Repost from Bill Still
Ludwig von Mises
At the core of the gold-backed money crowd is the Ludwig von Mises Institute. Mises was an Austrian economist who had a profound influence on the free-market libertarian crowd in the United States. Now there is nothing wrong with free markets, if they are really free – certainly not what we have today, and especially not what we have had for the last 10 years. There is nothing wrong with what’s called “classical libertarianism,” a movement that supports the minimal amount of government interference that is practical to still hold anarchy and chaos at bay.
The problem with Mises is most, but not all, of what he said was true. In fact, he is credited with ripping socialist economic systems to shreds and with the fall of the Polish socialist economic system in the 1980s, Mises was hailed as having been right all along by former socialist economists. Prominent socialists, such as Robert Heilbroner, admitted publicly that “Mises was right” all along (the phrase “Mises was Right” was the title of a panel at the annual 1990 meeting of the Southern Economic Association at New Orleans).
In his 1922 work, Socialism: An Economic and Sociological Analysis, Mises stated:
“The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism.”
So, this is good stuff, and exactly correct. In addition, Mises warned the world that the widely trumpeted “New Era” of permanent prosperity of the “Roaring 1920s” was merely a bubble created by too much money being created by banks and that it would result in a bank panic and depression. All this he predicted 20 years before he came to America.
What Mises should have seen was that America was already on a gold money standard, so it should have been obvious that gold money was not the answer for control of the national money supply in the public interest. Also, his view of the American system is premised upon a near fairy-tale notion of the existence of a “free” market, when, as we will show in this book, the “Money Trust” monopoly has completely dominated the “free” market since the American Civil War.
Mises also opposed solutions like propping up prices or wage rates, rightly saying they would make the situation worse. He opposed encouragement of consumer spending as a curative, saying that the real problem was under-saving and over-consumption and proposed thrift and less government spending as the cure.
“If socialism was an economic catastrophe, government intervention could not work, and would tend to lead inevitably to socialism. Mises elaborated these insights in his Critique of Interventionism (1929), and set forth his political philosophy of laissez-faire liberalism in his Liberalism (1927).”
Of course, during the Great Depression of the 1930s, these theories fell on deaf ears. President Franklin Roosevelt convinced a desperate nation that only a massive increase in government spending – a re-inflation of the bubble with borrowed money – the Keynesian theory – would fix the problem, exactly what the current administration in 2011 is trying to do.
So the two alternatives of the day were:
• Massive Keynesian spending by the state – statism — which forever after would depend on an ever-increasing economy – I call it the “housing-start economy”, or
• The Mises cure, featuring free-market deflation and austerity in the hopes of somehow stimulating less consumption and more saving. Does it strike anyone else that this seems impossible?
But today we can see that these are BOTH false choices – the same choice being offered to the world in 2011.
The real cure at that point was true monetary reform – the repeal of the Federal Reserve Act of 1913 – which, remember, was then only 20 years old — and a return of the money power into the hands of we, the people so that it could be administered in the public interest. In other words, a return to Lincoln’s Greenback solution, but with strict controls on the QUANTITY of money.
Libertarianism is great EXCEPT when it comes to this, the most important and fearsome power of a sovereign nation. There are only two choices; the money power must be in the hands of:
• We, the people, controlled strictly in the public interest, OR, it will surely be ceded to• The Big Banker class, to be run solely in their interest.
There is no middle ground. Apparently, their theory is that if you just give the money creation power to the biggest thieves, somehow, they will fight over it amongst themselves and everything will work out all right for the rest of us. For whatever reason, Mises couldn’t see this outcome from his point in history. So he clung to his gold like a religion, and tried to do his best at solving the problems within the impossible confines of the debt money system.
Anarcho-Capitalists Of course, Mises was exactly right about unchecked money printing, but he was exactly wrong on the cure. He advocated an extreme policy of non-governmental interference. In fact, many in, and closely affiliated with the Ludwig von Mises Institute admit that anarchy is one of their core beliefs. Von Mises author, Professor Murray Rothbard referred to himself as an “anarcho-capitalist” and favored the elimination of the state in favor of individual sovereignty in a “free market.” According to Wikipedia:In an anarcho-capitalist society, law enforcement, courts, and all other security services would be provided by voluntarily funded competitors such as private defense agencies rather than through taxation….
Anarchist author Lew Rockwell, has frequently acknowledged Rothbard’s anarchist sentiments:
“Rothbard is an anarchist, but others, such as Rand and Nozick, see a role for a limited government to protect individual rights.”
Llewellyn Rockwell, (b. 1944), is the founder and chairman of the Ludwig von Mises Institute. He also served as Ron Paul’s congressional chief of staff from 1978 to 1982.
It was clear to me at the time that Murray Rothbard was Mises’s successor, and I followed his writings carefully. I first met him in 1975, and knew immediately that he was a kindred spirit…. I cannot remember the day that I finally came around to the position that the state is unnecessary and destructive by its nature – that it cannot improve on, and indeed only destroys, the social and economic system that grows out of property rights, exchange, and natural social authority – but I do know that it was Rothbard who finally convinced me to take this last step.
Of course, it would be completely unfair to characterize Austrian economic thinking as monolithic, however it is fair to say that in general they pine for a world where, in the absence of a “coercive” government, a cooperative free market will somehow spontaneously evolve – and even more incredibly – survive without any form of collective protection (such as that which a democratically elected government might provide). One can applaud them for their utopian dreaming, but those of us who are serious about trying to create a system which has some chance of effectively holding the raging wolves of the Money Trust at bay from devouring what’s left of national sovereignty and thereby freedom, have to point out the weaknesses of economists who build their solutions around myths and short-sighted understanding of human nature.
De-Centralization of Power
Unfortunately, the anarcho-capitalist theory is somewhat utopian and equally impossible. It would be just great if all people were well intentioned and when left to their own devices would always do the right thing, but history has shown otherwise, especially when it comes to the money question. If self-government retires from the battlefield, the Money Trust will not simply allow these “anarcho-capitalists” to go about their merry way unchecked and allow human freedom to flourish. Their “free market,” absent self-governance is pure social science fiction.
The last thousand years of human history have been characterized by the march of humanity towards freedom – out of serfdom. Self-government has been the common man’s only way to escape bondage to the Money Trust – the only way to de-centralize their power. Yes, government can be, and has often become too powerful – too centralized – too statist; but the Money Trust would love nothing better than to have the anarchists – and their gold money – succeed in completely eliminating the collective power of the people and the rule of law of their Constitution. That is the only possible force which can effectively oppose them, to effectively ensure freedom.
The key going forward should be “de-centralization of power.” Neither governments, nor the Money Trust will ever be accused of too much de-centralization.
Support from the Rockefellers
But there appears to be still another side to the Mises story. Early in my career, I received an incredible 8-page handwritten letter from a brilliant 85-year-old lady from California which was subsequently misplaced. She explained that Mises was brought to America by the Rockefeller Foundation, to seed the false solution – gold money – into the fabric of American economic academia.Could it be true? For years, I didn’t want to touch that one. Not surprisingly, Ludwig von Mises does not bother to mention or acknowledge this association, but it increasingly appears to be true. Richard M. Ebeling, writing in The Independent Review: A Journal of Political Economy is just one of several authors who now recount a similar tale:
“Many readers may be surprised to learn the extent to which the Graduate Institute and then Mises himself in the years immediately after he came to United States were kept afloat financially through generous grants from the Rockefeller Foundation. In fact, for the first years of Mises’s life in the United States, before his appointment as a visiting professor in the Graduate School of Business Administration at New York University (NYU) in 1945, he was almost totally dependent on annual research grants from the Rockefeller Foundation.”
This detail is something about which the Mises Institute fails to inform their readers and followers as well. Does it strike anyone that the Rockefeller Foundation is likely to fund something that is truly in the public interest, particularly when it comes to the topic of control of the greatest power of them all, the money power? As we will see, it was John D. Rockefeller, along with J.P. Morgan, who, in 1907, deliberately caused the Crash of 1907, to teach President Teddy Roosevelt a lesson for having come after them with his Money-Trust-busting prosecutions. In addition, the 1907 Panic was one of the primary justifications used by the Money Trust to justify the creation of the Federal Reserve System in 1913.
Is it reasonable to assume that these very folks – the Rockefeller Foundation – were so concerned about the public welfare a few decades later, that they would support Mises to help him plant the pro-gold, pro-anarchy viewpoint, if they thought it would eventually bring down their money machine system? This strains credibility.
Mises, like many others who sport economic theories (ahem), was very dogmatic and unbending when it came to being challenged.
“Fritz Machlup was a student of Mises’s, one of his most faithful disciples. At one of the Mont Pelerin meetings, Fritz gave a talk in which I think he questioned the idea of a gold standard; he came out in favor of floating exchange rates. Mises was so mad he wouldn’t speak to him for three years. Some people had to come around and bring them together again.”
Milton Friedman considered Mises intolerant in his personal behavior:
“The story I remember best happened at the initial Mont Pelerin meeting when he got up and said, “You’re all a bunch of socialists.” We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it.”
Source: “No More National Debt”, Bill Still, 2011, pp. 39-43
No More National Debt