Statistics: Friend of the Interventionist, Enemy of Liberty
In the Clichés of Socialism number 57 Murray Rothbard makes the case against government statistics. Of course not all statistics are bad, but Rothbard argues that without government collected data significantly fewer statistics would be collected in a free society.
For advocates of liberty, the problem, beyond the wasted costs of collecting the data, is how critical data collection is for interventionist policies. Essentially the statistics are the only means of obtaining the knowledge necessary to “plan” and “reform”.
Businessmen and consumers, on the other hand, receive the information to achieve their plans through the market. This is possible because prices, which contain the relevant information needed by agents, act as signals. Given this, it’s no wonder Rothbard declares, “statistics, so vital to statism, its namesake, is also the state’s Achilles’ heel.”
This article is particularly interesting given the intellectual context within which the article was written. The majority of scholars at the time thought socialism was both morally and economically superior to capitalism. This is what Khruschev meant when he declared, “We will bury you!”
Intellectually, in the 50s and 60s, the failures of socialism were not attributed to the inherent difficulties of socialist planning but rather to institutional problems. The Socialist calculation debates, which took place in the first half of the century, were seen as over and many of the lessons were incorporated into a more sophisticated theory of planning. Mises and Hayek had lost but not without their ideas helping to fix the problems inherent to planning. Pure socialism was indeed impossible, as Mises showed, and was thus replaced by market socialist theories from economists like Abba Lerner (ironically a student of Hayek at LSE). To overly simplify, the market socialist systems attempted to mimic the market and to do so it needs statistics!
Still, in this article Rothbard goes against this intellectual grain and assumes that Mises and Hayek were right all along (which history now seems to agree with). Thus, in order to stop the planners, Rothbard proposes, the libertarian would do best to eliminate government statistics. While the context of our current times is certainly different, Rothbard’s point is no less important.
So a Capitalist Walks into a Bar…
Conjure up an image of the average capitalist. Did you imagine a comedian or at the very least some sort of droll character? Probably not, as capitalists seems to have earned a different stereotype. Most people probably imagine the likes of Ebenezer Scrooge, Mr. Potter from It’s a Wonderful Life, or the type of characters who have “rightly” earned the title of robber baron due to their “cutthroat ruthlessness.” Even those readers who know better, being educated in economic theory (by the likes of Adam Smith or Ludwig Von Mises), and would be sympathetic to the capitalist, probably did not imagine a witty wisecracker. Still, in this article, libertarian journalist and Albert J. Nock Protégé, Frank Chodorov makes the claim that Capitalists are Funny.
The humor of the Capitalist, in Chodorov’s view, comes not from some dry wit that goes over most of our heads. Rather it comes from, unbeknownst to him, his self-destructive actions: he funds an ideology counter to his interests (and societies in the long run). Chodorov argues that most capitalists give money to support their alma mater once they are gone but do not realize what is actually being taught.
This is unfortunate. As Nobel Prize-winning Austrian economist F.A. Hayek pointed out, the intellectuals propagate ideas through society. These intellectuals do not necessarily need to be particularly brilliant, they may even be flat out wrong, but this does not stop their ideas from changing the world. Reading Chodorov’s article should make anyone who is a supporter of the freedom philosophy happy that organizations like FEE exist today but also make us realize how much farther we still have to go.
A Q and A With Ayn Rand
Ayn Rand’s Textbook of Americanism, written in 1946, was originally to be published in the Vigil, a publication of the Motion Picture Alliance for the Preservation of American Ideals, as a number of serials and then later compiled together in one book.
Only the first two or three serials were ever written (all compiled together here). Rand considered this a side project for herself that would help clarify the ideas and terms needed to defend liberty and individualism. Given this goal for the project Rand thought it would be helpful for FEE’s Trustees and staff.
As she said in a letter to Leonard Read, “I hope your staff and trustees will study it (the Textbook of Americanism) carefully, as I know that it will be valuable to them in helping them to avoid giving our case away.” This file, which you can download at the link below, was the circulated copy. It consists of ten questions and answers (two more questions and their answers can be found elsewhere on line, see here) concerning the difference between individualism and collectivism.
The issues raised in the textbook really do attempt to uphold individualism and destroy any collectivist mind set. For as Rand says on page 14, “Collectivism goes a step below savage anarchy: it takes away from man even the chance to fight back. It makes violence legal – and resistance to it illegal. It gives the sanction of law to the organized brute force of a majority (or of anyone who claims to represent it) – and turns the minority into a helpless, disarmed object of extermination. If you can think of a more vicious perversion of justice, name it.”
Maybe Rand was planning on telling us what she really thought of collectivism in the unwritten parts but regardless this unfinished textbook makes for an informative and entertaining read.
Guess Who’s Coming to Dinner?
Ludwig Von Mises and Ayn Rand were two of the Twentieth Centuries most important advocates of the free market. Mises treatise on economics, Human Action, has been, and is a source of inspiration for many economists. And as for Rand there is even a saying “It usually begins with Ayn Rand,” as most young libertarians start off reading Atlas Shrugged. The two did have a great respect for each other and agreed on many points particularly on the role of the market, individualism, and liberty just to name a few.
There were, however, also some points of disagreement. Rand labeled her philosophy Objectivism. This stood in contrast to the radical subjectivism of Mises’ work within the Austrian tradition. For example, money, even the gold standard, for Mises, derives its value from the subjective preferences of individual agents but for Rand gold is an objective value. This can be seen in many of the speeches made by characters in Atlas Shrugged. The character Fransico d’Anconia, in his famous speech on money in the chapter the Aristocracy of Pull says, “Gold was an objective value, an equivalent of wealth produced.” Another point of departure was on ethics. Mises was also a utilitarian, which Rand, whose philosophy was rights based, despised even referring to Mises “as that old fool.”
In this letter to National Review editor William F. Buckley Jr., Henry Hazlitt tells the very amusing tale of Mises and Rand’s first meeting. Given these disagreements from these two very passionate thinkers it is not completely surprising to hear that their first meeting did not go very smoothly. The story has gotten around Libertarian circles for a long time but in this letter sets the story straight.
Download the Letter From Henry Hazlitt to William F. Buckley Jr. Here
Lenin (and Hazlitt) Was Right
On September 22, 1947 Newsweek published a short article by Henry Hazlitt entitled “Lenin Was Right”. I searched in vain to find a copy of this online. Fortunately FEE’s archives contain a rough draft of this article, which can be found here. I personally found the title very intriguing. Where could Vladimir Lenin (the Bolshevik revolutionary and follower of Karl Marx) and Henry Hazlitt (the classical liberal journalist and follower of Ludwig Von Mises) possibly find common ground? The answer of course is in the means to an end. In a strictly positive sense they both agreed the way to destroy the capitalist system; namely debauch the currency.
The difference is in the desire to achieve such an end. Lenin wanted the fall of the Capitalist system in order to usher in the Communist revolution. Hazlitt, on the other hand, makes the point that Lenin was right more as a warning. During this time the currency, in bank deposits and outside currency, was growing and Hazlitt warns readers of the hidden costs of such a monetary policy. The point is very similar to his main thesis in his book Economics in One Lesson,
“The art of economics consists of looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
Hazlitt wanted to show the hidden costs of monetary interventions into the market system and how they are particularly destructive.
The other interesting aspect of this rough draft, and relevant today given the current crisis, is how the whole first page is a paraphrase of John Maynard Keynes. The article can be seen as an attack on the Keynesian system. Keynesians wanted to steer the economy in the short run which ignores Hazlitt’s one lesson. After all, Hazlitt was no fan of the Keynesian system and he still uses Keynes’ own words to make a large part of his argument. It goes to show how far Keynes went from The Economic Consequences of the Peace to the General Theory.
Welcome
Welcome to the From the Archives blog at the Foundation for Economic Education. The purpose of this blog will be to provide context for the archive materials which will be periodically posted on FEE’s website. As one of the oldest free-market organization in the US, FEE has a vast collection of letters, articles, memos, audio files, video files, etc. dating back as far as FEE’s founding 1946 (and in some cases earlier). The letters and papers of two individuals- FEE founder and President Leonard E. Read and journalist and author Henry Hazlitt- constitute the bulk of the archives. But the archives also contain correspondence and papers by some of the most important advocates of the free market such as Ludwig Von Mises, F.A. Hayek, F.A. “Baldy” Harper, Murray Rothbard, Ayn Rand, William F. Buckley, Isreal Kirzner, among many others.
The Man Who Didn’t “Grow” in Office
December 29, 2009 marks the 200th anniversary of the birth of William Ewart Gladstone. This article by Lawrence W. Reed explains that Gladstone was one of liberty’s greatest champions.
Ayn Rand on Anthem Foreword
In this letter, Ayn Rand asks Leonard Read to review the foreword for her forthcoming book, Anthem.
Ayn Rand on Finding Intellectuals
In this letter to Leonard Read, Ayn Rand expresses her views on what an intellectual is and how important it is for organizations like FEE to recruit and promote them.
Cliches of Socialism Number 76
“What this country needs is creative federalism.”
Cliches of Socialism Number 75
“Under public ownership, we, the people, own it!”
Cliches of Socialism Number 74
“Everyone is entitled to a fair wage.”
Cliches of Socialism Number 73
“Government is all of us.”
Cliches of Socialism Number 72
“Moonlighting increase unemployment.”
