxurious but terribly dreary cocktail parties that have long served as rallying ground for the intelligentsia of the American right wing. There the more articulate of the rightists are wont to gather to declaim at each other for the umpteenth time on the perils of inflation, the immorality of welfare recipients, and the clear and present menace of Walter Reuther to the vitals of the American Republic.

The libertarian movement has been chided by William F. Buckley, Jr., for failing to use its "strategic intelligence" in facing the major problems of our time. We have, indeed, been too often prone to "pursue our busy little seminars on whether or not to demunicipalize the garbage collectors" (as Buckley has contemptuously written), while ignoring and failing to apply libertarian theory to the most vital problem of our time: war and peace. There is a sense in which libertarians have been utopian rather than strategic in their thinking, with a tendency to divorce the ideal system which we envisage from the realities of the world in which we live. In short, too many of us have divorced theory from practice, and have then been content to hold the pure libertarian society as an abstract ideal for some remotely future time, while in the concrete world of today we follow unthinkingly the orthodox "conservative" line. To live liberty, to begin the hard but essential strategic struggle of changing the unsatisfactory world of today in the direction of our ideals, we must realize and demonstrate to the world that libertarian theory can be brought sharply to bear upon all of the world's crucial problems. By coming to grips with these problems, we can demonstrate that libertarianism is not just a beautiful ideal somewhere on Cloud Nine, but a tough-minded body of truths that enables us to take our stand and to cope with the whole host of issues of our day. Read more

Upon the collapse of centralizing totalitarian Communism in Eastern Europe and even the Soviet Union, long suppressed ethnic and nationality questions and conflicts have come rapidly to the fore. The crack-up of central control has revealed the hidden but still vibrant "deep structures" of ethnicity and nationality.

Economists have referred innumerable times to the "free market," the social array of voluntary exchanges of goods and services. But despite this abundance of treatment, their analysis has slighted the deeper implications of free exchange. Thus, there has been general neglect of the fact that free exchange means exchange of titles of ownership to property, and that, therefore, the economist is obliged to inquire into the conditions and the nature of the property ownership that would obtain in the free society.

Yes, I confess: I'm a veteran anti-fluoridationist, thereby – not for the first time – risking placing myself in the camp of "right-wing kooks and fanatics." It has always been a bit of mystery to me why left-environmentalists, who shriek in horror at a bit of Alar on apples, who cry "cancer" even more absurdly than the boy cried "Wolf," who hate every chemical additive known to man, still cast their benign approval upon fluoride, a highly toxic and probably carcinogenic substance. And not only let fluoride emissions off the hook, but endorse uncritically the massive and continuing dumping of fluoride into the nation's water supply.

There are two types of ethical criticisms that can be made of the free-market system. One type is purely existential; that is, it rests on existential premises only. The other type advances conflicting ethical goals and protests that the free market does not attain these goals...

Number 1:           Knowledge of Self-Interest: An Alleged Critical Assumption
Number 2:           The Problem of Immoral Choices
Number 3:           The Morality of Human Nature
Number 4:           The Alleged Need for Equality
Number 5:           The Problem of Security
Number 6:           Alleged Joys of the Society of Status
Number 7:           Charity and Poverty
Number 8:           The Charge of  "Selfish Materialism"
Number 9:           Back to the Jungle?
Number 10:         Power and Coercion

 

Number 1: Knowledge of Self-Interest: An Alleged Critical Assumption

This criticism of the market is more existential than ethical. It is the popular argument that laissez faire, or the free-market economy, rests its case on the crucial assumption that every individual knows his own self-interest best. Yet, it is charged, this is not true of many individuals. Therefore, the State must intervene, and the case for the free market is vitiated.

The free-market doctrine, however, does not rest on any such assumption. Like the mythical "economic man," the Perfectly Wise Individual is a straw man created by the critics of the theory, not implied by it.

First, it should be evident from our analysis of the free market and government intervention throughout this work that any argument for the free market rests on a far deeper and more complex doctrine. We cannot enter here into the many ethical and philosophical arguments for freedom. Secondly, the laissez-faire or free-market doctrine does not assume that everyone always knows his own interest best; it asserts rather that everyone should have the right to be free to pursue his own interest as he deems best.

Critics may argue that the government should force men to lose some ex ante or present utility in order to gain ex post utility later, by being compelled to pursue their own best interests. Read more

The recent rioting and virtual civil war in Northern Ireland points out, both for libertarians and for the world at large, the vital importance of pushing for and attaining the goal of national liberation for all oppressed people. Aside from being a necessary condition to the achievement of justice, national liberation is the only solution to the great world problems of territorial disputes and oppressive national rule. Yet, all too many anarchists and libertarians mistakenly scorn the idea of national liberation and independence as simply setting up more nation-states; they tragically do not realize that, taking this stand, they become in the concrete, objective supporters of the bloated, imperialistic nation-states of today.

Each state has an assumed monopoly of force over a given territorial area, the areas varying in size in accordance with different historical conditions. Foreign policy, or foreign relations, may be defined as the relationship between any particular State, A, and other States, B, C, D, and the inhabitants living under those States. In the ideal moral world, no States would exist, and hence, of course, no foreign policy could exist. Given the existence of States, however, are there, any moral principles that libertarianism can direct as criteria for foreign policy? The answer is broadly the same as in the libertarian moral criteria directed toward the "domestic policy" of States, namely to reduce the degree of coercion exercised by States over individual persons as much as possible.

The elaboration of a systematic theory of liberty has been rare enough, but exposition of a theory of strategy for liberty has been virtually nonexistent.

If the State, then, is a vast engine of institutionalized crime and aggression, the "organization of the political means" to wealth, then this means that the State is a criminal organization, and that therefore its moral status is radically different from any of the just property-owners that we have been discussing in this volume. And this means that the moral status of contracts with the State, promises to it and by it, differs radically as well. It means, for example, that no one is morally required to obey the State (except insofar as the State simply affirms the right of just private property against aggression). For, as a criminal organization with all of its income and assets derived from the crime of taxation, the State cannot possess any just property.

So far in this book, we have developed a theory of liberty and property rights, and have outlined the legal code that would be necessary to defend those rights. What of government, the State? What is its proper role, if any?

A major problem with discussions of the necessity of government is the fact that all such discussions necessarily take place within a context of centuries of State existence and State rule – rule to which the public has become habituated. The wry coupling of the twin certainties in the popular motto "death and taxes" demonstrates that the public has resigned itself to the existence of the State as an evil but inescapable force of nature to which there is no alternative.

Now that the New Left has abandoned its earlier loose, flexible non-ideological stance, two ideologies have been adopted as guiding theoretical positions by New Leftists: Marxism-Stalinism, and anarcho-communism.

Protectionism, often refuted and seemingly abandoned, has returned, and with a vengeance. The Japanese, who bounced back from grievous losses in World War II to astound the world by producing innovative, high-quality products at low prices, are serving as the convenient butt of protectionist propaganda.

Étienne de La Boétie[1] has been best remembered as the great and close friend of the eminent essayist Michel de Montaigne, in one of history's most notable friendships. But he would be better remembered, as some historians have come to recognize, as one of the seminal political philosophers, not only as a founder of modern political philosophy in France but also for the timeless relevance of many of his theoretical insights.