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Monday, February 1, 2010

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 on 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.

Download “Lenin Was Right”.

  • Nicholas Snow is a Visiting Assistant Professor at Kenyon College in the Department of Economics, and previously a Senior Lecturer at The Ohio State University Economics Department. His research focuses on the political economy of prohibition.