Libertarians are right that the size, scope and power of government expand amid crises, but there’s no necessity to this, as they assume, and they have no remedy – even during crises – because they hate the state more than statism; but a new book takes a better approach.

Crisis, Leviathan, and the Odd Libertarian Sanction

by | Apr 6, 2020 | POLITICS

During emergencies and crises, whether due to wars, financial crashes, “natural disasters,” or pandemics, we see uncertainty and initial evidence of destruction (of life, health, or wealth) fomenting panic, not merely among the public but, more disturbing, among our “leaders” who, under pressure, lack sufficient poise and expertise to act rightly, for the short or long term.

The typical refrain is “this too shall pass” and “we’ll get through this.” That’s obvious, but the important question to ask and answer is whether, during and after the crisis, “we” remain as free or as strong as before – ideally, freer and stronger, with sounder, more just government – or whether we’re rendered less free and weaker, ruled by a still more oppressive state than before, whether it be more socialist or fascist (for the lover of liberty, it doesn’t much matter).

Weeks When Decades Happen

Sad to say, but there’s reason to suspect that in the current crisis, as in prior ones – 1917-18 … 1932-33 … 1970-71 … 2001-02 … 2008-09 – the main policy response has been to leave us less free and weaker, ruled by a still more oppressive state than we had previously. The only recent case of a crisis that was answered with a policy mix of relatively more liberty was the crisis of 1979-80; eleven years thereafter (through 1990) saw the reign of Thatcher (U.K.)/Reagan (U.S.), so powerful a change that it helped terminate the U.S.S.R. and with it the 45-year Cold War.  Yet many intellectuals still despise the shift, which gave rise, not only in the U.K. and U.S. but globally, to what is rightly labeled “neo-liberalism” (i.e., the “new liberty”); the critics reveal their keen intellect and heartfelt humanity when they yearn, instead, for the old tyranny.

Vladimir Lenin, Russian-Bolshevik revolutionary and founding father of the mass-murdering U.S.S.R. (1917-1991) [1] once said “there are decades where nothing happens and weeks where decades happen.” Clever. True enough. He referred to Russia’s Revolution, which he welcomed as much as did American sympathizer John Reed (author of Ten Days that Shook the World, 1919) [2] The “crisis” in 1917 Russia, for which Marxian anti-capitalism was the supposed “cure,” pertained not to capitalists “exploiting” millions of laborers by over-working and under-paying them, but to the Czar over-working and under-paying (exploiting) his millions of soldiers.

Oh well. Russia, 1917: a misdiagnosed problem, spawning still more problems. First, crisis – then weeks when decades happen. It’s not unlike recent weeks. Note the eagerness with which Trump, Cuomo, Newsom, Pritzker and all the other lesser-known authoritarians have echoed Lenin. Without any discernable opposition from any quarter, Trump just unilaterally invoked the Defense Production Act (1950), which gives him and his executive branch near-limitless power to jettison the 1st, 4th, and 5th Amendments to the U.S. Constitution, to restrict assembly, commandeer (expropriate) resources, impose wage-price controls, criminalize “hoarding” and “price gouging” (even though the latter cures the former), and nationalize firms and industries. DPA 1950 is like “Directive 10-289” in Ayn Rand’s dystopian novel, Atlas Shrugged (1957).

Also echoing Lenin, recall Obama advisor Rahm Emanuel insisting, amid the crisis of 2008-09, that “you never let a serious crisis go to waste; it’s an opportunity to do things you think you could not do before.”

To repeat: “Things you could not do before.”

What things, exactly? Massive new government spending, money-printing, and debt issuance, bailouts with “strings (edicts) attached,” an array of new executive orders (decrees), a cascade of new controls and regulations, special favors (like debt forgiveness) to cronies, perhaps some nationalizations – even mass house arrest. [3] Not more capitalism but more statism. That’s mainly what we’ve been getting in recent weeks from the “leaders” we (who?) voted for.

What can it mean when statists like Lenin and Emmanuel brazenly admit that in normal times, when people are more rational and less emotional, they oppose the spread of statism, so statists should tyrannize amid crises, when people are vulnerable and reason has been jettisoned? Better yet, they think, if statism is sanctified and codified by citizens’ representatives voting for it. What can any of this mean but that statists admit that they have no arguments or policies supported by facts or validated by reason, in the cool light of normal times It’s an admission that as opportunistic thugs they best achieve their chaotic ends amid chaos, in the “fog of war.”

Where Are the Freedom Lovers? Mere “Sunshine Patriots?”

But let’s not lay too much blame on the thuggish statists; at least they admit what they want and act on it when the chaos comes, ensuring mayhem. Where, in potential opposition, are the valiant, principled friends of freedom? Why so quiet, reserved, acquiescent, AWOL?  Perhaps they believe that even when there’s a huge need for “all hands on deck” (except for the statist crew seeking to manhandle or pick-pocket), the best approach is “laissez-faire,” or “hands-off.”

Libertarian anarchists, you know, oppose the state per se, not just statism (the oppressive state); they presume that all states are necessarily oppressive, to whatever extent they exist or operate, and they simply expect states to become more oppressive. Seeing this happen during crises doesn’t surprise such libertarians, but neither does it make them feel committed to doing much to stop or curb the growth. As such, however inadvertently, they end up aiding, abetting, and sanctioning the statists; they sit back passively, smugly, saying “I told you so.”

Let’s better understand this libertarian reticence in crises, this curious reluctance of supposed liberty lovers to do much to preserve liberty, especially when (by their own theory of crisis) it’s most under assault.  You may know how they love citing Thomas Jefferson’s claim that “the natural progress of things is for liberty to yield and government to gain ground.” By “natural” Jefferson meant unavoidable, incorrigible, inevitable.  But is it, really? Do we lack free will?

If, as Jefferson and today’s libertarians believe, statism is some inexorable, unstoppable march of history, akin to the dialectical-materialist-historicist mechanism found not in reality but alone in the idealized imaginings of Marxist minds, why bother restraining it, taming it, deflecting it, or reversing it? Resistance is futile! Assimilate!  Nothing can be done – except to wait passively until the state becomes so big and oppressive that we’re justified in tearing up the constitution, having a revolution, spilling blood, overthrowing the state, and starting afresh – after which the state will grow, yet again, necessitating the same chaotic sequence, every generation (20 years) or so.

Sound far-fetched? Yes. But this was precisely Jefferson’s advice for the liberty lover, derived from his erroneous premise about what’s “natural” and inevitable in politics. That premise naturally, and ironically, invites tyranny, with no means (or will) to fight it. Jefferson’s hated rivals, the Hamiltonian Federalists, taught the world how to permanently constrain the state, to make it behave, if and as we wish, by instituting and continuously cultivating a constitutional republic, not a democracy of the type the Jeffersonians (and later, Jacksonians) preferred.

Libertarians are fond also of Thomas Paine, a revolutionary pamphleteer who famously wrote, in The American Crisis (1776), that “these are the times that try men’s souls,” so active defenders of liberty “deserve the love and thanks of every man and woman,” but “the summer soldier and the sunshine patriot will, in this crisis, shrink from the service of his country.”  Many libertarians today shrink indeed from defending liberty, perhaps equating “service to country” with “service to state.” Above all they love to hate the state, even if it’s the American state.

Rooting for the Unprincipled

Just as some people declare “there are no atheists in foxholes,” so now some declare that “there are no libertarians in epidemics.” [4]  In the first case, unprincipled theists love to deny that those who are rational and principled can remain so amid crises; in the second case, unprincipled statists hope pro-liberty types are principled and will remain so amid crises, staying away while the statists play. But many libertarians, not being so principled, give ammunition to foes. Notice libertarians like Tyler Cowen pushing policies to “infringe upon liberties,” folding in with statists, or witness libertarians who fold their arms and offer no liberty-promoting ideas or rational public plans. States bad! So “public plans” bad!  Defer to the statists and Cowen types. [5]

Why, in emergencies, do the statists always seem to have plans at the ready, to quickly enact, and brazenly exploit public fears, to convince millions of dupes that things will get worse unless their plans are enacted, even though their plans make things worse? Meanwhile, supposed liberty lovers, who might make things better, don’t do so, in part because, once in power, they support their foes (the GOP-controlled Senate last week voted unanimously, 96-0, for the $2.3 trillion bailout), and if not in power, they merely stand aside and complain, repeating “laissez-faire” and insisting there never can be government planning, ever — not even a plan to deregulate, slash wasteful spending, handcuff the Fed, or cut taxes (yes, even during emergencies). The hands-off approach, in crises, really means passively conceding to the statist approach. [6]

This explains the “ratchet effect” so ably identified years ago by libertarian historian Robert Higgs in his book, Crisis and Leviathan: Critical Episodes in the Growth of American Government (1987). He demonstrated and documented how, during crises, the size, scope, and powers of government tend to grow and thereby assault every type of liberty (civil, political, economic). People who otherwise (in calm times) might object instead remain silent, yet supportive, believing (illogically) that such assaults will fix the crisis and hoping (naively) the assaults will fully recede or be reversed in the post-crisis years. Except they never are. A new level of state size, scope and power is retained, then expanded further in the next crisis.

Plausible as Higgs’s thesis may seem, and it seems well-documented, nevertheless it echoes the erroneous Marxian view of capitalism’s “inevitable” demise. For Marx, capitalism must degenerate and collapse because parasitical, blood-sucking capitalists feed off the life-blood (“surplus value”) of “real” (manual) workers, who become so alienated, expropriated, and phlebotomized that they unite, revolt, take over, “expropriate the expropriators,” and establish a (temporary!) “dictatorship of the proletariat.” [These are words and epithets of the “scientific” Marx, not little ‘ole me]. Higgs’s forecast differs only slightly; capitalism, he knows (contra Marx), isn’t exploitative, yet he believes its demise (Leviathan’s triumph) is inevitable because he believes crises are inevitable, and he believes that myth, not because he believes all capitalist nations are crisis-ridden (Marx’s view) but because he believes all states are crisis-ridden.

This libertarian view is false. It was false when Jefferson voiced it in the late 1700s and it’s no less false when Jeffersonian libertarians voice it today. There’s nothing “natural” or inevitable about states becoming successively more oppressive with every passing year, or crisis-ridden, then more still oppressive, until revolution, terror, and bloodshed also become inevitable (even welcomed). Remember, Jefferson admired the French Revolution, including its terrible (and terroristic) aftermath, and even after seeing it stoke the rise and rule of the despot Napoleon. Hamilton, in contrast, despised the illiberalism of that revolution, its aftermath, and Napoleon.

Marx’s thesis about the dire fate of initially liberal economies mirrors Jefferson’s thesis about the doomed fate of initially liberal governments. Each is doomed to degenerate, due to inherent flaws, with ever-increasing rates of exploitation and expropriation, culminating in revolution, destruction, and dissipation. Afterward, there’s just no plan. So good luck – you’ll need it.

Whereas the Marxist distrusts, despises, and blames capitalism for crises and predicts (even welcomes) dictatorship, the libertarian distrusts, despises, and blames states for crises and predicts (but doesn’t welcome) dictatorship. Although one intends ill while the other intends good, both approaches are wrong. Contrary to Jefferson and Marx, statism spreads amid (and between) crises only if the crises caused by anti-capitalist policies (i.e., most crises) are falsely attributed to capitalism.  Such false attribution is a common Marxist gimmick; liberty lovers needn’t fall for it.  Only with an accurate, causal attribution for crises, regardless of origin, will we see state-generated crises met with more capitalism, not less. Only then can we identify and implement a proper, balanced approach to public-private governance, in good times and bad.

The Hamiltonian Approach

America isn’t at her best right now, and not just because of a virus. Virus or not, panic or not, crisis or not, her best is liberty, not tyranny – capitalism, not statism. She’s not now at her best because she hasn’t been led or prepared by the best and brightest among us. When we need more supply than demand we get mandatory business closures and trillions spent on demand-side Keynesian schemes; when we most need “surge pricing” we get bans on “price gouging” (thus shortages, hoarding, and rationing); when we need more liberty we get more tyranny.

We must adopt a distinctively pro-liberty, pro-capitalist, Hamiltonian approach which embodies the principle of comparative advantage, leaving to markets what markets can (and should) do best while reserving to states what states can (and should) do best.  This unique approach avoids the errors and evils not only of the tyrannical-Leninist-statist approach to governance but of the anarchical-Jeffersonian-libertarian approach.[7]

What do markets do best? It should be obvious. They produce and exchange wealth, including infrastructure, coordinated by a free price system – guided by profit. What do states do best? Again, it’s no mystery. We have the history. The good government preserves, protects and defends individual rights, including private property rights, as well as the rule of law, voluntary exchange, law and order, and national defense, while facilitating, where necessary, the erection and maintenance of infrastructure – all guided by justice. Taken together, the ideal system sure isn’t unlimited democracy (nor is it “democratic socialism”) but constitutional capitalism.

 

References:

[1]  See R. J. Rummel, Death by Government (Transaction Publishers, 1994) and The Black Book of Communism: Crimes, Terror and Repression (Harvard University Press, 1999).

[2] John Reed, Ten Days that Shook the World (1919). Actor Warren Beatty so admired “Jack” Reed and his story that he lovingly played the man – the only American to be buried at the Kremlin – in the movie (which he also directed, and which was funded by greedy multinational conglomerate Gulf and Western) called Reds (1981).

[3] See Richard M. Salsman, “Incarceration, Monetization, and Nationalization Can’t Preserve Our Health or Wealth,” American Institute for Economic Research, March 21, 2020.

[4] Peter Nicholas, “There Are No Libertarians in an Epidemic,” The Atlantic, March 10, 2020.

[5] Peter Suderman, “Tyler Cowen Thinks Coronavirus Could Be This Generation’s World War II,” Reason.com, March 18, 2020. Excerpts: “The Mercatus economist says the private sector could provide the best response to the coronavirus, but the government should go big anyway.” “Cowen recently released a brief outlining what he calls ‘the best economic plan against the coronavirus,’ and in it he calls for  . . . expanding unemployment insurance (and) . . . sending every American a check for $1,000—a giant fiscal stimulus that he acknowledges would ‘mean a much higher budget deficit and higher inflation rate.’” “The goal, he says, is ‘to do those things that infringe upon liberties the least.’”

[6] Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government (1987).

[7] See Richard M. Salsman, “America at Her Best Is Hamiltonian,” The Objective Standard, Spring 2017.

Dr. Salsman is president of InterMarket Forecasting, Inc., an assistant professor of political economy at Duke University, a senior fellow at the American Institute for Economic Research, and a contributing editor for The Objective Standard. He is the author of numerous books, chapters and articles, including Breaking the Banks: Central Banking Problems and Free Banking Solutions (AIER, 1990), Gold and Liberty (AIER, 1995), and The Political Economy of Public Debt: Three Centuries of Theory and Evidence (Edward Elgar Publishing, 2017).

View all articles by author >

The views expressed represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine.

Submit a Comment

Your email address will not be published.

Pin It on Pinterest

Share This

If you found this useful please share it.