Category Archives: Austrian school

Whither Libertarianism? Reflections on the Revolution Within

I empathize with those who find ideological categories and labels confining and reductive. Many people hold a wide variety of positions which defy one easy overarching classification while others claim Radical Centrism® either out of extreme cognitive bias, intellectual laziness, logical incoherence or moral cowardice. Still others claim one set of principles in the marketplace of ideas, but subordinate them to one of the dominant political parties out of a sense of pragmatism. The political process certainly doesn’t help matters by herding people into the rigid confines of partisan bickering. The flattening of political thought is only exacerbated by the outrage du jour that is now a staple of our 24/7 social media enabled news cycle. As problematic as labels may be, they serve a purpose of distinguishing broad principles and ideas around which people organize. Words have meaning, and when it comes to political philosophy, it’s especially important to be able to clearly specify principles and objectives. If there’s one political philosophy which distinguishes itself on adherence to principles above all else, it’s libertarianism. Or at least that’s what I thought.

For those who aren’t in the liberty movement, libertarianism is undergoing a bit of identity crisis. This is nothing new. It isn’t the first time and it won’t be the last. Scorned and ridiculed by conservatives and progressives alike, libertarians have always had a reputation for being the gadflies of politics. If you thought the 2016 election cycle was fractious for conventional partisans, it was even more divisive for libertarians. Libertarians are already divided over numerous issues, and if anything, infighting and disagreement are features of being in the liberty movement. The aftermath of the 2016 election only seems to have amplified these divisions. In the run-up to the 2016 election, you had self-described libertarians for Donald Trump, Gary Johnson, Jill Stein, and most inexplicably, Hillary Clinton and Bernie Sanders. And that doesn’t even include the anarchists who didn’t vote. If that doesn’t leave you a little confused over what libertarianism means, you’re certainly not alone.

On the one hand, it’s great that there is such a diversity of thought and a robust culture of debate within the liberty movement. On the other, having such disparities in political activism dilutes what is a fairly well established body of thought. Such diversity may not lend itself towards building a future for a movement that is already vilified as a collection of nerds who are more invested in being militant iconoclasts than in achieving tangible political goals.

Is it important for libertarians to have a uniform ideology? Will having clearly defined principles result in purity tests and purges? Can an ideology that’s so resolutely individualistic and anti-state build a meaningful coalition? Is deference to state authority too deeply imprinted into the human psyche after thousands of years of psychological evolution? As the ultimate hierarchical organization, does state authority provide a salutary psychological benefit that libertarianism takes for granted? Are historical examples of anarchist societies evidence that anarchy can work or are they proof of their anomalous and unstable nature? Is state power an inherently corrupting influence on those who wield it or is the corruption merely a reflection of the absence of morality within the culture over which it presides? Moreover, is it realistic to advocate for a stateless society given that libertarianism is already a marginal philosophy within the context of what was arguably the most overtly libertarian attempt at a limited state: the United States of America? If true libertarianism is strictly defined as advocacy for the abolition of the state, are the ideas strong enough to sustain a lasting social order? Specifically, is the Non-Aggression Principle sufficient to sustain a stable and cohesive society? Or would it require strong familial, cultural, and religious communities? Do libertarians ultimately have to accept that large swaths of human civilization will simply not voluntarily buy into the idea of a stateless society? Is standing up for pure libertarian principles a brave position or is it little more than the libertarian version of virtue signaling?

While I don’t have definitive answers to these questions, I still regard libertarianism as a beautiful and edifying vision. I also believe that the most trenchant critiques of state power are found within the liberty movement. In light of the schisms that have emerged, I think it’s useful to take a look at the various libertarian factions and evaluate their respective merits.

LP/Cato Libertarians

Roughly comprised of beltway think tanks, tenured academics, LP aspirants, Reason readers and Radical Centrists® disenfranchised from the two party duopoly, this group of libertarians seeks to cast the widest net for the liberty philosophy. This crowd also seems most eager to lay claim to the legacy of classical liberalism by building a largely secular libertarianism from the likes of Hayek, Friedman, Nozick, Rand and Mill. What they lack in criticisms of central banking and the warfare state, they make up for in advocacy for legal weed and prostitution. Though there is a wealth of good journalism, research, and libertarian theory emanating from this corner, there are also some troubling sops to social justice activists, Islam apologists, open borders crusaders, and “post-scarcity” futurists cheerleading for universal basic income. This also happens to be the home of the “libertarians” for Hillary. That should have been an oxymoron, but for some reason, it was a thing.

What is to be made of the LP and Gary Johnson contingent? Johnson ran for president on the LP ticket in 2012 and 2016, and let’s just say his candidacy left most libertarians uninspired to say the very least. Most people saw Johnson’s credibility go up in flames over the infamous Aleppo gaffe, but the sad truth is that his debate and town hall performances did the job for him. While most libertarians were craving a principled candidate willing to articulate the liberty philosophy with clarity and conviction, what they got instead was a bumbling figurehead who seemed caught flat footed with every question. His mealy mouthed platitudes about being “socially liberal and fiscally conservative” just made him sound like Republican Lite. Since most libertarians spend a good chunk of their time and energy honing their arguments for liberty, Johnson’s intellectual lethargy was especially galling. He often seemed like he just wanted to be a more respectable “libertarian” version of Jeff Spicoli. Among many other dubious statements, Bill Weld’s rather open embrace of Hillary Clinton didn’t exactly endear him to movement libertarians either.


Despite fielding candidates like Ron Paul and Harry Browne in past elections, the LP has beclowned itself in several ways recently, too. If the striptease at the LP convention didn’t leave you bewildered, might I recommend a look at their Twitter account. Some of their recent flaking for North Korea has prompted both ridicule and revulsion. Judd Weiss’ sobering expose of the behind-the-scenes cannibalism and backstabbing of the 2016 election dispelled all notions that the LP were somehow above the bloodsport of major party politics. And that’s saying nothing of Nicholas Sarwark’s strange, unprovoked attack on Tom Woods. Though the LP has a radical caucus, it’s future prospects are murky at best.


Seriously, LP?

Left Libertarians


It’s like dialectical materialism, but way more #WOKE, dude.

Basically, these are the SJWs of the liberty movement. They seem almost wholly consumed by cultural progressivism and railing against entire spectrum of -isms that most have come to associate with the term “social justice warrior”. Best exemplified by the Center For Stateless Society and Bleeding Heart Libertarians, these so-called libertarians are putting a market mutualist spin on the entire progressive agenda from universal basic income to healthcare. There is surely some overlap with the Cato Libertarians, but for my money, there’s little daylight between this crowd and your garden variety gender studies freshman. For a group of people who claim to be promoting heterodox thought, it sure sounds a lot like the establishment.



The real schism in libertarianism seems to reveal itself when it comes to where you stand on the work of the Mises Institute, Murray Rothbard or Hans Hermann Hoppe. Given the fact that Murray Rothbard himself was excommunicated from Cato and split from the LP, it should come as little surprise that the Mises institute and everyone in their orbit seem to attract the most controversy. Unsurprisingly, this is also where you’ll find the most robust vision of libertarianism.

The two recent speeches given by Jeff Deist and Hans Hoppe demarcate the divide between the punters and the warriors for liberty. Both speeches laid out a practical way forward for the liberty movement while avoiding the temptation to impose abstract ideals of libertarian universalism. Deist laid out a strategy for radical decentralization from the grip of an overextended federal state and the tentacles of globalism coupled with a return to localized cultural and familial bonds. Hoppe echoed Rothbard’s call for libertarian populism by laying out a very specific set of actions where libertarians could make common cause with the broader conservative movement in order to make greater advances towards a libertarian social order. Besides his very explicit contention that libertarianism is strictly the advocacy for a stateless society, Hoppe’s speech was also a stinging rebuke to Libertarianism Lite as well as the Alt Right.

Naturally, both speeches drew a chorus of autistic screeching from every ideological corner. Deist’s speech was reviled as a crypto-fascist “blood and soil” screed while Hoppe’s speech was similarly attacked as a white supremacist dog whistle. The Rothbardian tradition has synthesized Lockean natural rights with a radical theory of laissez faire free markets and Burkean traditionalism. It’s an elegant and logically consistent ideology while taking into account human nature, history and tradition.

But libertarianism is staring down the corridor of history filled with centuries of monarchies, city states and nation states. Human psychology has evolved to submit to some kind of sovereign governing body. Even if some small scale version of Ancapistan is created, it will be forced to coexist alongside actual formal nation states. Its members will have to perform a private equivalent of every function currently performed by actual nation states. Including and especially border control and collective defense. And if necessary, physical removal.


Can libertarianism win and secure its victory for posterity? Can libertarianism win exclusively through persuasion in the marketplace of ideas? Can a meaningful coalition be built by completely eschewing the acquisition of state power? Would a polycentric society lend itself towards the kind of stability of tradition which Burke and other classical conservatives envisioned? I don’t know for sure, but I know it’s going to remain a hard sell. It’s perhaps the toughest pathway by which to build a consensus, but perhaps the one which presumably will grow the deepest roots amongst its adherents.

Yuri N. Maltsev: Requiem for Marx

Despite the epic failures of socialism throughout the world, the Left throughout the West has held fast to its perverse and irrational idolatry of the philosophy of Karl Marx.  In America, The Communist Manifesto is the most widely taught economics text in university.  The bookstores of the most elite and prosperous communities are stocked with copies of Das Kapital. Media elites openly trumpet socialism and socialist regimes in major publications without remorse. Socialists now unironically wave banners of Stalin and Soviet flags in public parades and protest rallies. But no matter how spectacularly socialism fails, the Left have mastered the art of apologia when it comes to the writings of Marx. Somehow these failures cannot be attributed to Marxist doctrine. They are handwaved away as merely the unfortunate consequences of bad actors who either misapplied principles or were just despotic malefactors to begin with. Socialists contend either that socialism has never been properly attempted or hold up the welfare states of Scandinavian countries as model societies to which to aspire with no regard for history or market economics. Even worse, Marx’ analysis of capitalism continues to be accorded unwarranted deference, and his quasi-religious promises of earthly plenitude and social harmony continue to hold sway in the consciousness of the Left.

Whatever the reasons for the maddening endurance of this doctrine, what is needed is a stern and thorough repudiation of Marxist doctrine in the court of public opinion.  Preferably, before its adherents do any more damage than they already have done. 

Though others have set out to stamp out the mental cancer of Marxism, there is perhaps no refutation more definitive than Requiem for Marx. Edited and prefaced by former Soviet economist, Yuri N. Maltsev, Requiem for Marx sets out to disassemble and dismantle Marxism root and branch. Comprised of essays by the most notable thinkers in the Austrian tradition, Requiem for Marx lays waste to every facet of this toxic, but seductive ideology. 

Mr. Maltsev’s introduction all by itself should be sufficient to disabuse the average Occupy Wall Street proponent of any fascination with socialism, but it is merely a prelude to the battering ram of truth which follows.  Maltsev describes being indoctrinated to accept Marxist principles from a very early age up to the massive abuses, widespread corruption, indifference, repression and deception he witnessed from within the highest echelons of the Gorbachev regime. While Gorbachev enjoys a reputation in the minds of the Western public as a forward-looking politician, Maltsev paints a far less charitable portrait of a party apparatchik who lacked any intellectual curiosity, and held fast to his belief in socialism despite the large scale collapse happening throughout the Soviet Republic. Most importantly, Maltsev reminds us that rather than being some misapplication of principles, the USSR was, in fact, a sincere and faithful attempt to apply and implement Marxist doctrine.  Put that in your pipe and Bern it, Occupiers.

The chapter written by Hans-Hermann Hoppe is revelatory because he illustrates the parallels between the Austrian and Marxist analysis of exploitation. Marxists and Austrians both posit the existence of a predatory ruling class, but Marxists got it completely wrong by incorrectly pointing the finger at capitalists and producers. Hoppe draws a critical distinction between those who produce and exchange through voluntary contract and the homesteading principle versus those who extract wealth through involuntary and coercive means (i.e. the State). The former are the productive classes and the latter are the parasites.  

Gary North’s examination of Marx’ personal life, spending and borrowing habits, academic output, financial dependence, and absence of any real employment history is absolutely essential because it exposes Marx as the dilettante that he was. The fact that Marx is so heavily favored by pampered, bourgeois academics is sadly appropriate because that’s exactly what Marx himself was.  Not only was he born into wealth and privilege, he married into wealth and privilege, and managed to squander a fortune that easily placed him in the 19th century 1%. Not exactly the hardscrabble life of a working-class prole. Boasting an exhaustive set of original and biographical sources, North paints a picture of a classically narcissistic and predatory personality. Marx was deeply vindictive and spiteful towards opponents both real and perceived, demanded compliance from everyone around him, lived off the patronage of Engels and spent well beyond his means, fathered illegitimate children despite having no gainful employment, and proffered no positive theory of socialism while penning volumes of seething criticism of capitalism. Most tellingly, Marx essentially stopped publishing at age 49, and North argues that this was because Marx had reached an intellectual dead end.  For someone who’s entire theory of exploitation hinged on the idea of class exploitation, the fact that he never bothered to define “class” until the third volume of Das Kapital says quite a bit about the superficiality of his thought. North delivers a stinging rebuke to the political parasites, celebrity socialists, media water carriers and academic wankers who replicate Marx’ cult of personality, venerate his toxic swill, and telegraph their phony concern for the working man while luxuriating in the confines of their gilded fiefdoms. With this chapter alone, Gary North has driven a permanent stake into the heart of the myth of Marx as a Champion of the Working Class.

David Osterfeld’s critique of the Marxian taxonomy of historical modes of production and theory of history completely annihilates the validity of any claim that Marx makes on his system of thought being a genuinely scientific framework.  Throughout his work, Marx makes repeated references to the allegedly irreconcilable contradictions of capitalism, but it appears that few true believers in Marxist doctrine examine the contradictions within the Marxist theory itself.  Among the many confused and confusing notions which emanated from his addled mind, his theory of the inevitability of socialism receives a well deserved thrashing. According to Marx, the material forces of production develop without interruption like some sentient Borg-like hive mind which simultaneously gives rise to the exploitative bourgeois superstructure, improves material conditions and immiserates the proletariat all at once. Individual initiative and innovation play no role in his theory nor does the increased satisfaction that follows from the ongoing material improvement for the vast majority of the population. He simply presents the development of a revolutionary proletarian consciousness laboring under the crushing bootheel of the capitalist machine as an unfalsifiable a priori proposition. Most importantly, Osterfeld illustrates how Marx alternates between a sociological definition of capitalism and an economic one which, if properly distinguished, would have made a clearer separation between the mercantilist interventions of the State and the voluntary nature of market transactions. 

Picking up where Gary North and Hoppe left off, Ralph Raico uncovers the classical liberal roots of the theory of class exploitation and illustrates how Marx perverted the idea and propagated a wildly distorted vision of reality.  Marx cribbed his theories of class struggle from early classical liberal thinkers, François Guizot and Augustin Thierry, but by the end of Engel’s life, the role of the individual in the development of historical materialism had been nearly erased. Through the liberal journal, Le Censeur Européen, Thierry, Charles Comte, and Charles Dunoyer developed the doctrine of Industrialisme, or Industrialism. These thinkers put commerce at the center of society and asserted voluntary exchange as the true engine of virtue, industry, and innovation.  Most importantly, these men also drew critical inspiration from fellow Frenchman and economic theorist, Jean-Baptiste Say.  At the center of the theory of Industrialism was a harsh rebuke to the intervention of the State in economic affairs. All of these theorists correctly identified the State and its enablers as the idlers, exploiters and parasites. Marx and his followers ended up turning this analysis on its head and pitting workers against capitalists while assigning an unwarranted illusion of virtue to the expropriative power of the State.  

Coming in for the coup de grâce is the late, great Murray Rothbard. Drawing from a mind boggling collection of original and secondary sources, Rothbard argues that the Marxian pursuit of Communism was, in fact, religious in nature. Rothbard argues that not only was the Marxian pretense of secular scientific rationalism a pathetic farce, but his work had roots in religious millennarian prophecy which seeks a Kingdom of God on Earth.  Just as Marx’ economic thought was built upon the foundations of British Classicism, his pursuit of communism was merely a repurposing of the work of 16th century religious zealots who also saw inequality as a moral sin and sought redress through confiscation and conscripted labor. Rothbard focuses in particular on the first large scale attempt at Communism in Europe based on the teachings of the megalomaniacial eschatological Anabaptist, Thomas Müntzer.  Though Müntzer’s initial attempt at Anabaptist Communism in the city of Muhlhausen was another abject failure resulting in mass death and his ultimate execution at the hands of the German monarchy, his ideas carried on and were implemented by others to similarly disastrous results. The zealots who picked up the torch of eschatological Anabaptist Communism eventually gravitated to the city of Münster, and under the leadership of another set of proto-Lenins, Jan Matthys and Jan Bockelson, the first major experiment in socialist dictatorship was imposed.  All the features that defined every modern Communist dictatorship were present in the Münster experiment. Private property was confiscated, labor was coerced, disobedience was met with capital punishment, and the lionshare of the produce of society was reserved for the self-appointed elites. 

Rothbard also points out that Marx was a Christian in his youth before he adopted Hegelianism as a college student and his megalomaniacal ambitions, nihilism and abject hostility to humanity were present in his early attempts at play writing and poetry. 

Among the many failures of logic in the Marxian framework is his inability to reconcile market prices to the value of labor inputs. The entire edifice of Marxism rests on the premise that market prices must reflect the value of labor inputs and that the relationship between capitalist and laborers is exploitative by nature. Rothbard neatly emphasizes that Marxists have neither adequately responded to Eugen Böhm-Bawerk’s critique of this aspect of the Marxian system nor come to grips with the insights of the Marginalists.  

Rothbard correctly observed that ideas are notoriously hard to kill even if they’re demonstrably bad ideas like Marxism.  The fact that Marxism forms the backdrop of thought for contemporary sociology, the new secular religion of the Left, is unsurprising. Predictably, the loudest advocacy for socialism is coming from the academic class via gender studies, critical race theory and other variations in postmodern social analysis. These new school socialists have simply put a new veneer on an old formula.  The New Kingdom of God on Earth will be achieved by eradicating racism and sexism. And of course, the age old gripe against inequality of outcomes must be rectified through confiscation and redistribution (aka “economic justice”). There’s no doubt these secondhand theories emanate from the same poisonous well of thought from which Marxism itself emanates.  

The debate against socialism should have been settled long ago.  Sadly, Marxism has retained its place as the unofficial religion of the Left since the Left has no firm principles and, like their Marxist forebears, have made the State their religion. The fantasy of “equality” and the yearning for a secular morality coupled with a prefab indictment of free market capitalism all conspire to keep Marxism alive. Subsequently, academic con artists, media dittoheads, and political hacks are aggrandized and their pretentious paeans to the proletariat proliferate. Aging Boomers and their patchouli soaked, non-binary, queer positive, trustafarian progeny lured by promises of “social and economic justice” and a sweet Simon and Garfunkel soundtrack regurgitate their braindead slogans like manna from heaven while what remains of the free world marches down the road to serfdom once again.  

Perhaps humanity needs to learn its lessons the hard way by repeating its mistakes a few times. It would be nice if it didn’t have to come to that. Marx and his system have been refuted many times over, and this magnificent collection of essays has earned its rightful place as the final epitaph for a philosophy that’s well past its expiration date. It’s high time that socialists pay attention. 

Ludwig von Mises: Economic Calculation in the Socialist Commonwealth


Despite its track record of failure, oppression and misery, socialism has enjoyed a seemingly endless parade of apologists and defenders.  As improbable as it seems, the argument for state socialism was hotly debated in the 20th century. This inexplicable allure is surpassed only by the seemingly deathless appeal it holds to this day.  While there are many academics who are eager to put a new coat of paint on socialism’s rotten edifice, it seems that too few pay attention to the individuals who challenged socialism and were proven correct. This is likely due to the fact that this is exactly what academic elites and apparatchiks want. Regardless, everyone should read what is widely regarded as the definitive demolition of the argument for the socialist state, Ludwig Von Mises’ 1920 essay, Economic Calculation in the Socialist Commonwealth. It is important not only because it identified the failures of the socialist state with devastating accuracy, but because it is a purely economic critique of socialist economics.

Mises’ argument is built on three central theses:

  1.  A socialist state with a monopoly on production goods is effectively destroying the natural market price system and rendering rational economic calculation impossible
  2. A socialist state which prioritizes labor based valuations on consumer and production goods is ignoring individual subjective preferences
  3. The socialist state destroys personal responsibility and initiative by removing the incentive to economize

Mises draws an important distinction around production goods and consumer goods at the outset.  He observes that consumer goods, the final result of production which a consumer can use to fulfill a desired end, are valued in monetary terms.  Consumers can subsequently engage in trade using monetary exchanges amongst themselves in order to fulfill their subjective preferences.  The entrepreneur, on the other hand, is not afforded the same opportunity.  In order to prioritize production goods and engage in the act of economizing, the entrepreneur needs to perform economic calculation through a free floating price system which emerges through exchange in a system of private property.  Because the socialist state monopolizes production goods and dispenses them through an arbitrary and bureaucratic allocation process that’s devoid of rational pricing, the entrepreneur is hamstrung. An efficient division of labor cannot even take place.  No single human mind or collection of human minds can replace the social nature of the price system in a competitive free market.

Because Marxism, the philosophical font of virtually all socialist economics, posits that an exploitative relationship exists between the entrepreneur and the laborer, socialists attribute an inherently predatory quality to exchange relations in the production process. The entrepreneur is somehow extorting and expropriating from each laborer and depriving him of the surplus value that results in the final exchange of consumer goods. Socialists have wrongly assigned virtue to the state monopoly on production goods, and subsequently, end up destroying the uniquely human capacity for rational calculation. Once socialists have gained control of the apparatus of the State, there is no underlying set of principles by which the socialist state can proceed that is even remotely comparable to the price system of the free market.

When Marxism solemnly forbids its adherents to concern themselves with economic problems beyond the expropriation of the expropriators, it adopts no new principle, since the Utopians throughout their descriptions have also neglected all economic considerations, and concentrated attention solely upon painting lurid pictures of existing conditions and glowing pictures of that golden age which is the natural consequence of the New Dispensation.

Marxism also posits a juvenile theory of alienation inherent in capitalism, but attribute the malady to the wrong source. Socialists bemoan the allegedly dehumanizing qualities of free market exchange while conveniently ignoring the fact that state intervention exists everywhere. Modern neoclassical macroeconomics reinforce and perpetuate an unchallenged activist role for the state in economic affairs as well as the reduction of economic life to increasingly abstract mathematical models.  As Dr. Joseph Salerno astutely argues in the essay’s postscript, it is exactly the reverse.

Abolish all, or even one, of these institutions and human society disintegrates amid a congeries of isolated household economies and predatory tribes. But not only does abolition of private ownership of the means of production by a world embracing socialist state render human social existence impossible: Mises’s analysis also implies that socialism destroys the praxeological significance of time and nullifies humanity’s uniquely teleological contribution to the universe.

Dr. Salerno goes further to argue that despite Mises argument against full scale state socialism, the argument retains its relevance to contemporary state interventions in healthcare and energy production.  Whether they be tax breaks, subsidies or loan guarantees, the myriad interventions and subventions in the managed market economy create numerous distortions. Perverse production incentives, misallocation of resources, and institutionalized mediocrity are but a few of the deformations which result from keeping entrepreneurs insulated from the forces of supply and demand.

Mises predicted the failure of socialism with devastating accuracy years before the collapse of the Soviet Union. While China’s version of market socialism is undoubtedly an improvement over Mao’s regime, their economic and monetary policies have lead to massive instability and mismanagement of resources which lend further credence to Mises core argument.

Almost a full century has passed since the initial publication of this essay.  Despite socialism’s continued failures here and abroad, the champions of socialism continue to flog the rhetoric of a discredited ideology while remaining seemingly oblivious to the intellectual and moral void at the core of their pursuit.  The leading lights of socialist thought have not offered any meaningful rebuttal to this problem since perhaps Oskar Lange, but as Mises already correctly argued, mathematical models cannot replicate human action.

Socialism offers nothing but a license for the unlimited expansion of state power packaged as a litany of grievances dressed up in a pretense of intellectual profundity and moral rectitude.  The promise of “equality” is never achieved, but socialists peddle these pathetic fantasies with the same chicanery and mendacity as a televangelist. Mises offered a theoretical framework and a set of economic principles that were grounded in sound scientific reasoning and a respect for individual liberty.  His arguments deserve a proper reckoning.


Henry Hazlitt: Economics in One Lesson


This book holds a vaunted status amongst libertarians. Not only does it live up to its reputation, it’s a damn shame that this isn’t the go-to text for anyone seeking a rational and clear-headed approach to economics.

Hazlitt builds his case by taking the central fallacy found throughout mainstream economics. This fallacy was famously revealed in the Frédéric Bastiat parable, That Which is Seen and That Which is Unseen, and he proceeds to apply it to each realm of economic life. By applying this logic, he demonstrates how the various manifestations of government intervention destroy wealth, savings, and positive incentives to work and produce.

Stated very simply, the lesson is this:

The effects of economic policy cannot be evaluated in terms of its effects on one group, but on all groups.

Not only do these fallacies persist, but they are accumulating strength and being accorded cultish deference.

Hazlitt covers all the bases in his analysis. He opens with the one-two punch of the fallacy of destruction followed by a withering exposé of the production disincentives resulting from taxation. Hazlitt runs a steamroller of truth over every conceivable government policy initiative and its accompanying deformation. The effects of automation, subsidies, loan guarantees, tariffs, trade quotas, industrial policy, price fixing, rent control, minimum wage, and inflation are all given an airing.

The opening chapter exposes the perverse obsession with destruction as an economic incentive that persists to this day. One only needs to peruse the pages of Rolling Stone to find this doctrine in the insufferable moronic blathering of Jesse Myerson. He openly praises rioting as some kind of economic boon and mutates the broken windows fallacy into an ugly article of faith.

The chapter pertaining to the rise of automation is particularly fascinating since fantasies of a “post-labor” economy are gaining traction in the media. The widespread belief of the imminent arrival of a world in which robots displace human labor hinges on the assumption that there is a finite amount of work to be done in the first place. Or perhaps the public fails to grasp the role price floors on labor may have played in hastening the creation of the automation in the first place. Either way, the belief of a Star Trek-like world of plenitude has taken root.

On the issue of free trade, Hazlitt argues that people are correct to be suspicious of free trade agreements like the TPP and NAFTA, but are mistaken to attribute any benevolence to the very idea of a managed trade agreement in the first place. Especially if it’s cloaked in gauzy rhetoric about workers and the environment.

Just what the government planners mean by free trade in this connection I am not sure, but we can be sure of some of the things they do not mean. They do not mean the freedom of ordinary people to buy and sell, lend and borrow, at whatever prices or rates they like and wherever they find it most profitable to do so. They do not mean the freedom of the plain citizen to raise as much of a given crop as he wishes, to come and go at will, to settle where he pleases, to take his capital and other belongings with him. They mean, I suspect, the freedom of bureaucrats to settle these matters for him. And they tell him that if he docilely obeys the bureaucrats he will be rewarded by a rise in his living standards. But if the planners succeed in tying up the idea of international cooperation with the idea of increased State domination and control over economic life, the international controls of the future seem only too likely to follow the pattern of the past, in which case the plain man’s living standards will decline with his liberties.

His analysis of minimum wage is as elegant a refutation as you’ll ever read. He argues that the minimum wage is more correctly viewed as a minimum price law. If the price of labor is artificially raised, the price of production is raised. Populist politicians always attempt to sell minimum wage law as a boon for low skill labor and ignore the adverse effects. Sadly, the fervor for this boondoggle remains as strong as ever.

The most potent analysis by far is the section dealing with inflation. As we enter our 10th year of ZIRP administered by our allegedly benevolent overlords at the Fed, the ill gotten gains and economic perversions abound. While politicians beat the drums of hate and envy, they draw more support for further expropriation as a corrective.

Economics in One Lesson is a timeless classic and the lesson contained in its pages burns with even greater urgency. It’s easy to look at the current state of affairs and despair, but Hazlitt ends with an optimistic note. The principles for which Hazlitt fought are indeed proliferating, but the voices agitating for socialism grow louder as well. The best defense against the lazy and callous recriminations of apparatchiks and statists is this righteous lightsaber of reason left for us by a Jedi master of economics.

Ron Paul: End the Fed


Prior to my full conversion to libertarianism, I held two opinions of Ron Paul.  On the one hand, I admired his apparently principled and consistent vision of limited government conservatism. He seemed to walk the walk. Seeing him openly trash the legacy of Saint Reagan in the Republican primary debates lives in my memory as one of the single biggest moments of political audacity I’ve ever witnessed. 

On the other hand, I regarded him with a sort of bemused, smug condescension.  His views seemed painfully simplistic at best and outright delusional bordering on conspiracy theory territory at worst. In other words, the very attitudes to which I’m subjected on a daily basis on social media whenever I assert my point of view! 

His argument against the Federal Reserve seemed tainted with just a bit too much of an InfoWars/John Birch Society stink.  And there was so much establishment opinion deriding it as naïve, I simply couldn’t allow myself to go there.  Marx had delusions of an omnipotent state, so why should I entertain delusions of a limited state whose scope rendered it seemingly irrelevant? 

Needless to say, I eventually came around to a purely libertarian view, and thankfully, I can now fully appreciate the magnitude and elegance of what Mr. Paul has achieved in 210 pages. 

This is the single most potent political argument of our time. 

This book is equal parts history lesson as well as a primer on Austrian business cycle and hard money theory embedded in a minarchist polemic. 

Mr. Paul is a master of brevity and he succeeds in packing a lot of great stuff in a short space.  After a brief overview of personal and American economic history dotted with generous references to his Austrian forebears (Rothbard, Mises, Hazlitt, et al), Paul lays out his case. 

He devotes two chapters to transcripts of his exchanges with Greenspan and Bernanke and exposes them as cagey, prevaricating gasbags.  Mr. Paul revels in needling Greenspan over his abdication of his objectivist convictions around hard money, and his responses are exactly the kind mealy mouthed obfuscating ramblings that define all too many bureaucrats. 

But even if Greenspan suffered from acute bureaucratrititis, Bernanke makes him seem generous and accommodating by comparison. 

After giving a brief tour through the Fed’s historical origins, the connection between the warfare state and central banking, business cycles before and after the Fed, the depreciation of the dollar, and the current state of economic affairs, he lays out the argument in four parts.  The philosophical, the Constitutional, the economic and the libertarian. 

The moral case is certainly compelling on its own. Here, he touches on the secrecy of the Fed and its ability to inflate without restriction. I certainly believe that the roots of the illusion of something for nothing, a free lunch, start here. He exposes the collusion between corporate interests and the state that everyone can see, but few trace down to its roots in the halls of the Eccles building. 

The only thing that undermines this section are his attempts to bolster the case by making reference to the Biblical passages which specify hard money as legitimate currency. Despite the cognitive dissonance inherent in their own fealty to the state, statists denigrate the notion of free markets and libertarianism itself as religious belief.  This strikes me as an appeal to tradition and helps neither the case for libertarianism or hard money. 

Ironically, the Constitutional case, though sound in terms of a strict reading, is actually the weakest. Article 1, Section 10 of the Constitution is explicit.  He proceeds to torpedo this argument a few pages later.

In reality, the Constitution is incapable of achieving what we would like in limiting government power, no matter how well written.

He goes further by showing how the Supreme Court itself has been largely ineffectual in ruling in favor of this reading of the Constitution. Easily the least compelling of the arguments. 

He returns to solid ground with the economic case.  The regime of the floating dollar and interest rate management by technocratic planners has bred an unhealthy incentive to borrow and consume in excess. It has undermined economic growth and enshrined a culture of permanent moral hazard where people continually overlook the source of the malignancy and politicians prey on this ignorance by insisting that another expansion of the regulatory state will deliver the Real Change. 

It is revealing that Keynes and Marx, two of the left’s intellectual leading lights, were explicit about the impact of monetary inflation and the importance of central banking in maintaining authoritarian rule. The former once repudiated it as a malicious invisible tax, but like Greenspan, abandoned his principled stance as his influence grew.  The latter advocated for it openly and without reservation.  The legacy of totalitarianism and suffering that was carried out under the banner of Marxism is explicit and undeniable. 

We are seeing the poisonous outcomes of this arrangement unfold once again as the current catastrophe in Greece attests. 

And what more can be said about Ron Paul that hasn’t already been said?  Without a doubt, he has one of the most interesting stories in American politics. He has certainly earned a place in the history books alongside the likes of Wright Patman as one of the most outspoken critics of the Fed. There’s also no doubt that he did everything he could to stop the encroachment of the state and that his political career was just as much about advancing the ideas of the liberty movement as it was about trying to stop bad legislation.  

Would we be better off as a country if more politicians were as principled as Mr. Paul? 


But not all politicians are and after 20+ years in politics, all it really got him was a reputation as a gadfly.  Don’t get me wrong. The fact that he got as far as he did is nothing short of remarkable, but the establishment forces have clearly prevailed.

And this is where the minarchist argument runs out of gas for me. Despite what was an apparently earnest attempt to set up a framework which would presumably keep government limited, we have the biggest government in the history of human civilization. There is no “change from within” to be made. His son is proving this point each day as he tries to contort himself into new and increasingly contradictory shapes.  A 15% flat tax and yet somehow the entitlement state can be funded by business taxes? Right.

The cause of liberty must be waged in the battlefield of ideas. Not the ballot box. 

Keynes famously derided opponents of state intervention with the oft quoted line, “In the long run we are all dead”.

This approach has been tried and the verdict is in.  

End the Fed. 

David A. Stockman: The Great Deformation


This book is absolutely, positively essential for anyone who’s even remotely interested in economics, finance or American history.

I’m going to go out on a limb and say that this is one of the most important political and economic books ever written.

Yes, it’s that good.

As a libertarian and as someone who’s worked in banking and finance my entire adult life, I’m accustomed to hearing antipathy toward Wall Street and the financial complex. After the 2008 collapse and bailout, I empathize with those who regard the system as predatory.

Unfortunately, the current state of affairs makes it difficult for those of us advocating for free markets to make the case for freedom when people generally perceive “free markets” not only to be the source of everything that caused the collapse, but pretty much anything else that adversely affects humanity. From climate change to racism to income inequality to rape, capitalism gets the finger of blame for every malady that plagues society. Since the time Marx enshrined whinging about the bourgeoisie as a virtuous guiding principle, the very notion of “capitalism” has become freighted with increasingly negative connotations.  

Well, socialists, Occupiers and capitalism haters everywhere, it’s time to set the record straight. David Stockman has laid down a devastating and record settling case against the mutant strain of state capitalism that is infecting the world today.

If you are really interested in learning about how the state corporate financial complex came to be the reviled beast that it is, this is the book to read. Put down Piketty and open your mind, because Stockman lays down a century’s worth of narrative busting truth in this book.

From the New Deal up to the housing collapse of 2008, Stockman dissects and disassembles one narrative after another in painstaking detail. No administration or monetary authority is spared.

In opposition to virtually all of the received wisdom, Stockman takes FDR’s New Deal out for a thorough demolition. From the Thomas Amendment’s destruction of hard currency to the ad hoc grab bag of bureaucratic agencies which bloated the administrative state to the origins of farm belt cronyism, no doubt remains that FDR’s true legacy is “the patron saint of crony capitalism.”

A final attempt at fiscal and monetary restraint was achieved in the Eisenhower administration. Between Ike’s budget discipline and the steady hand of Fed Chairman William McChesney Martin, the “old time fiscal religion” that now lives as GOP rhetoric more than reality was an actual phenomenon for a couple short years.

It proved to be a short lived victory. The Kennedy administration was the beginning of the end of fiscal and monetary restraint. After an initial promise to maintain the stability of the price of gold and the convertibility of the dollar under the Bretton Woods framework, Kennedy eventually succumbed to the ascendant gospel of Keynesian “full employment” budgets and tax cuts paid for on federal credit.

After the JFK administration’s capitulation to Keynesian dogma and the combined profligacy Johnson’s domestic spending expansion and war largesse, America’s fiscal house took a turn towards permanent deformation.

The only person whose legacy receives an even more punishing rebuke than FDR is Tricky Dick Nixon. Richard Milhous Nixon was solely responsible for the complete and total degeneration of American fiscal and monetary discipline. Between price and wage controls and the closing of the gold window, Nixon all but assured the rise of a permanent regime of statist economics. Financial markets would be the province of debt fueled speculation and bubble finance while giving rise to budget deficits without pain. The most eye opening of Stockman’s Nixon era claims are twofold: the silent destruction of Glass-Steagall through floating the dollar and the flagrant error of indexing Social Security to inflation in 1972.

Sadly, the progenitor of this deformation is none other than Milton Friedman. Starting with his misdiagnosis of the Great Depression, the flawed theory of a controlled expansion of the money supply took root amongst the political class. From this deeply flawed thesis, the FOMC committee transformed into an unelected politburo of central economic planning which heavily favored the financial class over the real economy.

It is supremely ironic that one of the 20th century’s greatest libertarian intellectuals laid the foundation for what Stockman argues is the mother of all deformations: central economic planning by fiat currency. A form of socialism that is perhaps more insidious than the more overt manifestation since its effects are invisible to most citizens and the blame ends up being assigned to capitalism itself.

From this single act of ultimate political hubris and ignorance, the Pandora’s Box of financial engineering was unleashed.

He delves into the history of Leo Melamed, the Chicago Mercantile Exchange, and the rise of currency and T-Bill futures; innovations that carried an aura of free market ingenuity, but ushered in a new era of speculative finance which added nothing to the real task of capital formation or job creation. Once the world shifted to a regime of floating currency, the genie was out of the bottle. Central bankers were in a perpetual battle with market forces that were made volatile by their own policy decisions. Exchange rates were subject to wild and unpredictable fluctuations, central bankers stumbled and bumbled through phenomena they could never truly manage while Wall Street gorged on the elixirs of leverage and easy credit.

Despite Paul Volcker’s final attempt to restore a semblance of sound monetary policy, Alan Greenspan abandoned his Objectivist roots and embraced the power of the Federal Reserve to propel stock prices and speculation. Between the Keynesian defense buildup and loose monetary policy enabled by the Greenspan Fed, the mythology of pain free deficit driven prosperity which ultimately defined the Reagan era was enshrined.

By the end of the Reagan era, the three dogmas of statist economics, Keynesianism, supply-side and monetarism, were accorded unquestioned deference.

From these central deformations, Stockman skillfully traces the ascent of the Wall Street financial complex that we have come to know.  Originating at the at the Salomon Brothers trading desks, the model of “long and leveraged” became the template that would be replicated in every investment bank on Wall Street.

While I empathize with those who regard our brand of state capitalism with cynicism and contempt, I genuinely hope that skeptics and cynics will take the time to read this book to understand that the myth of casino style easy money from the stock market is a phenomenon made possible because of central bankers.

Stockman addresses three phenomena of contemporary finance that should be of interest to progressives or anyone who regards the outsize gains of the Wall Street complex with suspicion or disdain: the hedge fund and private equity complex, the entire panoply of leveraged speculation on which it’s built, and financial bubbles which feed them.

In all three cases, Stockman argues that the Greenspan/Bernanke Put, the Fed’s implicit guarantee of lowering the funds rate into negative yield if stock prices dip below a certain threshold, is the lynchpin behind an entire host of speculative deformations.  Primary among these  phenomena are stock buybacks, M&A, and LBO’S.

The phenomenon that may hold the greatest interest to people is Stockman’s detailed but imminently readable analysis of the housing bubble. Contrary to the standard wisdom, this was not in any way a natural phenomenon of the free market. Warehouse credit lines, GSE’s, a legislative agenda and an accommodating Fed all conspired to create a speculative feeding frenzy which met an inevitable unhappy ending.

Perhaps the most provocative claim is his argument that the 2008 collapse was an artificially ginned up panic that was confined to Wall Street and should have run its course. Even more provocative is his claim that AIG did not need a bailout. It’s radical shit and it flies in the face of virtually all conventional wisdom, but his case is very persuasively argued.

The so-called green energy “investments” of the Obama administration are hauled out into the daylight for a righteous thrashing.  Little did I know that even America’s Tony Stark, Elon Musk, fed at the government trough.  The colossal waste of Solyndra debacle is laid bare in fair detail and the elitist hubris behind it will make your blood boil.  I’m completely in favor of the evolution of new technology, but the insistence on government support has turned this effort into yet another denomination in the Cult of the State which has little regard for whether the Green Revolution reality is anywhere near the rhetoric.

Stockman rounds out the book with a tour through the various failures and deformations of the market and the sycophants, parasites and opportunists who profited from them. This cesspool of corruption was made possible because of the abandonment of fiscal and monetary discipline and made worse by a class of political hacks who shamelessly feed off peddling the delusion of a free lunch. Among these deformations and predators are the subprime auto loan complex, the crony capitalist parasites who feed at the federal trough, the unsustainable welfare state, and the swarm of vulture capitalists who gorge on state-enabled windfall profits.

Stylistically speaking, Stockman is biting and acerbic throughout. My kind of guy. The sobering bluntness of his message is leavened by some healthy sarcasm and contempt.

The book is chock full of meme-worthy quotes and turns of phrase that can only be described as Stockmanisms.  For example:

Full-Retard Antediluvian: The Forgotten Standard of Honest Public Finance

And many, many more.

He’s a bit repetitive, but I don’t begrudge him on this point because I feel that it ultimately gives an accretive power to the core themes.

Make no mistake, Stockman’s prognosis for the state is bleak. This is a pessimistic view of the deterioration of public finance in the years to come.  Stockman predicts an unpleasant day of reckoning for all of us.

This doesn’t mean that he’s unwilling to proffer solutions. He has many, but they’re so radical that he admits their inherent impossibility in the current political climate right off the bat.

Stockman’s programme for reform is similar to the one proffered by Ron Paul; a radical separation of market and state, a full throated call for a rollback of the warfare/welfare state, and a return to sound money.

Though I applaud his sincere attempt to lay out a course of action, my concern (aside from the fact that it’s a form of political suicide in and of itself) is the same one that lies at the heart of all minarchist arguments. Even if this agenda were to be fulfilled, what would prevent the state from engaging in monetary and fiscal profligacy recidivism?

Regardless, this book is nothing short of a tour de force.  It has my highest recommendation.