Friday, November 2, 2012

Who Are the Revolutionaries in a Free Market Revolution?

On the dedication page of Ron Paul’s The Revolution: A Manifesto we find these words:
To my supporters:
I have never been more humbled and honored than by your selfless devotion to freedom and the Constitution.
The modifier “selfless” is intended as a moral tribute.  Imagine instead if he had written “selfish.”  Would that kill the Paul freedom movement?  Certainly there would be many who would question his choice of words, though most would probably shrug it off as an unfortunate typo. 

But if he had written “selfish” quite intentionally, how many people would regard that as a moral tribute?

What are the facts?  Can we really say that people who fight for freedom are acting in self-denial?  Wouldn’t freedom be an infinitely better condition to live under than the controlled society we now have or the totalitarian slave state we’re edging towards?  And if this is true, wouldn’t it be correct to say Paul’s supporters act in their conscientious self-interest, and therefore their support should be considered selfish?

So why didn’t he use that word?

As authors Yaron Brook and Don Watkins argue in their stimulating book, Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government, it is the widespread inability to affirm the self that accounts for the continuing decline of freedom.  And since political freedom implies economic freedom, traditional selfless morality becomes capitalism’s greatest enemy, as they discuss in detail.

The Triumph of Greed?

When the financial crisis arrived in 2007-2008, capitalism’s enemies had no trouble spotting who they believed were the culprits: greedy businessmen and speculators.  Once again, the government had trusted them with freedom, and once again their insatiable greed brought the economy to its knees.  But Brook and Watkins point out what should be obvious, that freedom in economic affairs had been increasingly restricted for decades:
[B]ecause the conventional view of selfishness remained entrenched, it was not the “public servants” in Washington who took the blame . . . .

The true lesson of the financial crisis is exactly the opposite of what the pundits concluded.  The conventional view is that the free market failed.  In fact, it was the unfree market that failed, and it is more freedom that is the solution. [p. 58]
As they tell us later in discussing soaring health care costs,
It’s no accident that we don’t have a computer crisis, or a hair salon crisis, or a veterinary crisis.  Nor is it an accident that we did have a housing and financial crisis.  Along with housing and finance, medicine is one of the most regulated industries in the United States . . . [p. 194; emphasis added]
But wait - Bernie Madoff was selfish, was he not?  He was trusted and left free to gain as much money as he could, which for him meant cheating his clients through a fantastic Ponzi scheme.  Could it not be argued that the combination of freedom and selfishness cost his clients billions?  One of his clients, a French aristocrat named Rene-Thierry Magon de la Villehuchet, was so heavily invested he was found dead of an apparent suicide after Madofff was arrested for fraud.  Ask almost anyone to name an example of a selfish person and Madoff becomes a prime candidate.  “To be selfish is to be like Madoff,” the authors write, “to screw anyone, even family and friends, in order to get more, more, more for me, me, me.  Madoff is just the latest poster boy for the evil of selfishness.” [p. 63]

But there’s a problem with this portrayal of selfishness - it includes people who don’t swindle others to get ahead.  It includes people who make a lot of money by producing goods that others value.  It includes people like Steve Jobs, “who was routinely derided as selfish” and was condemned for focusing on profit rather than philanthropy.  A Wired magazine commentary in 2006 described him as “nothing more than a greedy capitalist who’s amassed an obscene fortune.  It’s shameful,” adding that “he skates away from the responsibilities that come with great wealth and power.”

Brook and Watkins reject this analysis:
Does it really make sense to equate producers like Jobs with criminals like Madoff - to accuse them of the same dark motive and the same moral crime (in spirit, if not in scale)?  One creates wealth; the other steals it.  One thrives by trading with other people; the other destroys the lives of everyone he touches.  One works incredibly hard to build a product or company he can be proud of; the other spends his time trying to cover up the fact that he has nothing to be proud of. [p. 65]
 Anyone who takes the time to look at how businesses actually succeed will find, in most cases,
not ruthless exploitation but mutually beneficial production and trade; an Apple economy, not a Madoff economy.  [p. 67]
This runs counter to the conventional notion of trade as a zero-sum (win/lose) game.  Yesterday I bought groceries at a local supermarket.  If trade is a zero-sum game, then one of us lost.  I came home with the groceries I wanted, and the supermarket had the money it wanted - a win/win exchange.  What we each gave up in trade, we gave up voluntarily.  I didn’t have to settle on that supermarket; I could have gone elsewhere.  No one forces the supermarket to stay in business; if it can’t make a profit, it will close.  Right now it’s mutually beneficial for me to shop there and for the store to stay open.  In this sense, each of us was pursuing his rational self-interest, what Ayn Rand defined as selfish.  The store doesn’t sell groceries under cost as a matter of charity, nor do I shop there to do it a favor.

Should the supermarket do more than offer goods I want at prices I can afford?  Should it be “skating” toward other goals that certain others regard as its “social responsibilities”?
To get them to swallow the idea that it’s their duty to serve and sacrifice, the altruistic push for corporate “social responsibility” has taught businessmen that their choice is either some monomaniacal focus on the “bottom line” - one that involves ignoring many of the factors that determine a company’s bottom line - or a mawkish pursuit of a “service” agenda. . .

Any company that achieves productive success [such as my local supermarket or Apple] should self-confidently reject calls to “give back.”  It created wealth - it has nothing to atone for.
As the authors conclude, “the path to profits is paved in principle,” not chicanery or crime - something the skaters of this world will likely never understand.

The morality of sacrifice vs. the morality of rights

The authors note that the “dictatorial mentality that seeks power over others does not preach selfishness but self-sacrifice.”  As a character in The Fountainhead pointed out, sacrifice implies that someone will be collecting the sacrificial offerings.  The morality of sacrifice, of exploiter and exploited, underlies Big Government.

Free Market Revolution offers many refreshing insights on long-standing issues.   Following Rand, for instance, it tells us that “a right is a moral principle defining and sanctioning a man’s freedom of action in a social context,” then by way of elaboration says, “A society of rights is one in which you are as free as you would be alone on an island.”

Think of Tom Hanks in Cast Away, the authors suggest - he had no “right” to a survival manual even though he needed one, no “right” to dental care, no “right” to matches for starting a fire.  His only right was the freedom to figure out all those things for himself.  The notion of “a hungry man is not free” didn’t go over well on the uninhabited island.  He either learned to catch crabs or starved.  He even had to solve the problem of companionship on his own, by drawing a face on a volleyball and engaging in "conversation."  Unfortunately for the purveyors of sacrifice, there was no one around that the Hanks character could serve, other than himself.  If he wanted to live, he had to be selfish, he had to make a profit, in the best sense of those words.

As the authors note, “a society of rights is one that removes coercion from human affairs.”  [p. 131] Modern “rights” are claims to certain outcomes, not freedom of action.  What makes modern rights possible is the state, which forces some people to provide for others.  “Rights” in the modern sense increase coercion rather than remove it.  The result is bigger, more expensive, more intrusive government.

What about the workers?

It’s frequently asserted that workers need protection from the ravenous clutches of big business and therefore beneficent coercion on government’s part is required.  Notwithstanding the moral implications of this claim, how does this square with the facts?  Brook and Watkins tell us that real wages doubled between 1860 and 1890, a period in which the population was exploding.  Not only were workers making more, they were working less, with the average annual hours worked dropping from 3,069 in 1870 to 2,632 by 1913.  Because we didn’t have a central bank inflating the money supply and thereby imposing an unseen tax on dollar holders, the cost of living was going down.  Gently falling prices were the norm. 

In this century, by contrast, real median household income has been stagnant since 1968, due to policy-induced inflation (cheaper dollars) and the cost of government (taxes).  And it takes twice as many people (husband and wife both working) to maintain that stagnation today. 

The Invisible Austrians

My one serious complaint with Free Market Revolution is the authors’ claim that
Perhaps the most notable defense of capitalism in recent years is Arthur Brooks’s The Battle, a book that has received endorsements and accolades from political heavyweights, from Paul Ryan to Newt Gingrich to Karl Rove. . . .

But for all its virtues, The Battle suffers from two major problems: It doesn’t actually advocate capitalism, and it cannot defend the pursuit of happiness.
First, the political heavyweights the authors name are neoconservatives, who are as far-removed from free markets as the political left.  It’s hardly surprising they would endorse a book that speaks in “vague generalities” about liberty and limited government, and that “never explains what capitalism is.” [p. 212]  No politician today became a heavyweight by supporting limited government, free markets, and sound money, though of course neocons are obliged to pay lip service to the foregoing to keep their conservative credentials.

More important than this, however, is the absence of any mention of the rise of the Austrian school of economics in recent years, especially since 2007.  What about Tom Woods’ books - Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, The Politically Incorrect Guide to American History, Rollback: Repealing Big Government Before the Coming Fiscal Collapse, Nullification: How to Resist Federal Tyranny in the 21st Century - not to mention his Liberty Classroom, which purports to teach “real history and economics” while you’re driving your car?   We could add books by Thomas DiLorenzo (How Capitalism Saved America, Hamilton’s Curse), Robert Higgs (Delusions of Power, Against Leviathan: Government Power and a Free Society), Robert P. Murphy (Lessons for the Young Economist, The Politically Incorrect Guide to the Great Depression and the New Deal, The Politically Incorrect Guide to Capitalism), Peter Schiff (The Real Crash: America's Coming Bankruptcy---How to Save Yourself and Your Country, How an Economy Grows and Why It Crashes) and yours truly (The Flight of the Barbarous Relic, The Jolly Roger Dollar: An Introduction to Monetary Piracy) to the mix as well.  Why is there no mention of the proliferation of free market analysis at or of the Mises Academy that offers on-line studies in economics, political economy, history, and even a course on Atlas Shrugged?  And of course Ron Paul, about whom the writers are silent, has become capitalism’s champion in recent years, especially among young people and political activists.  Could it be that mentioning the Austrians - especially Ron Paul - is forbidden because of their foreign policy of peace?

If so, perhaps the authors can explain in a revised edition how maintaining a military empire worldwide and invading countries without provocation are compatible with free markets and the nonaggression axiom.

George Ford Smith is the author of three books, available on Amazon.  Visit his website.

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