Economics

Analysis of economic policies as well as discussion of economics from an Austrian perspective.

by

Frank Chodorov – The Individualist

Introduction

I am posting a blog article that I wrote several years ago (January 2009 to be exact) from a different blog site that I had set up at the time. That site no longer exists. Over the years, I have stated more than once that my political leanings align with libertarianism. I rarely discuss politics on this site, and I never support a political candidate on this webpage. The reason for that stance is not to come across as neutral or apolitical. I am not neutral, and I for sure embrace a political philosophy. That philosophy is neither progressive nor neoconservative. Given the rise of saber rattling neoconservatism and the hazardous emergence of the warmth of collectivism, I wanted to restate my libertarian principles here. In the midst of cleaning out my files, I came across this article I had written in 2009. I see no reason not to restate it here. One of my favorite libertarian (Classical Liberal) writers is Frank Chodorov. His thought underpins this article

Chodorov the Individualist

Frank Chodorov explicated the idea of individualism as passionately and rationally as anyone I have read to date. And I believe that the individualist spirit that contributed to what was once the freest country in the world is waning, and has been for sometime. At 60-years old, I come to this conclusion late in life. And I wish I could have learned the lessons about living much earlier in life. All the data, experiences, people, and facts existed for me to learn solid lessons about life. But like so many others, I passed them by, paid them no mind, and even in a period of my life, demeaned what they stood for. Well, I hope the old adage, it’s never too late to learn, is in fact an accurate assessment. I know difficult times are ahead for me because I didn’t learn the lessons early in life that I should have, lessons I want to explore in this essay. I am going to have to change a lot of old patterns, much wrong thinking, and sloppy ways of living. and I hope that those of you who happen upon this webpage and are reading this blog are willing to journey with me, bearing with me as I seek to carve out ideas where much greater minds than mine have already tread. If I use as a compass the thoughts and ideas of von Hayek, von Mises, Rothbard, or Chodorov, hopefully that will keep me from going too awry.

As Chodorov so insightfully claimed, the road to collectivism is an easy path for most to follow, and today its siren song loudly wails. I established this website [humanaction.us at the time; today my thoughts have not changed but rather deepened regarding Classical Liberal principles] to espouse principles of individualism, a much maligned notion in today’s postmodern thinking [note the conflation of individualism with what is thrown around as rugged individualism]. I wish I could claim that I have always lived in line with the values I wish to propagate through Analysis of Power [the subtitle of the webpage I published at the time], however, I have not. Only in recent years have I come across the writings of F. A. Hayek, Ludwig von Mises, Murray Rothbard, and more recently, Frank Chocorov. I have dedicated my website and E-Journal to Chodorov [today, what undergirds what I delineate on this page are my Christian spiritual beliefs]. His writings resonated with me in a way that is both inspiring and challenging. I am far from the destination that Chodorov designates as the individual. Yet I hope to reach that destination and live there. Both the URL and the title of my E-Journal reflect my beliefs in Austrian economics and individualism.

Frank Chodorov was the consummate individualist. In this inaugural issue, I want to highlight some of the themes that Chodorov developed more fully in his writings. So I inaugurate Analysis of Power with an apropos essay that outlines what is to be an individualist. Several themes stand out in Chodorov’s writings. I survey them below; any misstatements of Chodorov’s ideas are solely due to my ignorance.

The Right to Live

With everything under the sun today pronounced by the public-at-large as a right, I hate throwing around the concept of rights. But properly understood, it is a powerful, and more importantly, a truthful concept. There is nothing more basic to the individual than the right to live. For whatever reason, apparently the spirit to live has been poured into each one us. (Today I would more strongly point to the Imago Dei as that reason, and the only reason). If there are those among us who do not want to live, then we conclude rather quickly that something is drastically wrong with them. But the right to live is nothing more than an abstraction if we just stop at the phrase, the right to live. What does such a right actually entail? First of all, it is important to recognize that the right pertains to each individual. It is axiomatic, a given. It is not a right that belongs to me but not to you. It is not a right that belongs to some but not to others. It is not a right that belongs to the collective but not to specific individuals. Such a statement on a collectivist level would be meaningless. As an abstraction, however, a dangerous extension is inherent in the notion of the right to live. The right is not carte blanche. So we need to understand what is inherent in the right to live.

Liberty from Government

We talk about many forms of freedom today. You hear politicians wax eloquently about freedom, oppression, injustice, and social justice. However, when we listen closely to what they mean, we get a clearer understanding of what they are trying to sell. We hear such phrases as freedom from poverty, freedom from illness, or freedom from economic injustice. The sales pitch from demagogues who spew forth these phrases is that government is in place to provide all of us with these espoused freedoms (particularly if we vote for those spewing forth these platitudes). However, I have come to believe that such freedoms have little to do with what our Founders meant by liberty, a term that I prefer to freedom because the latter has been tainted by collectivist rhetoric. (I would add both neoconservative and progressive rhetoric). Our Founders, with all their flaws, and because they understood human flaws, established a Republic in which liberty was understood to mean, not freedom of government to make our lives for us, but but freedom from government, power, the State, (to guard against) that at its whim it would intrude upon our lives. It provides a framework within which people can pursue and carve out their lives as they see fit, so long as what they see fit to do does not prevent others from pursuing and carving out their lives.

The place of government in people’s lives is an issue that distinguishes individualists from collectivists. From an individualist perspective government is to provide a minimal rule of law that enforces contracts, protects private property among its citizens, and, on the level of the State, defends the borders from invasion. A corollary to collectivism, radical egalitarianism, has gripped the mind of the United States, and now many people look to government to educate them, provide them with health care, and to redistribute income in the name of social justice. We hear promises of politicians to make our lives better, to bring about a better society, to usher in better times, and to make us all equal. How many times have we heard the rhetoric and then come to understand that, for the most part, we have to be the ones who make our lives better? (This is not a denial of our social embeddedness and our need of working in conjunction with others.) I believe an important question regarding all these promises hinges on the notion of hubris: How can one person or one group of people actually know what is better for everyone else? For the individualist, not only is such knowledge impossible, but also it takes a sizable hubris-filled ego for someone to believe that he or she possesses such knowledge. If people believe such things about themselves and the knowledge they possess, then why shouldn’t they want power?

As a radical (I might drop this adjective today because of its conflation among people with so-called rugged individualism.) individualist, I believe that government not only lacks the ability to make people’s lives better, but also, even it could by some stretch of the imagination fulfill such a mandate, it lacks both the Constitutionality and moral authority to do so. Once someone provides a life for someone else, the provider has taken from the providee all sense of dignity that constitutes a free human being – unless the provider is an all-powerful being.

Limited Government

Liberty from government logically dictates what the Founders meant by the idea of limited government. Individualism is opposed to collectivism in all its forms. The only legitimate collective activities are those in which individuals freely choose to involve themselves. For an individualist, government in any form is coercion. Hence, an individualist tends to view government with suspicion and believes it should be severely restrained in all its activities, carrying out its minimal roles of protecting life and private proper, enforcing contracts, and protecting against fraud, all minimal activities that contribute to people’s ability to carry on commerce and trade. Beyond these activities, government begins to encroach on individual liberty. From the Classical Liberal perspective, government is granted limited power to protect citizens and to establish a framework whereby they carry out the pursuit of carving out a life for themselves. Government provides no guarantee that individuals will find such pursuits successful. It cannot guarantee that individuals will not encounter hardships and fail at their endeavors. It cannot guarantee that people can have the kind of lives they desire. Government, at its whim, cannot provide a life for an individual. To carry out such guarantees, government would have to use the very rewards of people’s labor it is called upon to protect. The Welfare State (and I would add the Warfare State) represents a prime example of such coercion, where property is taken (confiscated) to provide secure retirement, medical benefits, education, and a host of other so-called rights. Government – power – the State – possesses nothing by which to make such guarantees. Government, to make such guarantees, must take (confiscate) from those who produce. Consequently, such guarantees are fraudulent from the start.

Laissez-Faire Economics

Liberty from government and severely restricted or restrained government obviously dictates that government remove itself and stay out of everyday human affairs, particularly the free exchange of ideas, goods, and service. If an individual is to reap from his efforts and secure some type of living, then he should not turn to government to direct his steps in the endeavors he chooses to pursue. If he does, he forfeits the fruit of his labor to the power that so directs him. People choose their affairs, act in accordance with their desires, and do business and commerce with one another to obtain their desired ends. Their business plans, their business decisions, and what they acquire through their efforts are not submitted to the State for approval. The only say that the State has over such efforts regards fraudulent activities and the protection of property accrued through mutually beneficial commerce. Those who carve out their existence in this life do not owe government for such a privilege. Nor do they owe the collective in the name of some fabrication called the common good. Entrepreneurs by their very activities of producing, providing services, creating jobs, contributing to people’s standard of living impact the community for the good. That they carry out such activities for profit motive does not detract from the fact their work impacts society for the good. And they owe no one an apology for their profit motive.

In today’s climate taxes are viewed as the price that businesses must pay for their success and wealth. Never mind that such wealth and profit create jobs and a higher standard of living for people. Never mind that entrepreneurial capitalism has created a standard of living heretofore unknown throughout history for an enormous population of people. Those who complain about high taxes are labeled selfish, not caring about society, and not wanting to contribute their fair share to the community. The collectivist mentality (I would also label this the Statist mentality) is seen at its fullest in empowering the State to intrude upon business activities in the name of the common good.

The individualist says to the State, hands off. The State is to keep its parasitic hands off what people have produced for their own welfare. The State is to stay out of the way of entrepreneurs who best can decide to carry out their affairs, even when those decisions may not work out the way entrepreneurs desire. And when and if those decisions do turn sour, the one who is an entrepreneur to his core does not cry and whine to government for a bailout. When times are lean, tough, and difficult, the individualist shouts as loud as when times or bountiful and fat – Laissez Faire!

Personal Liberty and Responsibility

If I may choose a phrase from the existentialist’s handbook, an individualist defends personal liberty and responsibility. As free individuals, we can choose to carve out our lives as we see fit. There is a fine distinction, however, inherent in the right to carve out a life versus the right to a life I think I should have. The distinction turns upon the difference between opportunity and results. No other person can guarantee me that I will achieve in life what I want to achieve. In a free society, a rule of law allows me the right to give it a shot. But it does not promise me that the results I want will be forthcoming.

We live today in a culture populated by people bathed in a sense of entitlement and work life by playing the victim card. We blame everyone and everything for our plight, for not having the kind of life that we want. This mindset in turn sets us up for silver-tongued orators who guarantee us that they have the promise hand-in-hand. We vote for presidents like we are searching for a messiah. We expect to hear and see all the sweet and honey-filled promised morsels we hope to find in life. If we don’t have all the money we want, then we blame those who do have the amount of money we would like to have. Somehow or another they took it from us. It is inconvenient to get sick, but it is unfair to have to pay for getting well. And so we hear and are drawn like Odysseus to the sweet siren call of nationalized health care. People want an education, but it is unfair to have to pay for it. Nirvana in learning is straight ahead in subsidized education. A nice comfortable retirement is a dream, but it is unfair to have worked all one’s life and not have it, whether one had the foresight and fortitude to save for it or not. So now we will increase that magnanimous blessing called Social Security. What a deal! (Of course, our omniscient and omnipotent orators who know what we need and have the power to bring it all about for us are not retiring on Social Security. Do I smell demagoguery here?)

Private Property

If we have the right to live and the liberty and responsibility to make choices and try to bring about the life we want for ourselves, then we must have an avenue to accrue something from what we produce. Whether this accrual be pay, goods, property, or all three, what we have accrued is ours because we have worked for it. (Actually all three are private property – privately owned through personal effort.) Such accrual is the product of our labor; thereby, it is our private property. If I have the right to live, then I work, and my production is the means by which I carve out my living, preparing a life for myself. Although I do not believe that I have a right to a job (a confusion of today’s entitlement mindset), or the right to a particular results (a confusion of today’s radical egalitarianism), I work for what I earn or produce. And I can accrue the production of my labor and create property for myself. The very basis of my freedom – my right to live – is my private property. If it is confiscated from me, then the thief has robbed me, not only of my private property, but also of my right to live. The Founders of this country understood property in these terms, and were particularly leery of the government becoming a thief. Hence, they warned the populist about the power (dangers) of taxation. Since 1913, the government holds first rights to our property, carried out by a procedure called the income tax. From the viewpoint of an individualist, the income tax, as well as all taxes, is seen as confiscation. Income tax is legalized thievery, power – the State – stepping in to claim a part of one’s labor for its purposes. And one had best tow the line and fork it over. There are many forms today by which private property is constantly under assault by the State: eminent domain, inheritance taxes, professional licenses, property licenses such as car tags and inspection stickers. All these devices are legalized ways by which the State has step-by-step encroached upon citizens’ private property. To the degree that we lose control of our private property, we begin to lose the grip on our individual liberty.

Noninterventionist

Isolationism in foreign affairs is a term that carries negative connotations today. However, I proudly accept the label. Other libertarians prefer the term noninterventionist, but to me they mean virtually the same thing as long as one understands that these terms refer to government activities. Isolationism does not mean that individuals cannot freely choose to carry on commerce and do business around the globe, or Mars if they find someone there and can get the goods to and from them. Such activities emerge from inalienable rights that go into the pursuit of living. Isolationist or noninterventionist strategies refer, instead, to becoming entangled in the political controversies and conflicts of other nations. In his Farewell Address, George Washington warned us of such meddlesome activities. Yet in the 20th Century and into this one, America has found itself engaged in conflict after conflict around the globe, spending billions of taxpayer dollars in the process (as well as the countless loss of life). Our military is ensconced all over the globe from the Middle East to Germany. Our military is positioned as a standing army for some countries, such as South Korea. It is one thing to make friends and develop respect for other countries and cultures on the basis of mutual exchange and commerce; it is another thing altogether for a government to become the policemen of the world. If our allies relish the kind of liberty we possess, then somewhere along the line, they need to stand up and be prepared to defend themselves from those who would take such liberties from them. A Biblical Proverb speaks poignantly to misguided interventionism:

Like one who takes a dog by the ears,/Is he who passes by and meddles with strife not belonging to him. (1)

We need to rethink our understanding of national defense and not emotionally load galavanting around the globe with notions of patriotism. The true patriot does not allow the State to willy-nilly define defense or our national interests in a way that places brave men and women in harm’s way based on political expediency, nation building, and government power-broker deals that tend to always produce more international problems than they ever solve. We have witnessed these events over and over again in the billions of dollars we spend defending countries that refuse to defend themselves, and the more billions of dollars of so-called foreign aid that have disappeared into no-telling whose pockets – power begetting power.

Entrepreneurial Spirit: Personal Wisdom

If people are to carve out a life for themselves, then it behooves them to develop the kind of skills they need to get the job done. The problem with collectivism and the types of reformers it produces is that such crusaders become too meddlesome in other people’s affairs. I am drawn to the idea that the best way to any general reform is for one to embrace self-development (2). What skills do you need to establish the kind of life that you want? If you desire to achieve a certain lifestyle, then what do you need to develop in yourself so as to achieve what you desire? More to the point, what values do you hold? Are you living in alignment with those values? If not, what do you need to change? Do you truly value what you say you do?

Entrepreneurs are people who pursue a fulfilling life by putting their ideas to work. They know what they want in life, they know what they value about living, and they know what they need to obtain from life what they desire. They are honest with themselves about what skills they possess and which ones they do not possess. When it comes to what they lack, they find ways to fill in the gaps and develop their needed skill set so they can produce and benefit from their labor. They don’t play at being successful. They work at it with everything they have in them. If they do not do these things, then they are not successful, and they probably are not meant to be entrepreneurs.

Being an entrepreneur is something to which I aspire. However, I am not sure I have what it takes to become the kind of person I have described here. Many of us want to play the entrepreneurship game, but we do not want to do what it takes to succeed the way entrepreneurs succeed. We want the results that come to good entrepreneurs. But we do not want the process or effort that goes into making a good entrepreneur and producing the kind of results we desire. The process is hard, difficult, fraught with setbacks, disappointments, and sometimes failures so that one has to pick up and begin again. And above all, it takes vision that many people may not have and risks that others do not want to take. To aspire to entrepreneurship means asking difficult questions as to whether or not one has what it takes to be an entrepreneur.

Today achievement is something that is belittled, demeaned, and viewed as an idea that is elitist. Radical egalitarianism has won the day. Entrepreneurs are punished for their successes by the tax code and the attitude the culture at large has toward them. They achieve because they are exploitive cries the collectivist. They achieve and continue to achieve because they are privileged rages the egalitarian.

Only when individuals come to understand that they are responsible for their lives and must develop the skills they need to live, will they truly become individuals. Otherwise, we fall into the mediocre thinking that dreams and pursuits are not worthwhile. Or worse, we walk with our hands out, our palms up, our dignity emaciated to receive a life that someone else promises us. One may not be an entrepreneur, but that doesn’t mean that one cannot be an individual and claim his or her place in life. We may work for entrepreneurs, benefit from them in a myriad of ways, and find our place in life in a way that suits who we are, what skills we possess, and what desires we have. In the end, we have one thing to do: live (3). We need to choose how best to live for ourselves. To do otherwise is to forfeit who we are and what we are all about as individuals.

Conclusion

On a personal note, I penned this blog article in January of 2009. For years I struggled as I turned my back on my faith as a Christian. Close to the time I wrote this article, God had begun working on me to get me back on track with my faith and what it truly means to have faith in the atoning work of Christ and to have a personal relationship with God through Christ. Although I would change very little about this article if I were to write it now, I want to highlight a couple o f things, one pertaining to the concept of individualism, and second pertaining to my faith in Christ.

As I alluded to in the article, the notion of individualism has been much maligned, more so today than when I wrote this article in 2009. So I want to say a quick word about what individualism is not. First, the notion of individualism as put forth by those such as Chodorov, libertarians in general, and Classical Liberals, in no form or fashion claims that an individual is totally independent of others, not socially embedded or connected, or does not rely on the social fabric and interconnection with others. There is no such reality as pulling oneself up by one’s boot straps by which one is totally isolated from and independent from others. Embracing the philosophy of individualism does not mean that one does not ask for help from others when such help is needed. Nor does it mean that one does not offer help where help is needed. Individualism means that one is responsible for ones own choices and actions as well as for ones self-development. Self-development is never done in total isolation. Whatever rugged individualism happens to mean by those who throw around such caricatures, it has nothing to do with the Classical Liberal understanding of the sanctity of ones individual life. Such caricatures are nothing more than gaslighting and conflation, creating a false dichotomy seeking to provide an argument against nothing that the concept of individualism ever claimed in the first place. Those who have spewed forth such claims have been taken to task by individualists themselves.

Regarding my faith in Christ, if I were to write this article today, I would focus more on the providence of God in our lives and the spiritual gifts with which He blesses us. Psalm 139 speaks to how God intimately knows us and that He has made us who we are. A large part of discovering our skills involves coming to know how He made us and resting in that understanding. Additionally, life is played out by increasing our wisdom, as well as the pursuit of wisdom through diligence, which many of the Psalms address pointedly. In seeking to become diligent, we must also rest in the truth of God’s providence (Psalm 46:10). We must, by God’s grace, be honest about who we are as we gain in wisdom of how He made and gifted us. Since the time I authored this article in 2009 until now, I’ve come to realize that I do not, in fact, have what it takes to be an entrepreneur. That is not who God made me to be. When we realize such truths about ourselves, we can either kick at the goads against them, or by God’s grace embrace them, seeking to live as God would have us live. I am truly thankful for the gifted individuals by and through whom God has blessed the world. If you possess the skills of an entrepreneur, then I hope you follow your calling out with every ounce of energy you possess. Above all, I hope and pray that you will be called by God to believe in Christ as your Savior.

References

(1) “Proverbs 26:17.” In the Holy Bible NASB, Grand Rapids, MI: Zondervan

(2) Chodorov, F. (1980). “The Articulate Individualist.” In C. H. Hamilton (ed.), Fugitive Essays, (pp. 317-322). Indianapolis, IN: Liberty Press. (Originally published in Analysis, August 1946).

(3) Chodorov, F. (1980). “Henry David Thoreau.” In C. H. Hamilton (ed.), Fugitive Essays, (pp. 309-316). (Originally published in Analysis, November 1945 & February 1949).

John V. Jones, Jr., Ph.D/ February 14. 2026

ANALYSIS/Analysis of Power

by

Articles from the Mises Institute

For this months’s blog article I supplied some links to some articles written by Dr. Daniel Lacalle and Dr. Wanjiru Njoya, both independent scholars themselves and both who write for the Mises Institute. Mises Institute is a libertarian educational think-tank located in Auburn, AL near the campus of Auburn University. The Institute trains students in Austrian Economics as established by Carl Menger, Ludwig von Mises, Murray Rothbard and others. The content of the many articles from the Institute go beyond what is understood as the dismal science of economics, demonstrating that a sound theory in economics allows us to understand the culture in which we live, the dangers of power that have been allocated to the State, and what a personal and meaningful life can entail. As a Christian, I find what is proffered in Austrian Economics can be readily grounded in a Judeo-Christian worldview.

Since we are in an election year, I believe the two articles to which I have linked readers to are timely but do not even scratch the surface of what can be learned through the educational efforts of the Mises Institute. So my hope is that those of you who read the articles by Drs. Lacalle and Njoya will be lead to explore all that the Mises Institute has to offer.

I placed the links for this month’s readings on the page, Analysis of Power. You can go to that page to read the articles and glean some information regarding the two authors.

Next month, 09/14/2024, I will provide part two of my take on the Face of the Nation. Until then, good reading, and for sure explore the Mises Institute website.

John V. Jones, Jr., Ph.D/August 14th, 2024

ANALYSIS OF POWER (AOP)

by

Takeaways/Book Review – Lew Rockwell on Economics and Moral Courage

Introduction

As I’ve said before on this blog, we live in a postmodern age in which the notion of truth has been jettisoned, and rhetoric is king in a social milieu where everything is political. Most people, when they think of economics, see a field regarding filthy lucre. They do not think of absolute truth as being a part of any discussion of economics. The positivist philosophy of science constantly attacks the notion of economics as an a priori science. Indeed it attacks the notion of any a priori science. Hence, we live in a morass today whereby politicians and those in power define economic truth. For the most part, the academy is the mouthpiece for monetary policies proffered by bureaucrats who define what is and what is not economic reality. Hence we hear from the halls of power today that we truly have no inflation. State of the union addresses tell us that we are ensconced in a stable and healthy economy when all one has to do is go to the grocery store or seek to purchase a home to discover that Washington D.C. is made of nothing but lies. (To believe in lies, however, one must believe in truth.) Lew Rockwell Jr. has authored a small pamphlet with a title that stands fully against this postmodern age: Economics and Moral Courage. It speaks of three men who stood against the cultural milieu of their time in upholding that economics is not merely about political ideologies, but about truth and the reality that people must face as they strive to make a living, build savings accounts, and seek to make sound and stable lives for themselves. The three individuals are Henry Hazlitt, Murray Rothbard, and Ludwig von Mises.

Economics Should Explain the Financial Reality Which We Face

Thomas Carlyle dubbed economics as the dismal science. Austrian economists, however, have a different take. In this age of Keynesianism, however, (which might even frighten Keynes himself if he were still around to see what government has done to our money) the Austrian perspective is not mainstream. Over the past fifteen years, we have witnessed the spending of billions of dollars to bail out businesses and banks because they were deemed too big to fail. What the State cannot confiscate in taxes to pay for such policies, they turn on the printing machine, flooding the market with money. Hence, the dollar, which sometime back was ripped screaming bloody murder from the gold standard, has continually weakened in purchasing power, and inflation is undermining people’s ability to structure a life for themselves. Our overlord politicians tell us there is no inflation, and all is well with the economy.

In the first few pages of Rockwell’s pamphlet, he uses the the phrase underlying reality at least five times, speaking to how economics as a science should address, not the surface, but the reality that people face in their economic strivings. The positivist view of economics offers charts and statistics to explain the economy. The Austrians address the economic realities that people face day-in and day-out. Economics from the Austrian perspective is about human action. Rockwell calls on Bastiat’s notion of the unseen dimensions of human action through which we must understand such economic realities as the business cycle, the structure of production, sound money and investment, and the difference between fake and real savings. The goal of the political class, however, is to keep reality at bay.

Abstract Thinking Is Required to Understand the Economy

To grasp a full understanding of economic production in contrast to uneconomic production, economists must have a theory by which to explain the economy. What is the relationship between capital and interests? How can we understand the business cycle so as to know we are in a boom that will eventually bust? The 2008 debacle is a prime example. How do we understand what money really is and what it is not? How can such understanding provide us with a solid understanding of money and investment? What is the role of the central bank in the economy? Do we really need a central bank? The age of positivism will not give us answers to these questions. Only good and sound economic theory can lead us through and hopefully take us out of the morass that monetary policies created by politicians have brought about. In contrast to the postmodern dictum that everything is political, Frank Chodorov stated that economics is not politics. This is a lesson we must learn if we are to build a sound economy.

Holding To Sound Economics Requires Moral Courage

Rhetoric creates a reality that will eventually undo itself because what rhetoric alone creates is not real. In this age where we constantly hear the dronings of everything is political or follow the science, Austrian economists go against such mainstream notions. Since the academy, for the most part, is mouthpiece for the political class these days, there are few institutions of higher learning, where students will obtain the Austrian perspective on economics. The academy censors ideas that do not align with the political and philosophical ideologies that have become mainstream. (This is not only true of the field of economics, but it is true also in the field of science, especially regarding climate change and its political hacks. But that is another blog article.) Rockwell discussed three individuals who held the Austrian perspective and lived out their lives standing against other perspectives such as Keynesianism and its consequential interventionism and massive government spending. These three men were: Henry Hazlitt, author of Economics in One Lesson; Murray Rothbard, author of Man, Economy, and State/Power and Market; and Ludwig von Mises, author of Human Action. Two economists and one journalist held to principles and the moral courage that led them to, for the most part, to work outside economic departments in the academy. Hazlitt worked out a life as an American journalist while Rothbard and Mises taught as economic professors outside mainstream academic positions. As Rockwell points out, their moral courage and integrity led them to become known by those who believe in a free market. Over a million copies of Hazlitt’s Economics in One Lesson has been published. And the works of Rothbard and Mises form the foundation for the Austrian perspective in economics. These three men held to their principles in a time when government interventionism and middle of the road and socialist thought was sweeping the country as it is today.

Conclusion

Austrian economics today, however, is making comeback through such institutions as the Mises Institute, and the theory of Austrian economics is taking hold around the world from Spain to Germany. Politics is about power, not the truth. It requires moral courage to stand for the truth. As I opened this article, in this postmodern age, rhetoric is king. We live in a nihilistic culture in which the notion of truth is disparaged. However one must question whether or not the claim that there is not absolute truth is itself a claim of absolute truth.

Reference: [Rockwell, L. H. (2022). Economics and Moral Courage. Auburn, AL: Mises Institute.]

John V. Jones, Jr,, Ph.D./November 14th, 2023

ANALYSIS/BOOK REVIEW/Economics

by

Inflation and the Demise of Spiritual Values

Introduction

Jörg Guido Hülsmann is probably known to many who are members or followers of the Mises Institute for his massive biography of Ludwig von Mises, Mises: The Last Knight of Liberalism. I am presently reading through that work. For this month’s Contemplations blog, however, I will draw from a short pamphlet he authored back in 2004, How Inflation Destroys Civilization. February 10, 2022, this pamphlet was republished by the Mises Institute under the title The Cultural and Spiritual Legacy of Fiat Inflation. Sometime in the future I would like to do a TakeAway review of the pamphlet, but for this month I thought it would be fitting to focus on sections 7 and 8 from the pamphlet that address how fiat inflation leads to the demise of spiritual values with the consequent demise of civilization that depends on those values for its just and moral existence. Because the Christian worldview is the foundation for this blog, I agree with Hulsmann that inflation and economic irrationality destroy the spiritual bedrock values on which civilization is built and maintained. The very fact that in the United States we can speak of $33-trillion debt without any depth of understanding what economic and moral dangers such debt holds for our nation is evidence of how inflation destroys both rational and moral precepts that undergird a culture.

Inflation Undermines Christian Family Values

Throughout his pamphlet Hülsmann describes the devastating effects of fiat inflation, giving rise to the fractional-reserve banking system, the increase of public and personal debt, the undermining of legitimate entrepreneurship, and the decrease in quality of manufacturing products, these among many other destructive effects. Hülsmann in part 8 of this short pamphlet (p. 16) discusses how fiat inflation and the rise of the welfare state leads to what he calls suffocating the flame of Christian family values. How does inflation lead to this effect?

First, with the constant increase of public debt the welfare state emerges and usurps private responsibility through the politicization of all areas of life. For those of us who care to be aware, we are first-hand witnesses of this phenomenon in the United States. There was a time when people felt frantic about the fact that from the inception of Johnson’s Great Society legislation in the late 1960’s to the turn of the 21st Century, state expenditures for HEW was just over $5-trillion dollars. The welfare state has now encroached on nearly every area of an individual’s life from retirement to health care to public education. As stated above, people can nonchalantly speak of a $33-trillion dollar government debt in the blink of an eye without grasping what that means for the economy and where the nation is headed economically and morally. When people turn to the state for all their needs, human values change. Hülsmann points out that massive public debt represents a major factor in the decline of the family. Perennial inflation slowly but assuredly destroys the family, thus suffocating the earthly flame of Christian morals (p. 16).

Second, the Christian family generates a particular type of morals that can undergird and uphold a society. Among others, such values include understanding the legitimate place of authority, heterosexual marriage between a man and a woman, and prohibition of incest and abuse of children that appears so prevalent today. Hülsmann points out where families live according to Christian values, marriages stay in tact, offspring are loved and care for, and children respect their parents. For those who truly believe in Jesus, the Christ, the reality of the Triune God and the truth of the Christian faith is passed on. I would also add that where a nation stands on Christian values, a Christian consensus comes about, whether or not everybody is a believer. With these values come the responsibilities that families take on in educating their children, charitable assistance in times of need, and a work ethic that maintains the subsistence of the family and society. Most or all of these responsibilities have been hoisted upon the welfare state. Government expenditure escalates, taxes increase, and inflation sets in due to state fiscal policy, thus individuals no longer hold to the responsibilities that once belonged to families. When it comes to charitable giving, people say, I gave at the office. It’s called taxes.

Third, as Hülsmann points out, compassion cannot be bought (p. 18). Amazingly, Americans continue their donations to charities, but not at the level that once existed, especially when adjusted for inflationary costs of living. I might add not only can compassion not be bought, but neither can education and health care when it is placed in the hands of the state. Because the welfare state, and statism in general, is grossly inefficient economically, it must depend on taxes. People bow and praise the holy state because government bureaucrats slow down the rate of spending rather than reducing spending in large sums as they should. People’s taxes will continue to rise, and state spending will continue to escalate. Because people look to the state for a life, we are trapped in a nonstop escalating cycle. Government continues to tax, but taxes alone cannot come near paying for what politicians have promised people via their campaigns and once in office. Hence the state continues running the printing press and floating loans with the consequent absorption of capital that should be used in the manufacturing and production of goods and services (p. 18). The free market, the production of income, savings, and wealth, and the manufacturing of quality goods and services cannot coexist with statism and government’s infiltration of every area of the economy and life. The excessive welfare state of our days is a direct attack on the producers of Christian morals . . . The welfare state systematically exposes people to the temptation of believing that there are no time-tested moral precepts at all (pp. 18-19).

Additional Spiritual Casualties of Fiat Inflation

Part 7 of Hülsmann’s pamphlet (p. 13) actually begins his exploration of how fiat inflation undermines spiritual values in a culture. Part 8 discussed above puts the crowning cap on his discussion. I will briefly delineate what Hulsmann designates as the casualties of fiat inflation (pp. 13-16) in part 7.

First, because inflation destroys the purchasing power of money, people have to spend an extraordinary amount of time managing their assets and investments. No longer can we simply depend on having a healthy savings account. Indeed, these days leaving cash in the bank not invested is dangerous as inflation eats away at the value of the money simply lying there. It is a shame, but once having money in a savings account was considered to be frugal. At retirement age, I know so many people, having worked all their lives who are frighten about having enough income to continue to live on for the rest of their lives. The state should have never taken over the retirement plans for individuals. One’s social security account does not exist. The state spent the money years ago. This means retirement has been placed in an immoral pay-forward systems that puts retirees at odds with younger people who are starting out in their early productive and working years. The precept addressing the Biblical stewardship of money has fallen on hard times.

Second, the concern over the value of money leads people to consider higher-paying careers that would not otherwise be at the top of their lists except for its lucrative returns that will put them in better stead for retirement years. There has become a large financial rift between certain types of work and those sought out in the worlds of industry and corporations. This is especially ludicrous when one reflects on how the state and major industries and corporations are bed partners.

Third, inflation makes society cling to materialistic values (p. 15). As the economy descends into more and more ill-health, people, whether they want to or not, must place heavy emphases on their monetary decisions.

Fourth, continued inflation leads to the a lower quality of production (pp.15-16) Small businesses, and even large firms, industries, and corporations cut corners as prices increase in both production and consumer goods. Although technological innovation can ward off some of the inferiority in products, as a whole, innovation is a victim of inflation as well. What we are witnessing now is the desire of corporations to become political so as to gain a favored market share, regardless of the quality of their products.

Fifth, a failing economy leads to a blurred distinction between truth and lie (p. 16) In this postmodern age, rhetoric has become king, and what sounds good is true. Hence, the cost of advertising rises to create a language to convince people of the quality of what they purchase. The fractional-reserve banking system is a product of the distinction lost between what is true and false. The history of money-runs on banks bears this out. What people believe is safely in the bank is not there.

Conclusion

In this short 19-page pamphlet, Jörg Guido Hülsmann provides much food for thought, not only regarding economic catastrophes that come about due to fiat inflation, but also how inflation and the destruction of the value of money leads to and is continued by moral and spiritual decay. Economics, family, ideas about justice and frugality, and people’s moral and spiritual values are not separate compartments. They are a way of living out what we believe to our core in the world.

Hülsmann, J. G. (2004). How Inflation Destroys Civilization. Auburn, AL: Mises Institute.

[Jörg Guido Hülsmann is a Senior Fellow at the Mises Institute located in Auburn, AL. Additionally he is a member the European Academy of Sciences and Arts and the Pontifical Academy for Life. He is a professor of economics at the University of Angers where he also directs the Master of Law and Finance and co-directs the bachelors of Law and Economics. He has taught courses in economics, including macroeconomics, money, banking, and finance. He has authored several books, including an extensive biography of Ludwig von Mises, Mises: The Last Knight of Liberalism.]

John V. Jones, Jr., Ph.D./October 14th, 2023

CHRISTIAN THOUGHT/ANALYSIS/Economics

by

TakeAways/Book Review: Bylund’s Economic Primer

[Bylund, P. L. (2022). How to Think About the Economy: A Primer. Auburn, AL: Ludwig von Mises Institute.]

Introduction

One thinks of a primer as an introduction to a field of study. Per L. Bylund has fulfilled what the title of his book states. Although this is a short primer, Bylund’s work is not an oversimplification. Readers will obtain a thorough introduction to how to think about the economy. The author writes within the framework of Austrian economics, so in his exploration of the economy he draws on such historical figures as Carl Menger and Ludwig von Mises, both to whom the book is dedicated. Some might think this is a bias, but how many economic textbooks are written from a Keynesian perspective for the purpose of describing the “economy”?The Keynesian perspective, along with historicism in the social sciences, floods the universities. This primer is theoretical, building on the axioms of Austrian economics put forth by Menger, von Mises, Rothbard, and others.

The Primer at a Glimpse

Bylund divides his work into three major sections: 1) Economics; 2) Market; and 3) Intervention. In each section he introduces readers to the major elements of economics, explicated from an Austrian perspective. The following takeaways I provide regarding Bylund’s work merely scratch the surface of this excellent primer. If I succeed in piquing interest in people to read the book, then I will have more than satisfied my goal for this blog. If you champion the free market and desire a clear understanding of how the free market works, then this is a good starting point for anyone interested in economics, both as laypeople and for those starting out their journey on the road to becoming professional economists.

Six Takeaways from How To Think About The Economy

Economic Understanding Comes Through Economic Literacy

We live in an age where everything is politicized. And that is most definitely true about the economy. One can overhear debates regarding the market, government spending, inflation, etc., but the question that never comes to the surface is: how do you understand the economy? Per L. Bylund sets as the goal for his work to provide economic literacy. He would be the first to tell readers that they don’t stop with this book, but I believe it’s an excellent starting point, and that the author has fulfilled the goal he set for his readers. Through the three sections that divides the book, readers will learn what economics entails, what the market as a coordinated process involves, and how intervention affects markets.

Economics Is a Body of Theory

To properly study economics, one approaches the economy and the market from a theoretical orientation. Economic theory aims at helping people understand the working mechanisms of the economy. Without a theoretical foundation, one is speaking of a subject matter while standing over an abyss. Any theory should be coherent and based on first principles. These first principles, if flawed, my produce a theory, but it will be one that is not accurate. As I stated in the introduction, Bylund writes from the perspective of Austrian economics because he holds that Austrian theory provides a correct understanding of economics. He, therefore explicates the axiom of human action proffered by Ludwig von Mises as a first principle for economic theory.

Economics Is a Social Science, Not a Natural Science

For quite sometime, and it is still true today in many circles, social scientists have experienced the step-child syndrome in relation to the natural sciences. Because of this feeling of inferiority, many social scientists sought to incorporate the methods of the natural sciences into the social sciences. Such methodological procedures led to the rise of scientism and positivism. Hence, the very notion of science became misdefined. Bylund makes it clear from his discussion that the social sciences, and thereby economics, require a different methodological approach than the natural sciences. Drawing on Ludwig von Mises, Bylund discusses the a priori method that fits the social sciences, thereby truly defining any science as that which describes reality.

The Market Is a Process, Not a Factory

The market is a coordinated process among many entrepreneurs. Economic theory in describing the market, seeks to explain not merely the existence of goods, but how those goods got to the market via production and the savviness of entrepreneurship. One firm does not stand alone. It depends on what other firms do so that it can produce its goods and get them to market. For example, the automobile industry manufactures automobiles. But it does not manufacture the steel, rubber, and glass that are needed for the production of automobiles. Other firms do that, not only for the automobile industry, but also for a host of other industries. Hence the market is a coordinated process whereby all firms produce to make the economy work. To have a sound understanding of the market, one must approach studying the market as a coordinated process among those who act to fulfill their goals. Otherwise, statements regarding the market will be inaccurate.

The Scarcity of Resources Is an Economic Reality

Production in the market takes place to meet people’s needs. Production is demanded for the very reason that resources are scarce. Hence, to understand the market, one must understand production, cost, prices, profit, and the role of entrepreneurs. To grasp the understanding of entrepreneurship, one must also understand the distinction between capital and consumer goods. In his section on the market, Bylund delineates through an Austrian theoretical framework not only these important elements of the economy, but also he provides a thorough introduction of the place that value, money, and economic calculation play in the market. This latter concept Mises developed in his argument against socialism.

The Free Market Must Be Understood Before One Understands How Intervention Effects the Market

The third and closing section of Bylund’s work addresses government intervention into the economy. Throughout the book, Bylund approached the study of the economy from a free market perspective. He did not do this simply to propagate a free market. Workings of the market apart from government and regulations must be made clear before we understand how intervention affects the coordinated process that makes up the market. Bylund explores two general types of intervention: monetary and regulatory. The major question that emerges regarding any type of regulation is how do bureaucrats in government know how to design and control for the “common good” the coordinated process that is the market? Bylund discusses the effects of these two types of regulation on the economy. In so doing he discusses the Austrian perspective on the boom and bust cycle in the economy. Additionally, he explores a major economic theme found in the Austrian economic literature known as the seen and unseen effects when regulators seek to design the economy. Carl Menger was one of the first economic theorists to write about the seen and unseen effects of regulations upon the economy.

Conclusion

As I stated in the introduction, these six takeaways from Bylund’s excellent primer does not do the book justice. This short 132 page-primer is packed in a well-organized and succinct introduction to understanding the economy. For those who are searching for a beginning foundation to economic literacy, they couldn’t do any better than Bylund’s primer. In addition to his introduction to the economy, Bylund collected a thorough bibliography that will serve as springboard into continued reading for those who want to build on Bylund’s solid foundation. I strongly recommend this excellent primer for those who want to know more about how the economy works, and for those who want to pursue their study of economics further. This work is Austrian economics. I would welcome seeing this framework for understanding the economy replace what exists in most universities.

[Per L. Bylund is a Senior Fellow of the Mises Institute and Associate Professor of Entrepreneurship and Johnny D. Pope Chair in the School of Entrepreneurship in the Spears School of Business at Oklahoma State University. He is also an Associate Fellow of the Ratio Institute in Stockholm. (This bio is from the Mises Institute at mises.org)].

John V. Jones, Jr. Ph.D./August 14th, 2023

ANALYSIS/ECONOMICS/BOOK REVIEW