The picture of the free market is necessarily one of harmony and mutual benefit; the picture of State intervention is one of caste conflict, coercion, and exploitation.
— Murray Rothbard
All action is an attempt to exchange a less satisfactory state of affairs for a more satisfactory one.
Only individuals have ends and can act to attain them. There are no such things as ends of or actions by 'groups,' 'collectives,' or 'States,' which do not take place as actions by various specific individuals.
As 'Austrian' business cycle theory has pointed out, any bank credit inflation sets up conditions for boom-and-bust; there is no need for prices actually to rise.
The expansionary operations of the Second Bank of the United States, coupled with its laxity toward insisting on specie payment by the state banks, impelled a further inflationary expansion of state banks on top of the spectacular enlargement of the central bank. Thus, the number of incorporated state banks rose from 232 in 1816 to 338 in 1818.
Apart from medieval China, which invented both paper and printing centuries before the West, the world had never seen government paper money until the colonial government of Massachusetts emitted a fiat paper issue in 1690.
The most famous and one of the most thoroughgoing opponents of bank credit was Thomas Jefferson. Jefferson reacted to the panic of 1819 as a confirmation of his pessimistic views on banks.
In his second Inaugural Address, on March 5, 1821, Monroe admitted at last to a general depression of prices, but only as a means of explaining the great decline in the federal revenue. Despite this, he asserted that the situation of America presented a 'gratifying spectacle.'
Since the State necessarily lives by the compulsory confiscation of private capital, and since its expansion necessarily involves ever-greater incursions on private individuals and private enterprise, we must assert that the State is profoundly and inherently anticapitalist.
A robber who justified his theft by saying that he really helped his victims, by his spending giving a boost to retail trade, would find few converts; but when this theory is clothed in Keynesian equations and impressive references to the 'multiplier effect,' it unfortunately carries more conviction.
In order to continue in office, any government (not simply a 'democratic' government) must have the support of the majority of its subjects. This support, it must be noted, need not be active enthusiasm; it may well be passive resignation as if to an inevitable law of nature.
The Keynesian prescription for unemployment rests on the persistence of a 'money illusion' among workers, i.e., on the belief that while, through unions and government, they will keep money wage rates from falling, they will also accept a fall in real wage rates via higher prices.
If government wishes to see a depression ended as quickly as possible and the economy returned to normal prosperity, what course should it adopt? The first and clearest injunction is: Don't interfere with the market's adjustment process.
The successful entrepreneurs on the free market will be the ones most adept at anticipating future business conditions. Yet, the forecasting can never be perfect, and entrepreneurs will continue to differ in the success of their judgments. If this were not so, no profits or losses would ever be made in business.
If taxes and government spending are both slashed, then the salutary result will be to lower the parasitic burden of government taxes and spending upon the productive activities of the private sector.
Positivism eliminates any kind of natural law principle - for example, that there are economic laws which can be transgressed only at your peril. With positivism, there is a tendency to leap into ad hoc economic theory.
Libertarians regard the state as the Supreme, the eternal, the best organized aggressor against the persons and property of the mass of the public. All states everywhere, whether democratic, dictatorial, or monarchical, whether red, white, blue or brown.
On the market, all is harmony. But as soon as intervention appears and is established, conflict is created, for each may participate in a scramble to be a net gainer rather than a net loser - to be part of the invading team instead of one of the victims.
In order to institute action, it is not sufficient that the individual man have unachieved ends that he would like to fulfill. He must also expect that certain modes of behavior will enable him to attain his ends. A man may have a desire for sunshine, but if he realizes that he can do nothing to achieve it, he does not act on this desire.
The Jacksonians were not monetary nationalists; specie was specie, and they saw no reason that foreign gold or silver coins should not circulate with the same full privileges as American-minted coins.
The Jacksonians were libertarians, plain and simple. Their program and ideology were libertarian; they strongly favored free enterprise and free markets, but they just as strongly opposed special subsidies and monopoly privileges conveyed by government to business or to any other group.
War has generally had grave and fateful consequences for the American monetary and financial system. We have seen that the Revolutionary War occasioned a mass of depreciated fiat paper, worthless Continentals, a huge public debt, and the beginnings of central banking in the Bank of North America.
It is important to realize that gold and silver are international commodities and that, therefore, when not prohibited by government decree, foreign coins are perfectly capable of serving as standard moneys.
The underconsumptionist of 1819 believed that consumption would be stimulated by tariffs, while the underconsumptionist of a later day urged monetary expansion as the remedy. On the other hand, the remedy proposed for the shortage of money capital was monetary inflation in 1819, encouragement of savings and thrift in the 1930s.
As the greatest and last major crisis before 1836, the panic of 1819 holds considerable interest for the study of business cycles and for the present day. It was an economy in transition, as it were, to a state where business cycles as we know them would develop.
The State has invariably shown a striking talent for the expansion of its powers beyond any limits that might be imposed upon it.
Many and subtle are the ideological weapons that the State has wielded through the centuries. Once excellent weapon has been tradition. The longer that the rule of a State has been able to preserve itself, the more powerful this weapon; for then, the X Dynasty or the Y State has the seeming weight of centuries of tradition behind it.
The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively 'peaceful' the lifeline of the parasitic caste in society.
Savings and investment are indissolubly linked. It is impossible to encourage one and discourage the other.
The 'boom-bust' cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.
Reagonomics - a blend of monetarism and fiscal Keynesianism swathed in classical liberal and supply-side rhetoric - is in no way going to solve the problem of inflationary depression or of the business cycle.
While deficits are often inflationary and always pernicious, curing them by raising taxes is equivalent to curing an illness by shooting the patient.
Subjectivism is not an absolute principle; it is a necessary but not sufficient condition for sound methodology.
If you wish to know how libertarians regard the State and any of its acts, simply think of the State as a criminal band, and all of the libertarian attitudes will logically fall into place.
Play, as a consumers' good, is subject to the law of marginal utility, as are all goods, and the time spent in play will be balanced against the utility to be derived from other obtainable goods.
Only individuals can desire and act. The existence of an institution such as government becomes meaningful only through influencing the actions of those individuals who are and those who are not considered as members.
Leading the boom of 1838 were state governments, who, finding themselves with the unexpected windfall of a distributed surplus from the federal government, proceeded to spend the money wildly and borrow even more extravagantly on public works and other uneconomic forms of 'investment.'
Out of the bitter experiences of the panic of 1819 emerged the beginnings of the Jacksonian movement, dedicated to hard money, the eradication of fractional reserve banking in general, and of the Bank of the United States in particular.
Originally, Congress provided in 1793 that all foreign coins circulating in the United States be legal tender. Indeed, foreign coins have been estimated to form 80 percent of American domestic specie circulation in 1800.
The Panic of 1819 exerted a profound effect on American economic thought. As the first great financial depression, similar to a modern expansion-depression pattern, the panic heightened interest in economic problems, and particularly those problems related to the causes and cures of depressed conditions.
In the panic of 1819, the protectionists stressed the lack of consumer markets abroad and the necessity for building up a market at home. The inflationists, on the other hand, stressed the shortage of money capital available to manufacturers as a cause of the crisis.
Of all the numerous forms that governments have taken over the centuries, of all the concepts and institutions that have been tried, none has succeeded in keeping the State in check. The problem of the State is evidently as far from solution as ever.
While the seeming independence of the federal judiciary has played a vital part in making its actions virtual Holy Writ for the bulk of the people, it is also and ever true that the judiciary is part and parcel of the government apparatus and appointed by the executive and legislative branches.
The majority must be persuaded by ideology that their government is good, wise and, at least, inevitable, and certainly better than other conceivable alternatives. Promoting this ideology among the people is the vital social task of the 'intellectuals.'
While other individuals or institutions obtain their income by production of goods and services and by the peaceful and voluntary sale of these goods and services to others, the State obtains its revenue by the use of compulsion; that is, by the use and the threat of the jailhouse and the bayonet.
The proper governmental policy in a depression is strict laissez-faire, including stringent budget slashing, and coupled perhaps with positive encouragement for credit contraction.
Declines in specific industries can never ignite a general depression. Shifts in data will cause increases in activity in one field, declines in another.
We have gotten to the point where everything the government does is counterproductive; the conclusion, of course, is that the government should do nothing at all, that is, should retire quickly from the monetary and economic scene and allow freedom and free markets to work.
After the Volcker Fund collapsed, I got another grant from the Lilly Endowment to do a history of the U.S., which I worked on from 1962-66. The original idea was to take the regular facts and put a libertarian assessment on everything.
Early economic theory was rooted in the Italian, French, and Spanish traditions, which were subjectivist oriented. Then it shifted onto the terrible path by Smith and Ricardo and the British classical tradition, which is 'objectivist' - values are in inherent in production.
