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Wednesday, June 14, 2006

Deep Thoughts: how did US get where we are today?

The Intelligent Lover of Radical Liberty -- by David Gordon

America is today embroiled in a futile, costly, and immoral war. Domestically, deficit spending is out of control, and new revelations about telephone spying by the National Security Agency reveal yet another threat to civil liberties. How did we get to where we are today? To answer this question, six books are especially useful.

The Bush administration's disastrous policies show the dangers of centralized power. As Tom Woods makes clear in The Politically Incorrect Guide to American History, the struggle for liberty since the inception of the Constitution has been an effort to limit the federal government. Woods shows that the federal government, far from being the protector of the rights of minorities, has been the main obstacle on the path to liberty.

The supporters of the Constitution were the centralizing party, as opposed to the more farseeing Antifederalists, who warned of the dangers of the new regime. Yet even the Constitution's advocates sought to restrain national authority.

In this connection, Woods emphasizes the Tenth Amendment, which "guaranteed the states' rights to self-government … Since the states existed prior to the federal government, they were the sources of whatever power the federal government had."

But this did not suffice to protect the people from an overly powerful central government. Thomas Jefferson and his followers argued that the states had the right to nullify laws they deemed unconstitutional. If a state resisted in this way, the operation of the disputed law would be suspended in that state, until a conference of the states could resolve the dispute. This doctrine, embodied in the Virginia and Kentucky Resolutions, was by no means confined to the South. Northern state courts later nullified the fugitive slave laws.

The War Between the States, sometimes called the Civil War, was not fought to end slavery; Abraham Lincoln's aim was to consolidate national power. In the pursuit of this centralizing mission, the Northern armies shocked contemporary European observers by their assaults on civilians. The campaigns of Sherman and other Northern generals foreshadow the horrors of twentieth-century global warfare.

Woods shows how the policies of Woodrow Wilson and Franklin Roosevelt continued and extended Lincoln's drive for an all-powerful central government. Of course a government of this kind could not tolerate the free market; but during the New Deal period, many prominent intellectuals thought that interference with the market had not gone far enough. Some of the self-styled intellectual elite sympathized with the "Soviet experiment." During the 1920s, famed progressive educator John Dewey could hardly contain his enthusiasm for the Soviets.

Tom DiLorenzo's outstanding How Capitalism Saved America shows in detail the economic aspects of the struggle between centralized power and liberty. Throughout the course of American history since the Constitution was adopted, political groups have sought to yoke the free market to a policy of economic nationalism and governmentally directed growth. Alexander Hamilton began a program, unfortunately highly influential, that distorted the choices of the free market. He "favored the mercantilist policies of protectionist tariffs, taxpayer subsidies for private road- and canal-building corporations, and a government-run monetary system that could finance such patronage."

Hamilton faced vigorous opposition from Jefferson and his many followers, who recognized the fallacies of Hamilton's mercantilism. As DiLorenzo points out, the Jeffersonians hammered home the connection between a strong national government and mercantilism.

The Hamiltonians and their successors wanted a governmentally guided economy: the Jeffersonians did not. Who was right? The answer comes as no surprise. The policy of internal improvements, promoted by Henry Clay and other proponents of his American System, failed disastrously. By contrast, the free market proved perfectly able to provide public goods such as roads and canals.

The manifest mistakes of the American System did not deter Clay's main follower, Abraham Lincoln, from vigorous promotion of high tariffs and even more "improvements." DiLorenzo sees this as the key to Lincoln's career. Far from being a champion of human freedom, Lincoln aimed to subordinate the states to his program of economic nationalism. DiLorenzo shows that Lincoln's election was the triumph of mercantilism in America.

Unfortunately, DiLorenzo argues, "the American economy has featured what might be called creeping mercantilism ever since." Franklin Roosevelt proved an able student of Lincoln and the Hamiltonians, and, in his case, economic nationalism bore disturbingly close parallels with fascism. DiLorenzo notes that Roosevelt's National Industrial Recovery Act "was essentially modeled after the Italian fascist system."

DiLorenzo shows that the defenders of mercantilism often resort to strange tactics. In their efforts to promote statist monopoly control of the economy, they act to cripple large companies that serve the consumers. He maintains that many proponents of state regulation of alleged monopolies realize full well that the businesses they wish to suppress satisfy market demand better than any available alternative. He quotes, e.g., from Learned Hand's Alcoa decision. "Hand condemned Alcoa for its 'superior skill, foresight, and industry.' This was exclusionary, he said, for not all the companies in the industry shared this skill, foresight, and industry."

Both Woods and DiLorenzo emphasize that war has been a principal means to enhance the power of the centralized state. This has been a dominant theme in the work of the distinguished economic historian Robert Higgs, and I'd like to recommend two of his books: Against Leviathan: Government Power and a Free Society and Resurgence of the Warfare State: The Crisis Since 9/11 .



In Against Leviathan, Higgs applies his most famous thesis, elaborated in his great earlier book Crisis and Leviathan . The state grows during wartime and other "emergencies"; and when peace or normality returns, government does not shrink to its former size. Business groups that might have been expected to defend free enterprise in fact cooperate with the government in order to advance their own interests. "Within three decades, from the outbreak of World War I in Europe to the end of World War II, the American people endured three great national emergencies, during each of which the federal government imposed unprecedented taxation and economic controls on the population … Rather than resisting the government's impositions or working to overthrow them, they [business interests] looked for ways to adapt to them, positioning themselves so that government policies would provide a tax advantage, channel a subsidy their way, or hobble their competitors."

But doesn't the Constitution protect us from an overly powerful state? The problem, for Higgs, does not lie in the text of the Constitution. Rather, during periods of crisis, the Supreme Court all too often defers to the central government. Faced with an emergency, the Court refuses to impose legal barriers that an inflamed public is likely to condemn. Higgs places great emphasis on the Court's upholding the Adamson Act in 1917, under which the Wilson administration imposed a labor settlement on interstate railroads. Nothing in the Constitution allowed Wilson to do this, but the Court found a "reservoir of reserved power" to justify Wilson's invasion of the railroad owners' property rights.

Even worse, the Court during World War I "readily affirmed the constitutionality of sending men against their will to fight and die in a remote power struggle." Once conscription was allowed, how could government be restrained at all? Elsewhere Higgs has noted that this was precisely the argument of Justice Holmes: If government may involuntarily compel people to risk their lives, may it not restrict their liberties in any lesser way it chooses, should an emergency in its judgment demand this?

Unfortunately, as Higgs makes clear in Resurgence of the Warfare State , during the Iraq War the Bush Administration has continued to use military emergency to increase the power of the government .The ostensible reasons for the war cannot be taken seriously. Who can really believe that Iraq, a nation long subjected to a devastating blockade and bombing, posed a danger to America? In the months that preceded the invasion, much was made of Saddam Hussein's supposed plans to obtain nuclear weapons. Of course, we now know that the intelligence reports that alleged such plans were false. But even if they had been true, an Iraq with nuclear arms was a minor matter.


Higgs thinks that not only the Iraq war, but also the entire "war on terrorism" is a made-up affair, designed to frighten the American public into support for a foreign policy of militant aggression. He uses a simple but telling argument to show that the campaign against terror is bogus. If we really were in danger, isn't the government doing far too little to protect us? "If semi-organized gangs of suicidal maniacs numbering in the thousands are out to kill us all, the government ought not to be fiddling with kindergarten subsidies and the preservation of the slightly spotted screech owl. It ought to get serious."

If American foreign policy is so manifestly unreasonable, how can the elites who control the government fail to see that it is? Higgs finds part of the answer in a concept of C. Wright Mills's. (By the way, Murray Rothbard also thought highly of Mills's work.) Mills maintained that a self-styled elite thinks itself superior to the masses, in that it is not deceived by idealistic rhetoric but can cope with the hard realities of Machtpolitik . In fact, as Mills explained in The Causes of World War III, the elite is the prisoner of its own narrow assumptions .Mills called this inability to think beyond the ready resort to force "crackpot realism."

But why have such inept and dangerous policies been adopted? A good part of the answer, Higgs argues, stems from the vast fortunes to be made in the defense industry. The Cold War, he trenchantly remarks, is "too good a deal to give up." Military spending remains at Cold War levels, and the Pentagon still spends money for "the same kind of forces and weapons that had been developed for confrontation with the Red Army or a similar foe." We do not need these weapons for defense but a "politically entrenched defense industry makes sure that spending continues at a high level, and pork-dispensing congressmen grease the wheels, buying a few votes in the process."

To return to Higgs's main theme, events since 9/11 have conformed to the pattern of governmental assaults on liberty. Most notable in this connection is the notorious Patriot Act, and Higgs is appropriately severe: "Our rulers declare that by nothing more substantial than the emperor's say-so, any person may be held incommunicado, without trial, and then punished, even put to death. Say good-bye to the writ of habeas corpus , the very bedrock of limited government … Do I [Higgs] fear that the USA PATRIOT Act will be abused? No. I know that it has been already and will continue to be as elastic language allows unscrupulous prosecutors to scratch a variety of itches unrelated to terrorism."

In Speaking of Liberty , Lew Rockwell usefully complements Higgs's analysis of the dangers of war. He insightfully asks: how can one rationally favor both the market and a bellicose foreign policy? "The framers intended to keep the US out of foreign wars. They understood that a government that goes abroad in search of monsters to destroy will end up destroying its own people. The foreign policy apparatus of today inflicts a horrible cost on the world. But the greatest cost of all — or at least the one that should matter to us the most — is the cost to the liberty that is our birthright."


But, one might object, can't a peace-loving nation sometimes be forced to fight? After the attacks of September 11th, what choice did the Bush Administration have but to strike back at those who attacked us?

Rockwell rises to the challenge: though the attacks on the World Trade Center were a grievous wrong, the American response made matters much worse. How did the overthrow of the backward Afghanistan regime, in no way a threat to the United States, advance our safety? The perpetrators of the September 11th attacks remain at large, and since our triumph over the Taliban, we have proceeded to a much more costly and futile war. "The right response to September 11 would have been for government's entire security apparatus to be dismantled, and to allow the airlines and other firms to provide their own security. But, of course, it had all the earmarks of a crisis, and history shows that crises are great opportunities for the State."

Rockwell is a careful student of Mises and Rothbard. Rothbard's heroic struggle against a militaristic foreign policy is well known, but Rockwell notes that Mises also warned against the dangers of militarism. In a characteristically incisive passage, Mises said: "Military Socialism is the Socialism of a state in which all institutions are designed for the prosecution of war … Standing preparedness for war is impossible if aims other than war influence the lives of individuals … The military state is a state of bandits." Aren't we getting uncomfortably close to this today?

Rockwell's powerful defense of the key tenets of Mises and Rothbard presents us with a paradox. The Old Right vigorously opposed an interventionist foreign policy. Why have contemporary American conservatives been unable to mount an effective resistance to the neo-conservatives who now dominate American foreign policy?

The problem, as Rockwell sees it, is that conservatives downgraded the role of reason, and this rendered ineffective their resistance to the State. Rockwell cites in this connection the baleful influence of Russell Kirk. "In the middle fifties, as a consequence of Kirk's Conservative Mind, the word 'conservative' came to describe anyone who was a nonsocialist skeptic of federal policy … In Kirk's hands, conservatism became a posture, a demeanor, a mannerism … And if there was a constant strain in Kirkian conservatism, it was opposition to ideology, a word that Kirk demonized. This allowed him to accuse Mises and Marx of the same supposed error. In fact, ideology means nothing more than systematic social thought. Without systematic thought, the intellectual shiftiness of statist impulse gets a free ride."

In The Economics and Ethics of Private Property , Hans-Hermann Hoppe launches a full-scale assault on the philosophical enemies of reason. Hoppe is a philosophical rationalist, who "claims that man is capable of recognizing ultimate foundations and principles of knowledge." As such, he challenges the positivists, who confine our knowledge to empirical matters of fact. They recognize so-called analytic truths as well, but in their view these are mere tautologies that cannot convey new knowledge about the world. They reject Mises's economics, since Mises claimed that, purely by a priori reasoning, we could build up the entire structure of economic theory. On this view, a rational ethics also exits the field: ethical judgments are not true or false, but merely express approval or aversion for types of conduct.


Hoppe maintains that positivism refutes itself. "Regarding positivism's supposedly exhaustive classification of analytic, empirical, and emotive propositions, one must ask: What, then, is the status of this very axiom?" Hoppe has little difficulty in showing that, however the positivist answers, we have no reason to accept the axiom. If, e.g., the positivist claims to be defining meaning, he has doomed himself, since positivists think that definitions are no more than arbitrary conventions. If so, aren't we free to reject the definition of meaning the positivist offers?

Hoppe doesn't limit himself to refuting the positivists and other enemies of reason. He thinks that the main principles of libertarianism can be established through reason. If you deny that you own yourself, he claims, you are guilty of a performative self-contradiction. Someone who says, in English, "I have never uttered an English sentence" has contradicted himself; he is doing what he says he has never done. In like fashion, in order to say "I don't own myself", I have to own myself. This fascinating argument has aroused a great deal of discussion among libertarian philosophers, and anyone who wants to grasp the foundations of a free society needs to come to terms with it. Readers may find the book a little more difficult than the other items on my list, but it is a rewarding work that repays careful study. Hoppe writes with relentless force and clarity.

Those who read all of these books will have an excellent understanding of how America has reached its present crisis and what needs to be done to return to the path of freedom. All of the authors would agree with Mises: "Man has only one tool to fight error: reason."

(David Gordon covers new books in economics, politics, philosophy, and law for The Mises Review , the quarterly review of literature in the social sciences, published since 1995 by the Mises Institute)


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