Tag: Free Market Capitalism

Privatized Education Will Save American Schools

Nickolas Roberson | United States

This past month of February, teachers in West Virginia, California, Colorado, Arizona, Kentucky, and Oklahoma have been leaving their classrooms to take part in strikes all in the name of increasing wages, compensation, and school funding. Their numbers ranged from the hundreds to the tens of thousands depending on the state. Their demands have ranged as well, from a salary increase of few thousand dollars to salary increase of $11,000 dollars, the grand sum of these demands is that teachers want more from the government– in the name of themselves, their families, and especially their students. However, rather than receiving more tax dollars from state and federal governments, there is a better, more sustainable solution; privatize the education system.

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Are American Libertarians Inherently Consequentialists?

Atilla Sulker | United States

At the superficial level, libertarianism is split into two main camps regarding a moral doctrine. There is the old Aristotelian natural law tradition, sometimes referred to as deontological libertarianism, which draws some of the most passionate libertarians, including the likes of Ron Paul, Andrew Napolitano, Murray Rothbard, and Ayn Rand. And there is the consequentialist (often called utilitarianism) approach to libertarianism, advocated by many pillars of libertarianism including, Ludwig Von Mises, Milton Friedman, and David Friedman. The former group believes that libertarianism is valid because initiating force in any way is morally wrong. The latter on the other hand supports libertarianism simply because, in their minds, it leads to the greatest prosperity.

But the adherence to any form of libertarianism in America makes for a perplexing phenomenon. America has the greatest total wealth in the world and is the hallmark of the great machine that is capitalism. Surely there is some amount of freedom in America, despite the squabbles of libertarians. If not, the great works of entrepreneurial enterprise and competition would not be present to provide the average American with such goods as cars and electric ovens, products once classified as “luxury goods”.

Yet at the same time, the State tramples on the liberties of its citizens every minute. Wiretaps are initiated whenever the president feels like doing so. The state drafts young men to fight in territories unknown to them, showing how frugal its citizens are in its menacing eyes. Bureaucrats interfere with progressive efforts espoused by communities to take back control of their schools. Mandatory minimums tear apart families and lead to the mass incarceration of individuals who are supposedly detriments to society. Regardless of how you assess this claim from a moral standpoint, the argument could be strongly made that government in this day in age has become a far greater detriment to society than any drug lord.

Despite the mass regulations enforced by the state, the great bulwark of capitalism cannot be stymied. Sure, competition is slowly dying off and the Fed creates a false illusion of the growth of prosperity. But despite the destruction created by the Keynesian saga, prosperity still thrives to a much greater extent in America than most other nations around the world, further validating the extent of the notion that entrepreneurship drives the improvement in the material quality of our lives. Indeed the machine of entrepreneurship is far more powerful than the government. The great technological revolution of the late 20th century shows how the hindrances established by the government could not stop the glorious consequences of a market economy.

Now here’s a head-scratcher. Does an increase in the quality of goods in the market due to competition in the private sector necessarily signify an increase in liberty? Does a vibrant capitalist economy necessarily fall in line with a free world? Quite obviously not, as our country represents a good case study of this seemingly paradoxical phenomenon. But only superficially does it occur to be perplexing, for going beyond the layer of gloss shows that the situation is not that complicated.

A larger amount of wealth simply means a larger amount of capital for the state to exploit in its nefarious affairs. It means government simply has more wealth to steal and hence more wealth to fund the welfare-warfare state. This is evident with such tragedies as the growth of the military industrial complex and the bureaucratization of education. Lew Rockwell sums up this phenomenon:

In reality, the State is far more dangerous in a productive, capitalist society than it is in an impoverished, socialized society, simply because it has far more private resources to pillage and loot for the State’s own benefit. Availing itself of the vast fruits of private production, the State engages in self-aggrandizement, expansion, and, inevitably, imperialism.”

In retrospect, we see that much of the past imperialist adventures were supported through the exploiting of private capital, e.g. FDR’s redirecting of resources to support World War Two, or the rapid proliferation of nuclear arms during the Cold War. Indeed a capitalist economy could well be a catalyst for the expansion of the state. And more importantly, a desensitized public needs to be conditioned to express obedience. Think of the state as a block of sodium and the capitalist economy and obedience as a tub of water. Without the water, the sodium remains stable, but when put in the water, it becomes volatile. This is how the state works, it works parasitically- the more blood there is to suck, the bigger it becomes.

Comparing the United States to a garden variety third world country, we discover something interesting. While the former professes to be the beacon of the free world, it is so bloated and volatile that it tramples on the liberties of its people daily. The latter advertises itself as a monstrous entity that will drop the guillotine on any dissenters but is often so poor that it can’t actually enforce these codes.

Regardless of what a country’s government may proclaim itself to be, whether a slaughterer of masses or a liberator of worlds, to truly judge how free it is, we must focus on the actual situation of the country, i.e., the effectiveness of its means in realizing its desired ends.

Economic historian Robert Higgs adheres to this view, and used it to make a case for leaving the United States in search of another country. In a speech he gave, Higgs said:

If I were in your position, I would consider seriously getting out of this country, not because I think any other country is a paradise by the way. But because I think no other country has the means (emphasis added) that the government of this country has to carry out these horrifying surveillance programs, and other measures of state tyranny. So, I’m going to move. I’d suggest you might consider moving somewhere else.”

Higgs himself moved to Mexico in October of 2015.

So if one proclaims himself to be a natural rights libertarian, wouldn’t he be contradicting this assertion if he continues living in the United States? Natural rights libertarians are defenders of liberty even if it leads to economically inefficient outcomes. It would then follow that if they truly hold this to be true if they are truly the bleeding heart natural rights supporter that they claim to be, they would move to another country that does not have the means to enforce such control as our own.

I don’t believe that any libertarian can be classified as fully of the natural rights tradition or fully a consequentialist. Surely a consequentialist would become inclined to believe in some sort of natural rights if the government began to kill members of his family. He wouldn’t oppose it only on the grounds that it disturbs order and leads to disutility.

Now certain issues may invoke a more natural rights based defense. Such issues may include abortion and the defense of the second amendment. It would be hard not to be rooted in the natural law tradition to an extent, yet be an ardent supporter of the second amendment or the right to life.

Based on the actions of libertarians here in America however, on the economic front, the consequentialist doctrine trumps any belief that they may have in natural rights, not fully, but to an extent that libertarians have decided to stay here rather than follow the Higgsian vision. It would be foolish to try and sit here and say that we would defend liberty even if it didn’t lead to economically sound outcomes, yet live in a country in which the means to the destruction of liberty are far greater than most any other country in the world.

It is clear that we enjoy the fruits of entrepreneurship and capitalism as present in this country. For the American libertarian, the loss of this great prosperity in exchange for a more free lifestyle is not a convincing trade-off. Let’s face it, we all enjoy the constant new innovations in technology, in medicine, etc. We wouldn’t be willing to give up our cellular devices or our polio-free bodies in exchange for a more libertarian way of going about our lives.

America can be seen as a coin, having a free side to it, and an unfree side. As Lew Rockwell explains:By way of illustration, in the US today, we have two economies, one free and one unfree. The free one has given us the great abundance of consumer goods, the widest distribution of wealth, and the fastest pace of technological innovation known in the history of man. The unfree one—characterized by the two trillion dollar federal budget and the more than one-quarter of that spent on apparatus that builds and administers weapons of mass destruction—has produced what we have been reading about in the headlines for the last two months. Military Socialism, which exists by pillaging the free economy, is responsible for a brutal and immoral war on a civilian population halfway around the world—the destruction of hospitals, churches, nursing homes, residential neighborhoods, and town squares.”

So yes, it is the prosperity in the capitalist economy that keeps us here in this country. It is the reason why we enjoy the economic freedom present in this country. The atrocities committed by our government won’t drive us away, but the market economy keeps us latched. It thus follows that the American libertarian is inherently, to an extent, a consequentialist.


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The Difference Between Austrian and Chicago Economics

By Jack Parkos | United States

When it comes to economics, libertarians tend to subscribe to one of two schools of thought: The Chicago School and Austrian School. Both of these ideologies are rooting in laissez-faire capitalism and believe in the power of the free market. Yet both have unique differences between them that can divide people who believe in free market capitalism. It is important to understand the differences between the two for one to decide which school they agree with.

“Mainstream” Recognition

The Chicago School, which is sometimes called the Monetarist School, belongs to the neoclassical school of thought. It tends to get more attention from “mainstream” economists and politicians. Milton Friedman, arguably the most famous and influential economist of the Chicago School, served as an unofficial advisor to President Ronald Reagan as well as winning many awards for his books. While many Austrians have won awards for their work, they are not nearly as “popular” as their Chicago counterparts. In a high school economics course, you’re more likely to learn about Milton Friedman and Chicago economics than Ludwig von Mises and Austrian economics. Austrians are seen as outside the mainstream, meaning it is “heterodox”. Perhaps someone may be asking why this occurs.

Difference in Methods

One reason that Austrians tend to be seen as economic “outcasts” is that they tend to use different methods to come to conclusions. As stated before, Austrians are not seen in the mainstream, unlike their Chicago counterparts.

This is mainly due to the fact that Chicago economists tend to use similar methods as most other economists. Monetarists tend to use mathematics to test their theories. Chicago economists believe economics is like a science with rules that cannot be broken. Meanwhile, the Austrians believe that since the economy is based on the actions of individuals, no mathematical formulas can accurately predict how people would act. Thus, Austrians base their work on philosophy, logic, and reasoning. Praxeology, the study of human nature, is an important part of the Austrian School of economics.

Monetary Policy

While both schools criticize the Federal Reserve, they have different reasoning for it. The Chicago school calls out the Federal Reserve’s failures but still believe it should exist and be used in the right way. Monetary policy is a big part of Chicago economics, hence sometimes being called the Monetarist School. For example, Milton Friedman criticized the federal reserve for not printing enough money during the Great Depression.  Friedman also believed the monetary supply should be increased by about 2.5-3.5% each year.

Meanwhile, the Austrians do not believe the government should print more money ever. They tend to believe in a fixed supply, typically a standard based off of precious metals. The Austrians do not want the government inflating the currency at all. They blame many economic problems on government creating inflation through printing money.

 

Famous Economists

Here are some famous economists from the Austrian and Chicago schools.

Austrians

Ludvig Von Mises- Big leader and teacher of the Austrian school of thought.

Murray Rothbard- A leading pioneer of both Anarcho-Capitalism and Paleo-Libertarianism.

Frédéric Bastiat- Developed the concept of opportunity cost.

Chicago

Milton Friedman- Won Presidential Award for Freedom, possibly most famous Chicago economist.

Thomas Sowell- National Humanities Award winner, theorist on welfare economics.

Gary Becker- Awarded Nobel Memorial Prize in Economic Sciences.

Friedrich Hayek (who also belonged to the Austrian School) – Award-winning economist who contributed to the Business Cycle Theory and The Economic Calculation Problem.


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The Socialist Myth that is Late Stage Capitalism

By Sean Calvert | Canada

Late stage capitalism, or late capitalism, is an idea that has re-emerged in recent years to explain the purported failures of contemporary capitalism. According to this notion, absurdities and failures in the economy are symptomatic of capitalism’s death throes. These perceived failures, however, are not inherent to the system, as many Marxist economists believe, but are rather due to intervention by the state. As for the absurdities, none provide evidence that capitalism is failing.

While Marx himself never used the term late stage capitalism, he did describe what the final stages of capitalism would look like. In volume three of Das Kapital, Marx described how in capitalism’s last stage, market competition would decline as capital centralized in fewer hands. Marxist economists, such as Michał Kalecki, believed that capitalism was inherently monopolistic and that its fate was to move towards a system that would eventually devour itself.

The term “Late Capitalism” can be traced back to Marxist economist Werner Sombart’s work Der moderne Kapitalismus, published in the early 1900s. In this work, Sombart explains that Capitalism developed in three stages: early (pre-industrial revolution), high (the industrial revolution), and late stage capitalism (World War I and beyond).

The term was popularized seventy years later by another Marxist economist, Ernest Mandel. For Mandel, Late Capitalism is characterized by the rise of multinational corporations, consumerism, and globalization. He argued that the last expansionary wave began with the birth of fascism in Europe and the advent of the US and UK command economies during the Second World War. This expansion lasted until 1972 when it reached its limit. Economic stagnation and class struggle followed.

When Mandel was writing, he was witnessing the very end of the post-WWII boom. He believed that the working class would soon rise in a mass, revolutionary movement.  Obviously, this did not happen. The slump did not create anything resembling the conditions that sparked the revolutions in Tsarist Russia.

Contemporary understandings of Late Capitalism have broadened out from the original definition to include all the deficiencies and absurdities of the current economy. These include the destruction of the middle class, the growing gap between the rich and poor, and popular focus on useless goods, such as wifi-enabled kettles.

The “late” in “late capitalism” implies that capitalism is at the end of its age.  Just as Late Antiquity marked the end of the Classical era and the transition to the Middle Ages, so too does late stage capitalism herald both an end and a beginning. Marx believed that the final stages of capitalism would be marked by the rise of the proletariat and the diminishment of the middle class as wealth was concentrated into fewer hands. These three factors, according to Marx, would result in the emergence of a proletarian revolution. Yet history proved otherwise. Crises, such as the Great Depression, came and went, yet there was no revolution.     

Marx predicted that the advent of monopolies would signal the collapse of capitalism. While it is true that large corporations came to control the economic landscape, their dominion is not natural. Economist Horace Gray found that aspiring monopolies would petition governments to designate them as public utilities to protect them from competition. AT&T enjoyed monopoly status until its government supplied patents expired in 1893. By 1907, AT&T’s competitors controlled 51% of the market.

Income inequality is touted as one of the elements of late stage capitalism. Inequality is not necessarily a bad thing – it exemplifies the choice of the individual in a capitalist society. One person may choose to be a schoolteacher and another become a doctor. The income gap between the two is no doubt large, but the two individuals made different choices, leading to different outcomes.

On the other hand, the wealth gap between the rich and poor in the U.S. is growing at an alarming rate. A Bloomberg article found that between 2010 and 2015 the average annual income between the top 20% and the bottom 20% increased by more than $29,000 to $189,000. New York Times columnist David Brooks reports that wealth inequality is greater in the United States than it is in Iran or Russia. Surely this must be a sign that capitalism is in its final stages.

While this is true, the major reason for the channeling of wealth to the super rich is due to collusion among the state, large corporations, and special interest groups. It is called cronyism, and it is inherently against the precepts of free-market capitalism. Corporations lobby the government to create policies, which range from subsidies to protective regulations, which in turn create barriers for new competitors, effectively killing most competition and funneling wealth up the rungs of the socioeconomic ladder. It is not capitalism per se that has funneled the wealth to the top, but the state and its regressive regulations.

It must not be forgotten that capitalism allows more upward social mobility than alternative economic systems. “Oh, but the middle class is shrinking! Marx predicted this!” No doubt this is true in the United States. A Pew Research study showed that between 1991 and 2010 middle-income households fell to 59% from 62%.

Yet acording to the U.S. Census Bureau, since 1967, the number of households which have an income of more than $100,000 has increased from 8.1% to 27.7%. In addition, the number of low-income households, defined as those that make less than $35,000, has decreased from 38.7% to 30.2% since 1967. From these statistics, we can conclude that most households are moving up rather than down the income ladder, contrary to what Marx predicted.

Some who believe that we are in late stage capitalism point towards absurdities and irregularities within our socio-economic system. A $1200 margarita is touted as evidence of decadence. Yet a $1200 margarita undeniably targets the exceedingly rich, and should be regarded as a non-issue because consumers have the choice to pursue lower priced margaritas.

Critics of capitalism fail to recognize is that most of capitalism’s perceived shortcomings are, in fact, not intrinsic the economic system. Rather, they are consequences of the anti-capitalist policies of the state that constrict the free market, and in doing so, give rise to the perception that capitalism is on its deathbed.

Mandel waited from 1973 until his death in 1995 for the proletariat to revolt. Yet his wait was in vain.  If capitalism is as unsustainable and as exploitative as many Marxists make it out to be, we would have already seen a revolution akin to the overthrow of Tsarist Russia. For now, and the foreseeable future, free-market capitalism remains the best economic system we have.


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Capitalism’s Persuasion Problem

Glenn Verasco | @GlennVerasco

Fact: in politics, rhetoric is more persuasive than truth. I’m sure you know this already.

This fact is especially troubling for Libertarians and other political groups that favor free market Capitalism because understanding the benefits of the free market takes time and effort.

Capitalism is often counterintuitive, it requires blind faith in the capabilities of mankind, it goes against many emotionally satisfying worldviews, and it admits tough and sometimes undesirable realities.

Convincing people to vote for laissez faire policies and politicians is an uphill climb. To demonstrate, here is a list of premises one must probably concur with in order to view Capitalism in a positive light. I will present each premise somewhat cynically in order to demonstrate how negatively they are subject to being perceived.

  1. Invisible Hand/Spontaneous Order-There is no plan. You just have to wait. Things will work themselves out.
  2. Innovation-There is no need to commission an agency as a public good to solve problems. People will just do it. Don’t let your lack of imagination hinder the imaginations of others.
  3. Market Forces– There is no need to dictate which businesses should survive and which should fail. The best ones will survive, and the worst ones will fail. It’ll just happen eventually.
  4. Winners and Losers– Some people will succeed, and others will fail. It’s a competition like any other.
  5. Competition is Good– We shouldn’t play nice. We should battle each other for customers and resources.
  6. Equality is Futile– We’re not going to be equal. Stop looking in your neighbor’s bowl, and start filling yours.
  7. You Might Lose Your Job– The economy will shift from time to time. That means you might have to shift too. Keeping you permanently employed holds everyone back.
  8. Risk is Good– You are not safe, and you should never feel too comfortable. It is vital that you are at risk to become unemployed, impoverished, or even die.
  9. No Free Lunches- If you received something at no cost to yourself, and it was not given to you by its original owner voluntarily, you are complicit in thievery. You either earn, get lucky, or steal.
  10. Your Help Hurts-Whenever you try to create a system to take care of people, you wind up weakening them. Your systems cause immaturity, idiocy, and perversion.
  11. Greed is Good- Individuals wanting more for themselves and being allowed to pursue their desires is the only way to create wealth in a sustainable manner. The desire for material goods and security drives improvements in the populace’s quality of life. Compassion does not.
  12. Rich People Should Keep Their Money- Being mean to rich people hurts poor people. Being nice to them makes everyone richer.
  13. The Rich Contribute the Most- In a free market, the reason rich people have money is because they add the most value to the most people’s lives. If you wind up with a lot, you’ve brought about a lot of satisfaction. If you wind up with nothing, you have been unsatisfactory.
  14. Sentimental Value Doesn’t Pay the Bills-It doesn’t matter how much you care about something. If it’s only value is sentiment, it will only provide you with a wealth of emotion. You need to add monetary value to incur money.
  15. Sharing is Bad- We shouldn’t share public goods or property. If we do, no one will take responsibility for anything. Private ownership puts skin in the game.
  16. We Should Change the Environment- The environment is a violent and murderous villain. We have to alter and rearrange it to better suite ourselves.
  17. There is No Social Justice-Populations will never mirror each other. There is no reason for racial, gender, or random groups to be represented equally or to share equal outcomes. They never will.
  18. It’s Your Fault-You are going to make mistakes and miss opportunities. There is no one to blame for this but you. Find a mirror.
  19. Not Everyone Agrees with You-Unless other people like your ideas, they are not going to work out in the market. You have to satisfy or create demand, not dictate it.
  20. The World is an Imperfect Place-Some people will work really hard, play by all the rules, and fail. And that’s that.

Juxtapose these truths to a Socialist like Bernie Sanders saying we can have free healthcare, education, and social security paid for by the greedy, evil rich people who got their money by stealing it from you. Who is generally going to win the crowd’s favor in that debate?

The irony is that the honesty free marketers value so highly is the very thing that holds us back. If we were comfortable lying like Socialists, we’d be violating our principles. Maintaining the principle of honesty and persuading the masses are generally mutually exclusive.

If you are on the side of liberty and want free markets to reign, you must be able to persuade dissenters to your point of view. If you don’t come to terms with how far-fetched laissez-faire economics can be to most people, you’ll never be able to get them on your side. Finding the best ways to explain and illustrate the advantages of free market Capitalism is the burden of all lovers of liberty in a Democratic state.

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