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Yesterday, I posted on the pessimism we’re hearing in economic news of late, and how that glut of disingenuous dolor might be contributing to the lack of consumer confidence out there in America. Well, here’s a broader and more philosophical essay on the economy, lifted from the last pages of Russell Kirk’s textbook Economics: Work and Prosperity, published in 1989. Kirk reminds us that economics is, like all other human endeavors, primarily a moral activity. After all, Adam Smith was a professor of moral philosophy.
In our time of troubles, many strange economic doctrines are preached. Yet there is reason to believe that the productive market economy will be functioning well a century from now. The errors of command economies and the blunders of utopian welfare states have become obvious to a great many people, while Adam Smith continues to make economic sense. So long as many people work intelligently, with good moral habits, for their own advantage and for the prosperity of a nation, an economy will remain healthy. But hard work and sound habits may be undone by foolish public policies or by the violent envy of totalist states. There is a strong need for watchfulness on behalf of the economy.
The Christian, too, believes that every endeavor is primarily a moral endeavor, that every activity calls upon him to behave with a longer, and broader, view. This is healthy in human relationships, and it’s healthy in the economy. The long view - the eternal view, so to speak - is always the safe bet.
Books, for discussion: So, when I wanted to learn about what smart conservatives were supposed to think, back in my youthier youth, I turned to Russell Kirk. For the Democrats here, who’s a contemporary liberal counterpart to Kirk? And what about for Libertarians? Name some of the political and philosophical authors and books that have shaped your thinking, and that you would be happy to recommend to us.
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One more diversion
HARRISON: Kirk reminds us that economics is, like all other human endeavors, primarily a moral activity.
This argues for a stable measuring rod of value in the economy. Without the stability of a monetary policy that preserves the value of money, individualistic capitalism might not survive. Thanks to conservatives, we resist the temptation of printing money. Inflation would help borrowers to pay off their nominal debt by suddenly giving everyone high income and high asset values, but that fails to punish the people who induced moral hazard in the economy. So inflation is fatal to capitalism. On the other hand, depression is equally bad. How morally just would Kirk think it is to let millions of people lose their jobs so that the system can punish some financial violators?
Conservatives have run out of options in the current financial crisis. The only thing left is on the left — good old Keynesian government action. Here are a couple of old fashioned pre-Reaganomic books:
Amazon.com: Once in Golconda (Wiley Investment Classics): John Brooks: Books
The 1929 crash.
Amazon.com: Money: Whence It Came, Where It Went: John Kenneth Galbraith: Books
A defense of Keynesian fiscal policies against Milton Friedman
What Harrison truly needs to figure out, though, is whether we really are who conservatives say we are. And if we are, whether that’s who we want to be. In the words of Rodney King, the prophet of Karl Mark, why can’t we all just be generous, solidaristic, intelligent, and equal members of a free society of associated producers?
Ludwig von Mises (1881-1973), an Austrian economist and social philosopher, is the authority you need to look to in economics. He wrote classics like:
“The Theory of Money and Credit” (1912)
“Socialism: An Economic and Sociological Analysis” (1922)
“Human Action: A Treatise on Economics” (1949)
He wrote over 20 books and many more articles. Von Mises defended the market economy, private property, sound money, and peaceful international relations, while opposing government intervention as economically and socially destructive. His economic ideas were based on the fundamental axiom that individual human beings act purposively to achieve desired goals. Von Mises concluded that the only viable economic policy for the human race was a policy of unrestricted laissez-faire, of free markets and the unhampered exercise of the right of private property, with government strictly limited to the defense of person and property within its territorial area.
He believed that socialism would be disastrous for a modern economy because the absence of private ownership of land and capital goods prevents any sort of rational pricing, or estimate of costs, and that government intervention, in addition to hampering and crippling the market, would prove counter-productive and cumulative, leading inevitably to socialism unless all the interventions were repealed.
In his monetary theory, von Mises pointed out that society does not at all benefit from any increase in the money supply, that increased money and bank credit only causes inflation and business cycles, and that therefore government policy should maintain a 100 percent gold standard.
Most of this information (above) and more may be found at the Ludwig von Mises Institute at http://www.mises.org/about.aspx. By the way – when I was in college many years ago – I took a few classes in economics. In one of those classes, we were to use a book by John Kenneth Galbraith as our text. On the first day of class, the professor held up a copy of Galbraith’s textbook. He then said, “You see this book? It was written by a man who is very much admired in academic circles today.”
He then slammed the textbook on the classroom floor and said, “But he is an idiot who knows nothing about helping people make money.” Needless to say, this book was never discussed again in our class.
Kirk has this right. A free economy without strict adherence to moral order cannot exist. In fact the whole system of credit is based on a certain level of trust that come s from respecting the integrity of the counterparties one deals with. By and large this system works well, thouugh from time to time it gets out of whack due partly to corruption but mostly greed.
The alternative of a command socialist or communist economy has been proved disastrous as it hands to much power to the state. Keynes attempt at a middle way has so far proved to have merely muddied the water.
Believe it or not one of the most brilliant discussions of this subject was written by John Paul II who understood both the relation of morality to economics and from his experience as a Pole of socialism under the Nazis and Communists the fatal danger of state economic power.
While Russel Kirk is, also, very good on this subject, he is rather romantic in his opposition to large corporations.
There is no question that John Paul II was a severe critic of historical communism. Karl Marx the political activist failed to comprehend how his alternate world religion would turn into one of the greatest evils in human history. The politics of Marxism were disastrous.
Yet it’s a mistake to see the pope’s condemnation of Marxism through the lens of Ronald Reagan and the Club for Growth. John Paul II did not give market economies his blanket approval. He didn’t truly believe, as the WSJ does, that it is “unjust” for a factor in production to earn more than its marginal product.
The fact that such a comprehensive and prolific pope left an unfinished critique of capitalism shows how big a quarrel his personalist ethics had with “savage” capitalism.
Any critique of capitalism owes something to Marx the economist. This is not the Marx whom the pope repudiated. Better than Adam Smith, Marx understood what the industrial revolution meant for people. Workers would be reduced to prostitutes laboring for money alone. Except for the briefest periods, the economy would fail to deliver an acceptable distribution of income. Marx the economist foresaw the endemic nature of financial crisis and depression.
The pope was not entirely hostile to Marx the moral philosopher, either. Marx thought worldly institutions could help humans be kind, generous, intelligent, and free. The pope seems closer to that ethic than to Harrison’s picture of man in a recent thread as selfish and totally depraved.
Since you already have Von Mises listed, you should also read almost anything by F. A. Hayek. I would start with “The Road to Serfdom, 1944″.
Why hasn’t anyone mentioned Thomas Sowell?
And Larry Burkett…
Scroop Moth
Are you really suggesting that Galbraith or Keynes have anything to say to us?
I am Conservative, not stupid.
Here are a couple of titles I like:
1) Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics, by Henry Hazlitt. First published in 1946, at least two updated editions since then (for the benefit of updated examples and numbers). Available on Amazon, of course, but you can read it free here.
Hazlitt calls the book “a modernization, extension and generalization of the approach found in [Fredric] Bastiat’s pamphlet [What is Seen and What is Not Seen].” Hazlitt expands on Bastiat’s examination of a fallacy committed by scores of economists and politicians: overlooking the secondary or unintended consequences of their proposed policies. An excellent and very accessible primer.
2) Whatever Happened to Penny Candy? by Richard Maybury. Another excellent primer, esp. for parents who want to learn and discuss the most basic (but far-reaching) of economic principles with their kids. Maybury writes, a la CS Lewis, as “Uncle Eric,” to his nephew Chris. The book is full of short “chapters” (letters, really) containing Uncle Eric’s side of a correspondence between him and his nephew. (And there’s also a workbook available.) Check it out at Amazon or Maybury’s own publishing website, Bluestocking Press.
3) And lastly, for a sometimes confused, sometimes insightful, and always funny and irreverent consideration, don’t pass up Eat the Rich by PJ O’Rourke!
BOB: I am Conservative, not stupid.
Don’t let brains compound the misery, Bob. Galbraith writes good history and can warn you away from some false arguments, at least. No conservative wants to misunderstand the opposition, right?
Since Galbraith is beneath you, try Krugman’s updated defense of Keynes, Peddling Prosperity
Even better is Conscience of a Liberal.
http://www.amazon.com/Conscience-Liberal-Paul-Krugman/dp/0393060691/ref=sr_1_8?ie=UTF8&s=books&qid=1206372239&sr=1-8