Crimes of Politicians*
who are ignorant of the writings of Ludwig von Mises are unaware of the
role of credit expansion in creating recessions and depressions. Not
knowing the actual cause of such calamities, they turn to false and often
absurd explanations, such as the doctrine of a general overproduction, and
end up blaming increased production and supply, which is the very essence
of greater prosperity, as the cause of impoverishment—allegedly we are
poor because we are rich.
popular and equally false explanation of the present recession is the
fraud and dishonesty of businessmen. To be sure, there are many dishonest
businessmen. It would be surprising if there were not. We live in an age
in which principles of any kind are widely regarded with contempt. And at
least since 1937, when the Supreme Court of the United States abandoned
the protection of economic freedom, our government has been free to do
almost anything it likes in the economic realm. It is no longer restrained
by such principles as having to respect property rights and the freedom of
contract. The result has been that the government has gained almost total
power both to break and to make businessmen, i.e., either to destroy or
enrich them, as it may choose.
of affairs compels businessmen, especially large, successful businessmen,
to pay regular extortion money to politicians and government officials.
They have to pay bribes, in the form of "campaign contributions"
and "donations," to various pressure-group organizations in
order not to be harmed or altogether destroyed. And because there are now
so few restraints on the government in the economic realm, and because few
businessmen know anything of moral and political philosophy beyond the
doctrines of pragmatism, relativism, and assorted brands of statism that
they may have absorbed in today's so-called educational system, the line
is easily crossed between bribes that are mere extortion money, paid to
avoid being harmed by the government, and bribes that are paid to use the
government's apparatus of compulsion and coercion, as Mises called it, in
one's own favor—for example, to gain government subsidies or to harm
one's competitors, by such means as instigating antitrust proceedings or
other regulatory actions against them. Thus, a heavily interventionist
economy necessarily seethes with corruption and immorality.
credit expansion to this mix, and an environment is created in which
almost every business venture is given the appearance of prosperity, while
the underlying reality is one of the massive diversion of capital into
malinvestments. It should not be surprising that in many cases efforts are
made to sustain the appearance of prosperity by means ranging from
questionable to blatantly fraudulent, and that such efforts are encouraged
by the conviction that given only a little more time, the apparent general
prosperity will make those efforts good and permanently conceal their
But even in
this environment, a vital distinction remains between businessmen, on the
one side, and politicians and government officials, on the other. And that
is that the activity of businessmen qua businessmen, that is, as producers
of goods and services for sale in the market, is inherently positive. It
is the creation of wealth that sustains and promotes human life and
well-being. Indeed, it is the saving and investment and profit motive and
competition of businessmen that are responsible for practically all
of the wonderful technological advances of the last two hundred years or
more, and for the ability of practically everyone in the capitalist
countries to afford them.
dishonesty and fraud have no more essential connection to business
activity than they do to the practice of medicine or the performance of
music or to any of the arts or sciences. Just as the existence of
dishonest physicians, musicians, artists, or scientists has no actual
bearing on the nature of those activities as such, so too the existence of
dishonest businessmen has no actual bearing on the nature of business
activity as such.
contrast, the activity of politicians and government officials is always
inherently negative—it is always destructive or threatens destruction.
This is because the foundation of all law and government activity is
physical force or the threat of physical force. This is expressed in the
ancient Latin dictum "nulla lege sine poena," which means
"no law without punishment." That is, there is no such thing as
a law, administrative ruling, edict, decree, or government order of any
kind that is not backed by the threat to use physical force to compel
obedience to it. In the absence of the government's ability to use
physical force to compel obedience, its declarations would be without
effect. They could simply be disregarded at will.
legitimate use of this negative power is to negate the negative
constituted by the private use of physical force, that is, to prohibit and
punish such acts as murder, assault, robbery, rape, kidnapping, and fraud.
To that strictly limited extent, i.e., the banning of physical force from
human relationships, the government can make it possible for the positive
activity of the private citizens to then proceed unhindered and achieve
all the beneficial effects it is ultimately capable of achieving. However,
insofar as the government steps beyond this narrowly circumscribed,
strictly delimited domain of legitimate activity, it acts as a destroyer
in the same manner as private criminals.
extent and scope of the transgressions of the government today, one must
say that while there may be many businessmen engaged in activities ranging
from various sharp practices to outright fraud, the government and the
politicians who determine its activities are routinely, day in and
day out, engaged in massive theft, which is what the income and
estate taxes clearly are, and in other massive violations of individual
rights, which are inherent across the board in the government's using or
threatening to use physical force against individuals who have not
themselves resorted to force.
often than businessmen commit fraud, the government and the politicians
commit or are accessories to the commission of such criminal acts as
extortion, theft, and unjust imprisonment. This last occurs not only when
people are incarcerated for crimes they did not commit, which happens as
the result of carelessness, and worse, more often than one might think,
but when they are incarcerated for acts they did perform, but which are
not genuine crimes, such as the commission of so-called victimless crimes
and "economic crimes."
And when it
imposes a draft, the government is engaged in kidnapping and enslavement
on a massive scale, in that it forcibly compels people to be where and do
what it wants them to do rather than be where and do what they
choose to do. The same characterization may arguably be said to apply in a
milder form to public education and compulsory school attendance laws,
under which parents are given the choice of surrendering their children's
minds or going to jail.
in this country and the other countries whose legal systems are still
within the Anglo-Saxon legal tradition, the government and the politicians
have not yet gotten around to the commission of murder, though the
politicians of many other countries certainly have.
So much for
the comparison of the misdeeds of businessmen with the misdeeds of
government and politicians. The fact that it is nevertheless the misdeeds
of businessmen that are featured, indeed, blared forth, while the far
greater and more fundamental misdeeds of politicians and government
officials are for the most part ignored, is the result of the
anticapitalistic political philosophy and economic theories that guide the
great majority of today's intellectuals, including, of course, the great
majority of today's editorial writers and reporters.
not change until there is a new generation of intellectuals, who will have
read and studied the ideas of Ludwig von Mises and Ayn Rand, and their
predecessors and successors, that is, until there is a radical change in
the content of education.
originally appeared on the web site of the Ludwig von Mises Institute on
September 22, 2003.
© 2003 by George Reisman. All rights reserved.
Reisman, Ph.D., is professor of Economics at Pepperdine University’s
Graziadio School of Business and Management and is the author of
Capitalism: A Treatise
(Ottawa, Illinois: Jameson Books,
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