Per Bylund

Business Scholarship with a Swedish-Austrian Twist

Per Bylund

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On “Blame Anarchism?”

[ad]I have touched on this subject before, in the column Real and Fake Anarchism, but the duality of anarchism cannot be discussed enough. Just like some would say there may be parallel universes that are each other’s opposites, what is referred to as anarchism is both Dr. Jekyll and Mr. Hyde.

Consulting any dictionary on the meaning of the word anarchism makes the confusion obvious, yet people seem to not take notice. This is what Merriam-Webster’s online dictionary says about the word “anarchy”

1 a: absence of government b: a state of lawlessness or political disorder due to the absence of governmental authority c: a utopian society of individuals who enjoy complete freedom without government

It is fairly obvious that a and c go well together – they mean basically the same thing. b stands out as the “oddball” in the three-parted definition of “anarchy.” But b does seem to go well together with c through the word “utopian,” and also offers an “explanation” to the realized ideal in a.

I am not sure why the word “utopian” is necessarily a part of the definition of what the political theory of anarchism strives for. It seems “utopian” doesn’t add anything but the subjective assessment of this certain political theory’s validity, which is hardly a part of the word’s definition.

Nevertheless, Merriam-Webster doesn’t say that anarchy means chaos – only that it means “political disorder,” which is certainly true if “political” is interpreted as the organization of government. In anarchy there is no government, so such organization would definitely be “disorderly.”

A much more common definition of the word anarchy, where the contradiction is obvious, can be found in e.g. Microsoft’s Encarta:

an·ar·chy

noun

Definition

1. chaotic situation: a situation in which there is a total lack of organization or control

2. lack of government: the absence of any formal system of government in a society

Now this is very interesting, especially considering that the definition of “government” in Encarta is “political authority: a group of people who have the power to make and enforce laws for a country or area”. I guess without that “group of people” with “the power to make and enforce laws” the situation would indeed be chaotic.

The question is how people would react in a setting where no such group of people or their representatives are present. Say, in a school class, in a bus, in your apartment. Obviously a chaotic situation in desperate need for a “group of people who have the power.” So why don’t we all establish such power structures whenever we meet people?

The contradiction in the definition exists because there is no obvious link between the two separate definitions, and this makes the word ambiguous. Yet people seem to think there is only one definition of the word “anarchy” and that it always means “chaos” and “disorder.” And anarchists, they conclude, must of course strive for such chaos and disorder – that follows from the very word “anarchy.”

This is of course not true in any sense, unless we add the subjective assessment of the situation in which there is no group of people with power – that it would immediately cause chaos and destruction. As we have seen, such an assessment has been made part of the very definition of the word in Merriam-Webster’s dictionary.

The problem here is that some people have taken all this confusion to heart, and exploit it. There is today an international movement of people who are only interested in destroying and fighting – and they call themselves anarchists. These idiots have nothing to do with the anarchist tradition or the real anarchist movement, but they free-ride on its name and are pretty effective in destroying the word as well as the reputation of the peaceful anarchism movement.

When journalists report on the rioting by the free-riders they tend to augment the distortion through calling the people busy burning property and terrorizing people “anarchists.” They have of course nothing to do with anarchism as it was spelled out by Proudhon and the other “greats” of anarchism, but they are successful in mooching trademarks and symbols. There is a reason they often use well-known anarchist symbols like the circled A and the black flag.

Even though some people who are well-read on the anarchist tradition seem to join them at times (I guess to blow off some steam), the rioting freaks usually know nothing of the ideas or aims – or understand the reasons. They are “anti,” but don’t have a clue what they are pro.

The fact is that this “movement” of rioters are the Mr. Hydes of anarchism. They are not the original or the true movement; they are freaks out of control who have chosen a name that was already taken. And the worst part of it is that they are utterly statist in what they do and say – destruction, violence, and terror are all means of state and power, not of anarchism.

The movement following the tradition of Proudhon, Tucker, Kropotkin and others are the Dr. Jekylls. And as we know, people take notice of and fear violent action, whereas voluntary cooperation seldom hits the news.

The article, Blame Anarchism?, is available here.

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The Profit Motive Drives Government

[ad]When analyzing the State (government) it is often claimed that it has nothing to do with market. In a sense, this is absolutely correct: the State is coercion, force, and violent means whereas the market (in a fundamental way) is the opposite, as it is based on voluntary cooperation and freedom to associate. However, if we take on another point of view it should be fairly obvious that the size of the State is utterly dependent on a market-place incentive: the profit motive.

Of course, the State has no competition – actually, it prohibits competition. Also, it does not work in a market and it does not offer goods and services to customers who have the right not to pay for them. Also, the State isn’t known for making profits – it seems utterly inable even to balance the budget. In this sense, the State doesn’t even behave like a monopolist; even monopolists earn profits, which are maximized through utilizing the influence of the monopolist on the market (also known as “market power”).

It might not even be true that the officials of the State make profits, even though they are sometimes (or always, depending on your philosophical view on government) overpaid. The profits politicians make through accepting bribes (“campaign contributions” from special interests) aren’t really profits made by the State, so in no sense does it provide prosperity to its “shareholders,” the citizenry and those elected for office.

We might even ask: Has there ever been a State that has consistently balanced the budget or had excess funds at the end of the year? The answer is most likely no.

But I would still argue that it is the profit motive that drives the State, or rather that it is the profit motive of those who, according to the myth, control the State. It is the profit motive of voters that drive the State.

People in general seem to believe that the State is a good deal for them. Taxes are paid, but most people tend to think they get more benefits from the State than they pay in dues. In some cultures, like in the Scandinavian Jante based culture, this statement is equivalent to getting benefits for which someone else pays more. You are better off is if you are worse off but someone else is even more worse off.

Most people have adopted the illusion of somebody else paying most of the goods and services provided by the State, and thus they, relative to other people, come out as “winners.” This illusion is supported by the State, which often makes sure to have a system of progressive tax rates, meaning “the rich” pay higher percentages in taxes, while offering loopholes, rebates, and deductions effectively making the tax system regressive rather than progressive.

As my undergrad economics professor Ken Schoolland frequently reminded the class, “there has never been a tax system beneficial for the poor.” The reason for this is simply that the rich have the means to get professional help to find loopholes, and they also have the means to purchase influence through lobbying. And, which is an often disregarded fact, those elected to office are often both rich and influential – why would they tax themselves to have others reap the benefits?

But this illusion of who pays the taxes that finance the goods and services provided by the State seems literally impossible to do away with. People genuinely believe they are better off (or less worse off) than others because of the tax system. And since taxes means there is an enormous pool of resources managed by the State, there is plenty of reason to make sure the benefits granted are granted to you.

The incentive is thus not to lower taxes and also not to decrease State spending – it is to redirect spending in such a way that it benefits you (or to increase spending on the benefits you find most valuable). People in general recognize that a small tax cut for everybody means you get a little more money out of each pay check, whereas a small tax increase could mean you pay a little more but get a lot more benefits (assuming you receive the benefits, of course).

In this sense, it is the profit motive that drives the constant and increasing growth of the State. The individuals in the voting populace correctly identify the chance to make a profit while others (are forced to) pick up the bill. The profit motive, as those of us who are economists know very well, is a very strong motive power (whether it is expressed in monetary terms or not) and it fundamentally affects the political environment.

It is thus the profit motive of individual citizens, suffering from the illusion that benefits handed out by the State are actually to their benefit, that makes for a constant growth in the State’s powers and the size of its budget. It is the same profit motive that gives politicians the opportunity to seize power through outbidding competitors in terms of number and size of State benefits.

Politicians are therefore not guilty of how power politics has come to [not] work, even though they are of course guilty of their actions. The incentive structures or framework of rules making the political system what it is, is the product of individual citizens believing they are acting rationally: asking for [increased] benefits for which they mistakenly think somebody else will pay.

Without exaggeration, it can be claimed that this is the fundamental structure of all political systems of power: they always tend towards increased State budgets and promises of benefits.

It is easy to realize that the continuation of this logic, letting the system of politics have its course, eventually leads to a change of the meaning of taxes in society. From being a “necessary evil” increased taxes will tend towards meaning “increased benefits [at somebody else’s expense]” and thus from negative to positive. This is the case in extreme high tax States such as Sweden, where political parties can get elected through promising to raise taxes. The voting population in such societies have learned to directly associate “higher taxes” with “greater benefits.”

What drives people in such societies is the same motive power as in all people: to maximize utility. The profit motive is one of the human being’s most fundamental instincts; to maximize the outcome of one’s “investments” is a means for survival.

This is a major reason why political systems, like any system of power, are dangerous – to all of us.

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Why Is Inflation So Bad?

[ad]A cornerstone of government economic policy is to “fight” inflation and make sure we do not have too much of this problem, to make sure we minimize the costs of inflation. This is in a sense why we are taught there is a need for the Federal Reserve: they manage the currency and interest rates in such a way that inflation is kept at a minimum. This is an important task, and that is why the news media so frequently reports on inflation and talks of “inflationary” policies, etc.

But why is inflation a problem? According to the common definition used in the media, in politics, as well as in economics, inflation is an “increase in the price level of goods and services.” It is therefore pretty obvious why inflation is bad for most of us: with higher prices we get less for our hard earned dollars. Indeed, the latter is sometimes made part of the definition: “prices for consumer goods rise, eroding purchasing power” (emph. added).

So we, i.e., all of us, would definitely have an interest in keeping inflation “as low as possible,” or – even better – at zero (if possible). In other words, we should be grateful that we have government and the Federal Reserve to protect us and the economy from inflation, which would make us a lot poorer were it allowed to increase.

It is a well known fact that prices tend to increase. Ask anyone and they know for sure that prices will go up, which makes it better to buy whatever you need now, if you have the funds necessary, rather than wait for later. Especially if you are not sure how much your salary will increase (if at all). In other words, those of us who do have funds could very well become richer through spending than holding on to their money.

So there seems to be a bias in the economy to increase differences in wealth. Those who already have enough funds don’t have to wait for higher prices, and thus get more for their dollars than those of us who don’t have that much money. In other words: if you are rich, you will get richer; if you are poor, you will stay poor.

This is the problem with the capitalist economic system, if you ask any Marxist economist or theorist. The economic system does not only distribute wealth unevenly, it also augments the differences; this is the very basis for exploitation – the rich industrialists are given the opportunity by both the state and the economy to make more money, to get even wealthier, while the poor labor workers’ salaries are literally swallowed by inflation.

And it is conventional wisdom that prices do indeed always go up. Prices of groceries and clothing go up; prices for energy go up; prices for houses as well as rented apartments go up; prices of cars, transportation, and travel go up; prices for health care and education go up. Up, up, up. They don’t ever go down, at least not in the long run. Or do they?

Let’s have a look at an example of a free market, without regulation, and what would happen to prices. Imagine there is a market for goods and that it is at equilibrium (or close to it), so that demand is approximately the same as supply. In other words, prices are set at such a level that there isn’t a great shortage (demand higher than supply) or surplus (supply higher than demand). In other words, the market “works.”

In this market, if relative demand suddenly goes up the prices will follow (upwards). This would also be true if relative supply goes up, which would lead to prices going down to adjust for the increased number of goods in the market that would not be sold if the price was not lowered. Prices may be different in different areas, but the market as a whole (at any level) is somewhat stable in that it “tries” to approach equilibrium. There will thus not be a long time period of constant surplus or shortage; such inefficiencies will be corrected through price changes.

But let us make something clear: such price changes are not the same as constanly increasing (or decreasing) prices. We haven’t gotten that far in the example yet. So far, all we know is that prices fluctuate naturally in a market.

What happens over time? One thing that is for sure is that producers have a great incentive to be efficient, or more importantly: to increase efficiency. Increased efficiency means the products can be offered in the market to a lower price than competitors are able to match, which means increased market share and thus (hopefully) increased profits. Such increased efficiency, which is caused by constant market competition (from existent competitors or probable future such), is largely the same as economic growth.

There should thus be a tendency in the market for these products towards lower prices. Of course, if prices for energy, capital goods, and labor go up, prices might not go down as much. But as long as there are markets for energy and capital goods the prices in these markets would tend to go down as well.

If we assume salaries are kept at a constant level, the purchasing power of each dollar earned would increase. This should mean any consumer with income or funds at hand would be better off waiting for lower prices rather than to purchase the goods immediately. In other words, there is a fundamental market incentive for saving rather than spending, which in turn should put extra pressure on producers and sellers of goods and services to “make” consumers purchase as soon as possible (and therefore also increased competition).

At this point (or sooner), the Marxist would definitely ask about the market for labor – wouldn’t it too tend towards lower prices and thus lower salaries? Well, so far we have only discussed the supply side, companies supply the market with goods and services. These companies are however not suppliers of labor – they are consumers of labor, and therefore companies employing labor workers would bid prices up rather than down. The supply side competes and thereby push salaries down; in this case, labor workers themselves would, through competing for the best employment available, push salaries down. Would labor workers compete to such degree that they would not only accept, but compete for, exploitation level salaries?

In a free market, which is the fundamental assumption in this example, there are no regulations restricting the market in such a way that labor workers are forced to accept employment. Companies compete for labor workers not only with other companies, but also with the possibility of labor workers starting their own businesses (individually or together), making use of their competencies and reaping the full profits. It is very unlikely that a freed market would tend towards a situation where a whole class (if such a thing at all exists in a market) would choose slave labor or exploitative employment.

If this is indeed true, you might ask why not the market for capital goods work the same way – companies are consumers of capital goods. This is true, and I have so far only discussed the supply side of this; there is also a demand side for capital goods competing for consumption in such a way that prices are bid up.

But it is important to understand that a new type of capital good (like a machine), used by an entrepreneur seeking new and more efficient ways of producing some good, is expensive at first – but as soon as the market realizes that there are profits to be earned from adopting the same type of capital goods in production, the market grows and the market therefore generates incentives for increasing efficiency in producing the capital good itself.

(The same is true in the labor market, where unique knowledge in a new market is highly rewarded, whereas relative salaries may go down as this knowledge becomes a common characteristic sought for in the market.)

What we have in such a market is therefore deflation rather than inflation, at least if we assume there is no secret meddling with the currency itself. If the currency used in the market place is stable, actors in the market will see the value of each dollar measured in goods and services go up. In other words: prices go down.

If the market works in such a way that a stable currency is effectively deflated, then the cause of inflation in our contemporary markets must be something other than the market itself. As we have already established, prices do tend to go up and the value of one’s salary, measured in the amount of goods and services it can purchase, is constantly abated.

To understand the inflation from which we suffer, we need first ask: 1. why do prices go up rather than down? and 2. is the currency stable?

The first question can be answered rather easily without having to study the market or the details of it. In our example we assumed a free market without regulation, whereas the real market today is extensively regulated by [at least] three levels of government. The market mechanisms are restricted (if at all allowed) and therefore the market does not function as a market. In other words, the regulated market may not deliver the positive effects expected.

The second question can as easily be answered. No contemporary currencies are stable, partly because they are not fixed in value (through for instance an exchange value set in commodities) and partly because the money supply is constantly increased. In other words: the value of money is based thoroughly on expectations that it will be accepted by sellers of goods and services in the future and that it will retain some or all of its value; and the volume of currency notes (bills and coins) is increased relative to the market estimate of number of products and services already available, which causes a pressure on prices upward. The supply of money without backing in “real” value is in other words increased, while the market has not created a corresponding increase in available goods and services.

Inflation according to the mainstream definition is therefore a product of government-imposed restrictions on how the market functions, while government at the same time is supplying a currency without a real value base that is constantly suffering from an [artificial] increase in supply. The reason inflation is such a problem is thus that the market is not allowed to generate wealth through economic growth to the degree (or even fraction of) it would if left unregulated, and that government is constantly devaluing the currency the market uses. No wonder inflation is a problem – we are getting poorer from not reaping the full profits of our investments (in terms of money, labor, effort, and ideas) while being stripped of the value we have at hand (as currency).

And then government comes to the rescue claiming to fight inflation?

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On the Recycling Myth

[ad]We are, on a daily basis, fed the idea that the world is coming to an end – and it is all our fault. Global warming is going to cause a new cataclysm and we are all going to die. And the reason? We use technology, we lead good lives, and we emit CO2 when breathing out.

Al Gore is and has been preaching the end of the world for quite some time, and was recently awarded the Nobel Peace Prize for his long and hard work telling us we are destroying the world. He is investing a lot of time, effort, and money in making people believe he is doing everything to not make things worse; he is telling us what to do and wants to be seen as a good example. This is why his contract explicitly states that he refuses to be picked up at the airport in an SUV – he prefers a small car or hybrid – and he tries to avoid first class travel to save the environment through joining the crowd in coach class (or was it business?).

It is therefore not surprising that Gore was proud to announce that he took the electric train from Stockholm airport when having flown from Oslo to attend the Nobel Prize reception in city hall. However, he failed to mention that his luggage was picked up at the airport and transported in a Mercedes. (I guess he cannot carry such heavy luggage to and from the train because it would make him breathe too heavily.)

Also, this prophet of environmentalism, when leaving Stockholm for Brussels, was treated by the Swedish taxpayers to a flight with the Swedish government’s “private” jet. He cannot travel in an SUV because of the emissions, but a private jet for two or three people is probably very beneficial for the environment.

Meanwhile, the Swedish recycling disaster continues. It is definitely a system Mr. Gore would find commendable: it is thoroughly force-based, centralizes power, and distributes the main costs of the basically ineffective measures on common people. People like Gore and his friends in the top tier of government would not have to worry about the costs.

I write about this scam today on the Ludwig von Mises Instiutute‘s web site. In the article, which is available here, I show how this system has at best no effect on the environment (even if we accept the ideological claims that CO2 will effectuate the end of the world) while generating enormous costs for society. The purpose of the recycling system, like most of the current environmental mania, is of course to increase the powers of the state in a way that, at least at first glance, would seem “legitimate.”

After all, the environmental threat has a fantastic potential in causing universal feelings of fear, shame, and guilt – feelings exploited throughout the centuries by religious powers. But even though we have been through all this before, I doubt we have learned from history. It should be obvious from how the environmental threat is propagandized that it is but another “leftist” attempt to have us all give up whatever liberties and freedoms we still have left in order to further increase and centralize power.

As is always the case with centralized planning systems: they are good for one thing only – power and the powerful. And the environmental panic around the world will allow the powerful to look good – in our own eyes! – while stripping us from our liberties. So trust me in that it will not be long until President George W. Bush will “come to his senses” and sign the Kyoto Protocol. After all, he should not be able to resist the obvious temptation.

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How to Look Really Stupid

[ad]I get a lot of comments on my articles at the time they are published as well as years after they have been made available. This blog entry is about the comments I receive and why so many of them are supposed to make me look stupid, while they are really making the commenter look stupid.

There are many things one could discuss with respect to the people commenting on my articles (I do appreciate all comments, by the way), for instance that some seem to think they don’t have to mention which article they are commenting on. And it seems to not matter if the article was recently published or was published five or six years ago. I am no mind reader and thus I cannot understand the comments and even less rebuff the criticism (which makes me think that sometimes it is a conscious choice to not tell me, only to not have me respond).

But I would like to focus on a couple of general comments that so obviously miss the target that they make the commenter look really stupid. I realize the comment is itself a rather lame attempt to talk down the article without having to discuss the contents: the details in its reasoning or the arguments supplied. To some extent the comments are definitely made only to make the author of the article commented upon look bad, while in other cases it isn’t as obvious. Let’s have a look at two of the most common comments.

“The article is too black and white”

This could mean almost anything, but the point is probably to say that the article is unrealistic and shouldn’t be taken seriously because it exaggerates the positives and negatives. However, when trying to make a point most authors and debaters exaggerate to make the point clear. After all, the point of the article isn’t the exactness in which it describes details of reality – there is an underlying point that is made, and which is made clear through consciously distorting reality somewhat.

This is not a conscious attempt to deceive the reader, even though this is what the commenter seems to suggest.

“The article doesn’t cover all the arguments”

This is possibly a favorite of mine. It is simply too dumb to take seriously. What does it mean to “cover all the arguments”? And even more importantly: is it possible to ever cover them all? In an article?

Pointing out that there are better arguments is clearly a better approach, even though it too misses the target. The purpose of an article can very well be to present one argument for something so that the argument can be discussed in itself; it might not be an attempt to actually argue at the best of one’s ability for something. But this point is obviously way too advanced for most commenters, since most of they seem to believe an article can only deliver the best of arguments – and if it doesn’t, the article simply isn’t good enough.

But even if “the best” argument is covered in the article, it is still possible to say there is one more argument that can be made and that the article doesn’t discuss. I don’t see how this kind of comment could ever be considered valid criticism. The author of an article is most likely trying to make a point, but he or she might not choose to cover all possible arguments – it might even be better (as in more efficient or convincing) to make a nice point using one argument than covering a whole list of arguments.

Also, there are books written to provide arguments for a certain point that fail to cover “all” arguments simply because adding one argument at the margin does not make the totality of the argument more convincing. And even if one would like to cover all arguments, it wouldn’t be possible simply because there are only so many pages one can write in a book.

Now apply this on an article. If all arguments cannot be covered in a book, can they be covered in an article? It should be obvious that “it doesn’t cover all the arguments” is no real criticism; it is, at best, a poor attempt to talk down the article without wanting to take on its content.

I have commented on this issue of criticism before but it seems the people eager to comment on my articles do not read this blog. Or, at least, they don’t understand what I am saying, which is another point that is pretty clearly communicated through this kind of comments.

I do enjoy feedback. But please spare me the cheap remark; there are more productive uses of my time.

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Ceteris Paribus for Dummies

[ad]The economist’s analysis based on ceteris paribus (lat. “all other things being equal”) can, at least in certain contexts, seem almost laughable. After all, isn’t it pretty obvious that any economic system is a web of interdependent relations and interactions dependent on signaling through for instance the price system?

Even so, certain so-called scientific models may require the ceteris paribus statement simply because we do not have powerful enough tools and lack sufficient knowledge of the interrelationships. It could make sense, in a scientific setting where some progress is the best possible (since aiming too high simply means no progress), to use simplified models of simplified relationships and interdependencies and conduct experiments with simple tools to try to increase our understanding of our complex social world.

This does not, however, offer an excuse for all those experiments claiming to provide models that can make very exact forecasts. All such claims, when the models on which these forecasts are made are ceteris paribus models, are at best ignorant if not consciously deceiving. An economic model accepting exact values and providing exact forecasts based on ceteris paribus reasoning is fraudulent.

But this should not be interpreted as if economics needs to be abolished or disregarded. Rather, what I am trying to say is that we should know that interdependencies and relationships in the social world are complex and often mutually constituting. The result from a model where one variable is changed while all other variables remain constant can tell us something, but it does not tell us much about the effect of changing that specific variable in the real world. We should anticipate that one change in a delicate system or social web of relationship as an economic market effectuates other changes. The outcome of the system as a whole is therefore not fully foreseeable.

Most people would agree with this statement, and at this point many might even smile haughtily when thinking of the economist with the simplified models. But that would be a rash reaction: most people seem to rely on ceteris paribus reasoning.

The economist, forced by the complexity of social systems, sometimes needs to rely on ceteris paribus reasoning in order to make progress at all. Perhaps this is the reason people in general, “dummies” in the title, reason this way; it should be easier and thus a lot faster to come to a conclusion if one does not consider all variables and parameters – even better if only one or two variables are considered.

Now, let me explain what I mean by saying people in general use ceteris paribus reasoning. Most people reading this blog are radicals of some sort, the majority likely consists of libertarians and anarchists. Being radicals, I assume most of you have approached a non-radical with your ideas only to get a seemingly “stupid” question back such as (if the argument is for less state): “but who will build the roads?”

Another “radical” thought would be to allow everybody to control their bodies and therefore decide what substances are inserted into the body. In other words, abolishing the repressive drug laws, a suggestion that usually rebuffed with something like: “but then everybody would become drug addicts and the drug lords would seize all power.”

These reactions are examples of ceteris paribus reasoning. Abolishing government does not mean roads disappear and it certainly doesn’t mean nobody would be willing to build roads. But roads are generally built and maintained by government or possibly by government contractors. A ceteris paribus effect of abolishing the state or drastically reduce its size could be that none of the government services would be supplied and thus that their infrastructure would dilapidate.

A more likely outcome of abolishing the state would be that people would acquire whatever infrastructure and services they need and find efficient ways to provide for these services on the market. But this requires a dynamic view and the analyst would necessarily have to consider multiple variables simultaneously and have at least a basic understanding for how people act and why they choose to act.

The same would be true for the drug example, where the abolishment of drug laws would likely strip the mafia of its powers while making quality on the drug market much more reliable. In other words: drug related crimes would eventually drop drastically, if not fully disappear.

But, again, to come to this conclusion one would have to consider a number of variable. In the drug example one would first need to identify the problems today through asking what are the real effects of the repressive laws. The laws create a black market that drives up prices while the civilized behavior required by suppliers in an open market would not be rewarded. In other words: the most brutal suppliers are able to create monopolies through terminating competition and buying off people representing the “authorities.” The artificially high prices for drugs provide artificially high profits and also enough funds to cover costs for violent behavior (which would not be the case in an open, competitive market).

The arguments supplied against deregulation disregard likely effects for the sake of fast and simple rejections. There are obvious advantages to be able to offer fast and simple arguments: most people would consider a fast response more credible than a response delivered after thinking about it, and simple arguments are much easier understood than more complex such. Also, time is an important factor: most people do not have the patience nor the interest to invest the time it takes to explain how e.g. drug prohibition causes problems and why the laws should be abolished – especially if the issue is not one of their great interests. Most people would accept the simple answer because of its simplicity, not because of its realism (a high degree of consistency with the complex social reality).

It is easy to see how a ruling elite could take advantage of this. Whether this tells us anything about economics is another matter.

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My Take on Anarcho-Pacifism

[ad]I have never been an advocate of violent action or destruction. As a matter of fact, I consider my anarchist philosophy to be most fundamentally based on the libertarian non-aggression principle and I am personally disgusted by violence. To me, the pen is beyond any doubt more powerful than the sword; actually, I would hesitate to use “the sword” even if it were in direct self-defense. I am a champion of peace and voluntaryism.

This is essentially where my refusal to accept government comes from: government is in every sense violent force and aggression, and as such I can never accept nor tolerate it. But my morality forbids me to take violent action as part of my resistance to being ruled. I believe Gandhi set a great example – peaceful disobedience, not violent action.

The way I would like to see a society without the state is a society based on respect and tolerance, where all actions and associations are strictly voluntary and physical force is never a solution. But I realize this might very well be a utopian dream on a national level, even though I think it is a fully attainable ideal in radically decentralized communities. In local, prosperous societies there is simply no need to resort to violence, as violence does not achieve anything or offer a solution. There is simply no reason anyone would do him- or herself the disservice of violently aggress on someone else.

In a free society the incentives for violent action are none and thus the violent actions taken in such a society would be at an absolute minimum, if not zero – unless one counts mining, wood felling or smithery as “violent.”

My principle for anarchism can thus be summed up as: do no harm. The reason I do not get out on nightly missions to destroy the illegitimate property of those who continuously aggress on me (read: government) is simply that such missions would cause harm – to both innocent and semi-innocent people. I am not violent by nature and I do not generally enjoy destruction; there is no reason for it and I don’t understand it. Which makes my insistence on the necessity for a free, stateless society even stronger and more deep-rooted.

This said, let me clarify: I am certainly not saying I accept government’s illegitimate rule of me or anybody else. And I would desperately like to see government wither away, be undermined, or even be torn down. But I do not engage in destructive measures directed at people or property; I do not find destruction fun, inspiring, or even necessary.

In this sense I would certainly call myself anarcho-pacifist. But I do not think non-violence is a principle that must always be honored, paying for it with my life. I do believe in my right to defend myself, my loved ones, and my property. I do not think it my duty to be a passive bystander and observer of all evils going on. If I see grave injustice being done I am likely to act; it is just that I would probably not act with force unless it is absolutely necessary – and then only as the very last way out.

I do, in a way, believe in self-defense and I would not have a problem to get a gun. As society degenerates around us it is becoming increasingly urgent for all of us to learn how to use firearms and get a gun for protection. As anarchist there is no reason whatever to expect that government “protect” works and that the monopolized police force will actually come to my rescue if I were to face real danger.

In the long term, future (some say imminent) economic crises may bring about a social stress that could fire antagonisms and outright street fighting between a government run amok (in the mainstream sense) and a people brought to arms in utter desperation. If this were to happen there is no reason not to have a gun.

So perhaps I could call myself a “pacifist with a gun.” Well, if I had had one.

But let’s return to of self-defense, it is a quite interesting concept that is not not at all as simple as most people tend to make it. Those who advocate “natural” rights, for instance, generally conclude that a violation of right is a violation of right, which causes a situation of measuring the weight of rights.

For instance, a person owning property has the right to defend that right. But to what extent? Would it be okay to kill a murderer? A rapist? A blackmailer? A trespasser? Why? Why not? In each of these situations there is the right of the violated rights bearer against the right of the violator. Does the right of a violator carry less weight? Says who? It does not follow from the “natural” rights how such problems should be solved (which is why some conclude there is a need for government), so some add e.g. a theory of proportionality to regulate these shortcomings of the original rights theory.

I think “do no harm” is a sufficient principle of justice. When you act violently in self-defense it might be justified by the situation, but that still does not give you the right to do harm. You might have to in order to save your life, but it is still wrong to do harm. Your being assaulted does not give you the right to assault the assaulter.

This might seem like a difficult principle to implement, but I think it is very intuitive and the practical solution to conflicts arising from “violence and counter violence” is fairly simple: apply any market solution of your choice. Imagine a person trespassing on your property and thereby doing harm on your exclusive right to this property. You tell him or her that s/he is trespassing and need to leave immediately. If the person refuses you can simply remove him or her from your property – if s/he thinks this action was uncalled for you might face a trial hearing held by a private arbitrator you accept.

What this means is simply that if the parties disagree on whether the outcome of the situation was just, each of their violent actions can be measured by a “third” party to which they agree. The third party can then estimate damages to set things right.

This is a rather obvious market solution to a problem of two or more parties disagreeing on a situation: let a neutral party, to which the parties agree, decide who acted “most” in error and who therefore owes the other party/parties damages. Such a system would never face the philosophical problem of proportionality, since doing harm is always a bad thing and fault can always be established and estimated by a neutral party of choice – even though “harm” is always subjectively assessed.

That is the way I see self-defense. You have the right to act, but not to harm. If you wish or need to use violent actions in order to achieve some end you are responsible for your actions and should be held accountable for wrongdoing. This applies even though you might already have been violated by the other party. If someone trespasses on your grounds to pick berries and you shoot that person the both of you have done harm – but to different degrees. You should be tried for murder and convicted, however with your fault reduced with the fault of trespassing and berry-stealing.

This way all violations and conflicts can “easily” be settled by the market as in any situation where you destroy someone’s property or are guilty of breach of contract. And there is no need for a constitution or bill of rights – you do not have the right to do harm to anyone, and that goes for everyone and everything.

If I am assaulted I will, according to this principle, use violent action to resist and possibly escape the aggressor, but I will be very reluctant to use force. And if I use force I believe I am at fault to the degree of force applied and should be held responsible for that action – just as you, as my aggressor, should be held responsible for all your actions.

This principle is equally applicable on the thugs working for government – if they attack me they should be held accountable on a market for justice. (If I violently and forcefully resist, I am at fault to that degree even if I find it necessary.) When the state is finally abolished I believe representatives for government will face charges of forceful aggression and theft filed by millions of oppressed people.

The problem with government is however that it is not a person, even though it pretends to be a “legal entity,” and thus each of its representatives can hide behind an abstraction that can not be held accountable. But the way I see it each individual is responsible for his or her actions – it does not matter if these actions were taken following orders from someone higher up in the chain of command; a taken action is your choice and thus responsibility. So on the first day of freedom the thugs, goons, and imbeciles in government will be held accountable for their actions.

This is as far as my anarcho-pacifism goes. It does state a philosophical principle that nobody has a right to do harm, but it also provides a framework for assessing violations of this principle and how to regain a peaceful equilibrium. Force is never a solution, and aggressive such is even worse. But my believing in peace and non-violence does not mean I will accept your enslavement or your rule. It means I will resist to my greatest ability and practice disobedience as much as possible, and that I will take full responsibility for my actions.

And I demand that you do the same if you want my respect as a human being.

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Money Is the Root of All Evil

[ad]The radical left generally plays with the thought of a society completely devoid of money and market. According to their reasoning, money is the root of all evil. This is the complete opposite to the view of objectivist philosopher and writer Ayn Rand (read or listen to an excerpt from her magnum opus), but still a view shared by, it seems, a majority of people around the world. Perhaps this is the reason Ayn Rand’s views are considered so radical, even though they are rather “mainstream” among economists.

However, I would say the radical left isn’t as far out as many claim it is. Some of the arguments and aims of this rather communist movement are definitely both ignorant and stupid as well as “evil.” But that does not make the radical left very different from most ideological movements: there are bad ideas (sometimes called dogma) prevalent and even dominant in most traditions of thought.

But the existence of such dogma should not make us throw out the baby with the bath water. No one is infallible or perfect, and thus we should be magnanimous and patient enough to assess the ideas for what they are. We shouldn’t disregard from all mail simply because the carrier in some respects is despicable, so to speak.

Actually, I claim we could learn from the radical left in how we understand and appreciate money. What I am saying here is that it really is the root of evil. But before you panic and appalled vow to never visit this blog again, allow me to explain what I mean and in what sense money is indeed evil.

The left despises wealth as they see it as the fruits of exploitation. Part of this is their insistence to believe in the labor theory of value, a value theory that, to say the least, has some shortcomings. Since wealth is expressed in money and money in turn means power it is a symbol of oppression. As such a symbol it is literally hated by many on the far left.

The power of money is evident since large amounts of money brings the power to e.g. build or shut down factories (thereby creating and destroying jobs), boss people who lack money around, as well as corrupt the minds of those desperately wanting this kind of power. Money, it would seem, is both an instrument and symbol of power, and as such it is reasonable to assume things would be for the better without it.

I tend to agree with this view, but strictly in the light of contemporary corporatist (or fascist, if you will) state society. Money doesn’t have to be evil and it certainly isn’t inherently so, but it definitely is as things are today. The reason for this? The state.

Money is an instrument of oppression simply because it has been monopolized by the state and therefore is no longer a voluntarily accepted market instrument. Wealth as we see it today is hardly ever a result of hard work, ingenuity, and respectable conduct; it is literally never a natural outcome of being at service to the masses. Rather, wealth is the result of not hesitating to use corrupt and utterly immoral measures to become market leader and bar others from offering better and cheaper products: wealth is what you get if you have enough friends in Washington, D.C., and if you manage to play the game of politics masterfully.

Wealth is not a result of masterfully producing products cheaper, faster, and at a higher quality than your competitors. It is a result of producing while using the guns of government to slay or tie the hands of the competition; to legally limit the number of suppliers and producers in the market to perpetuate the privilege of acting as a monopolist (or oligopolist); to maintain a constant flow of cheap labor to exploit; to prevent, block, hinder, and stop any kind of market mechanisms that might arise.

There are of course some exceptions to the rule, but most of them can only come so far. Sooner or later they will need to buy politicians off and call for legal support, if nothing else simply to not let competitors use government against them without a “fight.”

This is the reason we have corporate empires that seem unaffected by time – everything changes, but the corporate empires seem to prevail.

There is however another piece to the puzzle that must not be forgotten. It is definitely not the case that Capital is rotten and makes whatever immoral use of a neutral state they possibly can. The main problem is the system of force in which these corporations and business leaders act: the state.

Money as it is today is not a tool created by Capital in order to exploit labor workers and use the state to protect profits. It is a tool created and used mainly by the state and political power. The reason we see corporations and politics working so tightly together, i.e. in symbiosis, is not an effect of the state desperately trying to stay alive in corporate society. It is quite the opposite.

Controlling money is essential for government: if money is a voluntary, market-based and market-controlled commodity as a means of exchange it sets narrow limits of government influence, authority, and power. In a market with free money government is literally forced to act like any other actor in the market: it would be impossible to constantly mismanage public finances and deceive people as to what degree government controls society. Government would have to tax its subjects the exact amounts it intends to spend, since it would only be possible to borrow so much – and loans would have to be paid back.

Sound, free money would thus effectuate a strictly limited government and a government which would not be able to have a secret agenda. And most of all: such a government would not be able to wage wars unless absolutely necessary. To engage in war the state would have to get the funds like anybody else, i.e., borrow in the free market. Or it could (not like anybody else) tax citizens and make them directly finance murder abroad without being able to deceive them about the intents or real costs.

With a government-controlled money that is not based in real value (such as commodities or precious metals) all such restrictions immediately vaporize. Whenever the state wishes to engage in wars it can simply print more money and thus dilute money supply, which inevitably results in a decrease in the money’s purchasing power and thereby an indirect tax on its users.

Money printing has another effect, knowledge of which is essential to understanding the ingenuity of the money monopoly. The market doesn’t react immediately to the increase in money supply simply because there is no knowledge available on whether and how much money supply has been diluted; there is a “learning curve” to dilution, which means only when the increase in money gets publicly known through the price mechanism (increase in prices to adjust for the increase in the money available) will the full effect of it be seen.

In other words, those who learn about the increase first get to react to it before the market as a whole gains this knowledge. Increasing the money supply, government can thus reward friends and allies while indirectly punish others. With more money printed, government can purchase products from corporations it wishes to support (and even pay excess prices) and these corporations can use that money for profits or spending in a market that does not yet know all money is worth less.

Money, i.e., fiat money, is thus what grants political government its powers and offers a way to constantly let its representatives escape responsibility for their actions. It is thus the root of not only immoral and unmerited wealth – it is the root of all evils government can do (and does) when not being subjected to the laws of the market. It is the root of the system of government that chains us all and makes us slaves to its whims, quirks, and distortions. It is the root of poverty and the class system!

Fiat money and the command money system is what brings State and Capital together in a symbiosis of corruption that enriches those close to power and enslaves those further away. It thus seems money, in the sense of the fiat monetary system, is indeed the root of “all” evil. Such money is the enabler and driver of a corrupt system of power and force that thrives on the subjugation and exploitation of the people.

This kind of money must indeed be abolished, so that free men and women can establish free monies as enablers and drivers of universal prosperity through voluntary exchanges.

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On the Power to Get Away With It

[ad]The apparatus of the state is all about power: it is established to maintain a hierarchical power structure in society and to keep a certain class’ privileges. For the sake of understanding what the state is about it does not matter whether the contemporary state is a remnant from when one tribe subdued another and made them slaves in order to maximize the extracted wealth, or whether the state is in fact a Hobbesian contractual agreement to avoid chaos and destruction.

I have discussed the improbability of the latter theory in previous texts, but it cannot be sufficiently stressed: if a society of men will degenerate into a chaotic war of all against all, then handing power to some of those men will not solve that problem. It can only make it worse – and at best no change at all is achieved. If people are fundamentally evil and respond mainly (or solely) to short term incentives, then a centralized power in human society is at least as destructive as the absence of one.

In the other case, if people are in fact fully able to peacefully get along and voluntarily interact and cooperate there is no reason for a state. If this is the case, then the state as an institutionalized body of coercion with sole objective to subdue, oppress, and exploit is necessarily and in every sense the negative of liberty.

Philosophically only these two alternatives are valid: either people can get along fine without being forced to (and then a state is not only unnecessary – it is destructive and oppressive), or they cannot (and then a state is not solution anyway). It thus does not matter what view of man you have, because in either case the state offers no solution and cannot be a tool for liberty.

The only way a state can be thought of as a solution is if we see humanity as fundamentally divided into a couple (or a few) collective groups with different sets of rights. In such a case it would be appropriate to advocate a centralized power such as the state, run by the only group of people wise enough to run it, and that could be used to force the stupid, ignorant, unintelligent, and violent class(es) to behave. This view of man is however racist in the sense that it identifies different groups of different value and different natural characteristics, and different sets of rights.

In a world such as that a state might even be necessary, since it might be the only way to protect the wise and peaceful from the violent and destructive masses. However, this is hardly a libertarian theory of humankind – it is the very opposite. And thus we should be able to conclude, from a fundamental assessment of how we view man, that the state is neither a necessary evil nor is in any way compatible with a libertarian world view.

Following this logic further we might wish to jump to conclusions a bit and claim that those engaging in politics, including those calling themselves libertarian, are necessarily racist in some respect. But as I said, this is probably to go a step or two too far.

However, the state as forceful power is essentially racist: it divides people into groups of different value and creates the illusion of group interests being incompatible and contradictory. The state creates a view of society as chaotic, and thereby it creates a need among the populace to be ruled by a power that has the might to destroy them – and, perhaps more importantly, has the might to destroy their enemies.

The state does not only mean power, it also means this power will always be used in the interest of those who keep it. It should therefore not be surprising or strange that challenging ideas are opposed, hindered, and thwarted whenever necessary. It also should not be a surprise that those with power would use whatever means necessary to maintain status quo – and to crush those who oppose power and how power is used.

The rules that we are told should limit the powers of the state and restrict how it uses force are not rules for the ruling elite – they are rules to feed the illusion of the state being “under control” by the people, and rules to keep challenging ideas and individuals/groups at bay. The rules do not really apply to those who have the power – they have the power to get away with what they choose to do. That is, after all, what power is about: to be able to use it as you want and to protect your privileges at the cost of others.

It is not surprising that a lot of people have fallen for this illusion of rules restricting the powers of the state, but it is sad that so many libertarians tend to embrace the concept of “constitution” as a way of restricting and limiting violent force. Such a set of rules will only keep the state at bay for as long as those with power agree the rules apply; whenever they no longer find reason to uphold such a constitution they will not.

I discuss this issue in other terms and connected with the ongoing Republican primaries in an article published today on Strike the Root. The article, called The Power to Get Away With It, brings up the issue of “vote fraud” in the primaries, and whether such fraud is indeed a factor.

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Driven by Fear

[ad]As the frequent reader of this blog has probably noticed, I am fascinated by war. This is not a fascination of war per se, but a fascination for the rhetoric, logic and politics of war. I have previously discussed so-called pro-war libertarians and their contradictory standpoints. However, there is a much more generally accepted view of the war in Iraq, which is also fully applicable on most wars, that I would like to discuss briefly. It is the matter of war for freedom.

It is often argued that the terrible terrorist deeds on 9/11 were carried out by Islamic fundamentalists who despise the Western way of life: they were willing to blow themselves to pieces in order to threaten the Western rights and freedoms. They “attacked us because of our freedoms,” as it is often argued.

In a sense, this argument may very well be valid. There is no reason to assume religious fanatics do not feel such hatred to other cultures and religions that they cannot commit suicide bombings “in the name of god.” There are a lot of crazy people out there, and religion has proven to be a very efficient catalyst of such manias. After all, the crusades were not carried out because the people in the Middle East were a direct threat to the European society, culture, or religion. Europeans traveled thousands of miles to slaughter people of different religious convictions simply because they had other convictions (and sometimes because they lived where Jesus presumably was born).

So there is no doubt a possibility, how big is difficult to say, that the maniacs hijacking airplanes on 9/11 2001 and crashing them into the Twin Towers were motivated by their personal religious beliefs to carry out those terrible deeds. And just as Christians claim to preach the “message of love” through their religion, even though it is responsible for crusades, witch hunts, etc., it is also possible that there are Islamic fundamentalists who celebrate the hijackers as “heroes.”

This is however not the main point of this post; it is but a brief introduction, touching the fact that there are many possible reasons why people act certain ways.

The official propaganda (all one-sided “information” with a purpose from government should be considered propaganda) says they attacked the Western world because we are free and prosperous. This view makes us assume that freedom and prosperity are not part of normal life in the Middle East. I am not sure this is true – there are wealthy parts in the Middle East, especially in the oil producing countries, and there are also a number of freedoms that the general public (i.e., men – usually not women) enjoys. Terrorists aren’t necessarily poor, ignorant and unfree – Osama bin Laden, e.g., is (was?) an extremely rich and educated man who still developed a very narrow, evil and fundamentalist mindset.

However, let’s have a look at the argument for the anti-terrorism policies adopted by the United States and European governments since 9/11, policies often referred to as the “War on Terrorism.” And indeed this “war” includes real wars, such as the war on Iraq and possible future attacks on Iran and Pakistan.

The argument is based on the official truth (emphasis on official, not truth) that the terrorists attacked us and will continue to attack us because we in the Western world are “free and prosperous.” If this is truly the reason they attacked (and will attack again) there is no way of protecting ourselves – it is the perfect argument in politics: the solution offered to this problem is The Only One. If we are attacked because we are free, there is nothing we can do but kill them first. Since they are fundamentalists they do not care about their earthly lives, they will gladly kill themselves in order to bring our great society to its knees – they would be honored to die in order to make us unfree and poor.

If we take a little time studying this argument it no doubt seems a bit nutty. Why in the world would someone want to travel secretly to the other side of the planet in order to kill people they have never met (and never will) only so that other people they have never met (and never will) will get less wealthy? Well, that’s the reason these people are always referred to as fanatics or religious fundamentalists – if they are not fanatics or fundamentalist they would reason logically and would thus never go through all the trouble only to die (even if it did mean they would be awarded with 72 virgins in the afterlife). So we can clearly see it is necessary that the argument contains both parts – they are fundamentalists (1) and we are “too” free and prosperous (2).

Now we move on to the counter measures, since the argument clearly shows (or is designed to show) that there is no other way out of this mess than to wage war on fundamentalists and terrorists and engage in such a war until all of them are literally wiped out. “If we do not kill them first, they will kill us.”

If we accept the above assumptions and argument as true we would find support to wage wars, even though they would be costly. As long as the wars don’t cost as much as our prosperity it could be argued we are better off spending our money killing these people off so that they cannot kill us. And the sooner we do it the better.

But what about the “security” measures taken here at home? Both in the United States and the European countries the governments have gone a long way to control their peoples and get rid of their rights. In the United States we have the so-called Patriot Act and Military Commissions Act that explicitly reject and nullify a lot of the basic rights of freedom American citizens are guaranteed through the Constitution. They also effectively do away with a lot of the formal limits put on the executive branch of government in order to protect the citizenry from their government. In the European countries the same kind of measures have been taken for the same reasons, even though there is no constitution to protect such citizens’ rights in the way the United States Constitution supposedly does.

It is argued these measures are necessary to fight the “War on Terrorism” and that we need to be loyal and patriotic to our governments during this time of distress. Maybe so, but let’s go back to the reason argued for instating these measures: “they kill us because we are free and prosperous.” With these new policies of government allowing all branches of government seem to have gotten the “right” to spy on its citizens, jail people without trial or suspicion, steal people’s properties without even telling them why, torture them, and keep secret prisons where literally any horrors could be done to anyone who happens to be in the wrong place at the same time. What this means is simply that we are free no longer.

Using the official truth about the reasons for future terrorism, is there reason for the terrorists to attack us? Not really; the freedoms they supposedly hate so much that they could kill others and themselves to stop are not there anymore. The Western world isn’t as free as it was pre 9/11, and it is getting less free every day – through our Western governments making sure to tighten the grip they have on their territories and citizens. In order to protect us from the terrorists, motivated by our freedoms and prosperity, our governments have stripped us of our freedoms and prosperity.

The ultimate effect of the War on Terrorism is thus that we have approached the fundamentalists and agreed to their terms: they don’t like our freedoms, so we have dismantled our rights and freedoms; they don’t like our prosperity, so we are investing large sums of our money in foreign wars and tightening government control of our society. If anyone should be happy with the way things have turned out, and the way things are heading, it should be the people who planned and carried out the attacks. They have won this battle even if they might end up getting killed by the Western war machine governments and their poor and unfree subjects.

Yet the risk of terrorist attacks is claimed to still be there. So we still, they assure us, need to be afraid – very afraid. The question is simply, what else do we need to give up?

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