Thursday, June 29, 2006

One of the very first replies to my posting of CO2 Science’s journal review "A 221-Year Temperature History of the Southwest Coast of Greenland" was this: "’CO2 Science’ is funded by Exxon. Come on, you guys are usually such independent thinkers—you can do better than rehash this stuff.” (The response was on the blog at the Mises Institute.)

The author of this statement believes that it is sufficient to name the economic affiliation of an individual or organization to be able to dismiss and ignore anything that comes from them. This was a tactic employed for generations by the Marxists. Instead of refuting the criticisms leveled against their doctrines by economists and others, they were content to identify critics as a member of the capitalist class or as having received financial support from capitalists. The Nazis had their own variant of the practice. They were content to identify their critics as Jewish or as somehow supported by Jews or otherwise affiliated with Jews. The devastating criticisms of socialism made by Mises were dismissed on both grounds.

Now, today, here is Exxon. I don’t even know that it is the source of funds for CO2 Science, or is the major or only source. But I’m willing to assume that it is. How does it follow from that, that whatever comes from CO2 Science, or from Exxon, on the subject of global warming and CO2 emissions is automatically false?

Yes, it is true that Exxon-Mobil is the largest American oil company and wants to be able to remain in that branch of business, while the environmental movement would like to destroy it, and the whole rest of the oil industry, along with the coal and atomic power industries, and is using the alleged connection between global warming and CO2 emissions as its main weapon in its attempt to do so. (This weapon, of course, does not apply in the case of atomic power. But atomic power is regarded by the environmental movement as a terrifying death ray, even more frightening than global warming.)

So, yes, Exxon may have a financial self-interest at stake, which depends on whether or not there is a real connection between the CO2 emitted by the consumption of its fuels and global warming. Its financial self-interest may very well lie with the establishment of lack of any connection.

As a minor digression, I need to point out that this is not necessarily the case. To the extent that the environmental movement succeeds in making petroleum scarcer and more expensive, the revenues and profits earned by the owners of existing petroleum reserves rise. Major oil companies like Exxon-Mobil have actually gained in this way and have been severely criticized for these gains. In fact, some of their critics seem to imply that oil companies are, or at least should be, actual supporters of the environmental movement, precisely because it makes oil scarcer and more expensive and thus increases their profits to the extent that they already have reserves.

I have to say that I believe that the norm of competition within the oil industry, as well as its pride in the products it produces, prevents any such monopolistic, pro-environmentalist mindset. The individual oil company knows that its self-interest lies with an increase in its reserves, because whatever the effect on the overall supply and price of petroleum, its own situation would be worse if others added those reserves instead of it. Because then, it would be faced with the same lower price, but have less to sell.

So, granted, the individual oil companies, like Exxon Mobil, have a financial self-interest in the continued and growing production of petroleum and are glad to find any evidence they can that diminishes the threat of the environmentalist agenda. The relevant question is, which better serves their self-interest in accomplishing this? Is it to fabricate the facts or to find the actual facts and present them if they support its case? Or, to say the same thing in different words, which is the better defense of their self-interest: The actual truth if it supports their case? Or simply lies?

In the United States, we are fortunate to have both a long-standing tradition and clear Constitutional protection of a defendant’s right in a criminal trial not to testify. What the Marxists and Nazis and those who are following in their path today are seeking is the equivalent of a prohibition of a defendant’s right to testify.

Individuals, corporations, industries, are to be subject to attack by those who seek to injure or destroy them, and they are to be prohibited from defending themselves by virtue of people being unwilling listen to what they have to say. They are not to be listened to for no other reason than that their avoidance of injury and their survival matters to them. They have an “interest” in the outcome. Yes, they do. And they have a right to be heard—for that very reason! Because their best defense is truth.

Wednesday, June 28, 2006

I had been receiving e-mails for more than a year from an organization called CO2 Science. They all looked so abstruse and technical that I had never bothered to open any of the numerous links that they typically contained to this, that, and the other study, scientific journal, conference, or whatever. But for some reason, the other day, I did click on one of the links and what I found was not only readable, but also quite startling. Since the item was fairly short, I’ve taken the liberty of reproducing the whole of it here:

A 221-Year Temperature History of the Southwest Coast of Greenland
_______________________________________
Reference
Vinther, B.M., Andersen, K.K., Jones, P.D., Briffa, K.R. and Cappelen, J. 2006. Extending Greenland temperature records into the late eighteenth century. Journal of Geophysical Research 111: 10.1029/2005JD006810.

What was done
Combining early observational records from 13 locations along the southern and western coasts of Greenland, the authors extended the overall temperature history of the region - which stretches from approximately 60 to 73°N latitude - all the way back to AD 1784, adding temperatures for 74 complete winters and 52 complete summers to what was previously available to the public.

What was learned
In the words of the authors, "two distinct cold periods, following the 1809 'unidentified' volcanic eruption and the eruption of Tambora in 1815, [made] the 1810s the coldest decade on record." The warmest period, however, was not the last quarter century, when climate alarmists claim the earth experienced a warming that was
unprecedented over the past two millennia. Rather, as Vinther et al. report, "the warmest year in the extended Greenland temperature record [was] 1941, while the 1930s and 1940s [were] the warmest decades." In fact, their newly-lengthened record reveals there has been no net warming of the region over the last 75 years!

What it means
With approximately half the study region located above the Arctic Circle (where CO2-induced global warming is suggested by climate models to be most evident and earliest expressed), one would expect to see
southwestern coastal Greenland's air temperature responding vigorously to the 75-ppm increase in the atmosphere's CO2 concentration that has occurred since 1930, even if the models were only half-way correct. However, there has been no net change in air temperature there in response to the 25% increase in the air's CO2 content experienced over that period. And this is the region the world's climate alarmists refer to as a climatological canary in a coal mine??? If it is, real-world data suggest that the greenhouse effect of CO2 has been hugely overestimated.

Reviewed 28 June 2006

 

Saturday, June 24, 2006

To combat climate change, we need to break our addiction to consuming oil, while developing countries need to break their addiction to selling it. We need a different lifestyle model . . . . —Thomas L. Friedman

The biggest problem with our bounty of coal is not what it does to our mountains or the atmosphere, but what it does to our minds. It preserves the illusion that we don't have to change our lives. Given the profound challenges we face with the end of cheap oil and the arrival of global warming, this is a dangerous fantasy. — JEFF GOODELL

The above two quotations are from side by side op-ed pieces in The New York Times of June 23, 2006. They read like an orchestrated effort to make people feel guilty about a way of life in which man-made power eliminates most of the drudgery of life and makes possible light, heat, refrigeration, air conditioning, television, computers, and high speed travel, among many other things. This power, of course, is derived mainly from oil and coal. Much of it could be derived from atomic energy, but that is denounced even more than oil and coal. Man-made power, and the Industrial Revolution that spawned it, is what the pleasure-hating crew at The New York Times wants us to give up, along with years of our lives.

There is more ignorant and destructive verbiage in the same issue of this newspaper, this time on The Times’ editorial page proper:

Yesterday, the House of Representatives passed an estate-tax cut that is a repeal in everything but name. The so-called compromise would exempt more than 99.5 percent of estates from tax, slash the tax rates on the rest and cost at least $760 billion during its first full decade. Of that, $600 billion is the amount the government would have to borrow to make up for lost revenue from the cuts, which would benefit the heirs of America's wealthiest families, like the Marses of Mars bar and the Waltons of Wal-Mart Stores. The remaining $160 billion is the interest on that borrowing, which would be paid by all Americans. — “A Look at Republican Priorities: Comforting the Comfortable”

The Mars candy company (Milky Way, Snickers, M&Ms, etc.) and Wal-Mart are great benefactors of mankind. The first provides the pleasure of delicious candy at a price practically everyone can afford. The second provides an enormous array of goods at the most economical prices possible. The owners of these companies, and of all others like them, deserve every penny they have made and the right to pass all of their wealth on to the heirs of their choice.

If their heirs are allowed to receive that wealth, it will most likely continue to be invested in the provision of excellent goods that people want and need. If, instead, the wealth is diverted to pay taxes to finance welfare-state spending, it will certainly not remain invested in the provision of such goods, because it will end up in the hands of welfare-state clients and in such things as “bridges to nowhere” and other ridiculous pork-barrel projects currently financed by taxes.

The heirs should not be blamed for budget deficits. All they want is what is rightfully theirs—wealth that has been earned by those eager to pass it on to them. The budget deficits are created by massive government spending. Whoever is concerned with budget deficits, must urge the reduction of government spending to eliminate them.

Whoever is concerned with the plight of welfare-state clients deprived of government support, must urge the freedom of the individual to find employment on the best terms the market has to offer and his freedom to be supplied by the most economical suppliers he can find. This means the wholesale abolition of restrictions on production and exchange, from agricultural subsidies to zoning laws.

But here again, The Times shows itself to be the enemy of human success. It urges a forty percent increase in the minimum wage, a measure that that will inevitably deprive large numbers of people of the possibility of finding any employment and thus of gaining the skills and experience that might qualify them for better-paying jobs later on. In its ignorance and moral pretentiousness, The Times declares:

At the same time that Republicans are fighting to exempt the richest estates from taxes, they are blocking a raise for the nation's poorest workers. . . . Senate Democrats tried unsuccessfully this week to raise the federal minimum wage, which stands at just $5.15 an hour. It has not been increased in nearly a decade, and at its current stingy level, the rate flies in the face of Americans' belief that those who work hard and play by the rules will be rewarded. — “A Look at Republican Priorities: Afflicting the Afflicted”

The Times (and the Senate Democrats who are its heroes), is apparently ignorant of the well-established elementary principle of economics that the higher the price of anything, the less of it that will be bought, and that the same principle applies to wages. The fact that the minimum wage has not been raised in almost a decade is one of the reasons that the United States does not have the unemployment rate of France or Germany.

If The Times understood the principle that the higher the wage, the smaller the number of workers sought, it might also realize that the way to raise the wage rates of low-paid workers, would be to repeal the laws and regulations that enable labor unions and professional organizations to obtain artificially high wage rates for their members.

The inability of more-skilled workers to obtain employment in jobs commensurate with their skills, because artificially high wage rates hold down the quantity of their services that employers seek to buy, is responsible for an artificially large supply of labor competing for lower-skilled and unskilled jobs. And this larger supply requires that wage rates in the lower end of the labor market be lower than they would have to be if the middle and upper portions of the labor market were free and could thus employ all the labor they should employ.

Wage rates everywhere are also needlessly depressed by all of the allegedly “free benefits” that employers are made to pay for. These alleged free benefits include employer contributions to Social Security and Medicare, providing maternity leave, holidays, and paid vacations, and meeting the requirements of job safety laws. Their cost is as much a part of the cost of employing a worker as is his take home wage. It would make no difference to employers if the workers received the cost of these “free benefits” as actual take-home wages instead.

The Times doesn’t care to know any of this. Instead, it prefers what it considers to be the “moral high ground” of everyday contemptuously looking down its long, supercilious nose and sneering at the capitalist economic system, those who make it work, and those who enjoy its benefits.

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Friday, June 23, 2006

 

“Mutualism” is currently a hot topic of discussion on the blog of The Ludwig von Mises Institute. (See the extensive thread following my last posting there.) The following is my most recent posting there on this subject. Hopefully, it will be of interest to readers of this blog as well.

Mutualism claims to oppose the exploitation of labor, i.e., the theft of any part of its product. But when it comes to labor that has been mixed with land, it turns a blind eye and comes out foursquare on the side of the exploiter.

Thus, to elaborate on the case I presented in my last post, “Mutualism: A Philosophy for Thieves,” let us imagine that our legitimate land owner—legitimate even by Carson’s standards—has spent several years clearing or draining his land, pulling out stumps, removing rocks and boulders, digging a well, building a barn and a house, and putting up fences to keep in his livestock. It is this land that he agrees to rent to a tenant, or, what is not too different, sell on a thirty-year mortgage, which he himself will carry, on the understanding that every year for thirty years he will receive a payment of interest and principal.

The tenant or mortgagee signs a contractual agreement promising to pay rent, or interest and principal, and takes possession of the property. Being a secret mutualist, however, he thereupon proclaims that the property is now his, on the basis of the mutualist doctrine that, in Carson’s words, “occupancy and use is the only legitimate standard for establishing ownership of land.”

This is a clear theft not only of the land, but also of the product of labor. A worker has toiled for years and is now arbitrarily deprived of the benefit of his labor, and this in the name of the protection of the rights of workers!

Mutualists cannot help but be uncomfortable with cases of this kind. And because of this, they don’t mention them. Instead, they assert that land is unique, because it is not the product of labor. But in all cases of this kind, which are so common as actually to be the norm, major features of the land clearly are the product of labor.

After he has been robbed, mutualists tell the worker to be content with getting the thief’s moveable property, but not “his” real estate. Well, farmhouses, barns, wells, and the improvements in the ground itself that are products of labor, are not moveable. And yet they are just as much the product of labor as any manufactured product. And the worker who created them has the only legitimate claim to them in these circumstances.

The mutualist fraudster who has violated his contract is clearly a vicious exploiter of labor. And Mutualism is on his side.

Mutualists pretend that there will be communities in which such behavior is accepted and routine, and chide opponents for their lack of knowledge of anthropology for not understanding this. They do not care to admit that the only thing which can enforce such a practice is the threat of physical force against those who would put an end to it, i.e., for all practical purposes, the existence of some form of tyrannical state. Yes, mutualists are “anarchists” who turn out to be statists!

It is possible to see why this must be so by starting with a condition in which there is no government. In this state of affairs, our exploited worker-victim easily proves to his neighbors that a “lying, thieving mutualist” has stolen his land and deprived him of the benefit of years of work. If his neighbors have neither been lobotomized nor castrated, they will probably contemplate lynching this “mutualist.” In any case, they proceed with our victim to his land and are ready forcibly to evict the “mutualist.” What will stop them from doing so and thus putting an end to any practice of Mutualism’s depraved concept of “property rights”?

The only thing that will stop them is the threat or actuality of greater force exerted by mutualists, i.e., by a mutualist armed gang. If the mutualist gang has its way, it constitutes a de facto mutualist state, which must continue in existence indefinitely in order to uphold the mutualist concept of “property rights.”

Mutualism thus ends in nothing more than a state dedicated to the violation of property rights.

And, of course, it is worth pointing out that there is nothing genuinely “mutual” about “Mutualism.” It is a system designed to protect thieves, who gain at the expense of victims, who lose. Mutuality of gains requires the enforcement of voluntary contracts. It requires that the tenant or mortgagee pay the landowner or mortgagor what he has promised to pay. He gains, and only by honoring his contract can the other party gain too. Abiding by contractual agreements can legitimately be called “mutualism.” In contrast, the doctrine of “Mutualism” is a self-desecration.

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Sunday, June 18, 2006

The collapse of socialism-communism has not only given rise to the remarkable growth of environmentalism, as a replacement outlet for hostility to capitalism, but also to some growth, vastly less considerable of course, in the remnants of the old anarchist movement, which now sometimes calls itself “libertarian” or “left-libertarian.” A leading strand of this remnant goes under the name “Mutualism.” And its philosophy has recently been set forth in a book by one Kevin Carson, called Studies in Mutualist Political Economy (Fayettville, Arkansas: Self-published, 2004), which I reviewed in the current issue of The Journal of Libertarian Studies. The opening portion of my review appears in my blog posting of June 14 on this site.

The purpose of this posting is to expand on the following paragraph of that portion of my review:

Thus, for example, if I, a legitimate owner of a piece of property, legitimate even by Carson’s standards, decide to rent it out to a tenant who agrees to pay the rent, the property, according to Carson, becomes that of the tenant, and my attempt to collect the mutually-agreed-upon rent is regarded as a violent invasion of his [the tenant’s] “absolute right of property.” In effect, Carson considers as government intervention the government’s upholding the rights of a landlord against a thief. He believes he has the right to prohibit me and the tenant from entering into an enforceable contract respecting the payment of rent and that such action is somehow not a violation of our freedom of contract and not government intervention.

In support of my claims, I now quote Mr. Carson:

For mutualists, occupancy and use is the only legitimate standard for establishing ownership of land, regardless of how many times it has changed hands. An existing owner may transfer ownership by sale or gift; but the new owner may establish legitimate title to the land only by his own occupancy and use. A change in occupancy will amount to a change in ownership. Absentee landlord rent, and exclusion of homesteaders from vacant land by an absentee landlord, are both considered illegitimate by mutualists. The actual occupant is considered the owner of a tract of land, and any attempt to collect rent by a self-styled landlord is regarded as a violent invasion of the possessor's absolute right of property. (p. 200.)

Careless readers of this passage from Carson may assume that all that he is talking about is the case in which a later owner chooses not to occupy or use the property to which he has obtained title. Such a case is certainly possible, but it is not the case that needs to be considered first. The case that needs to be considered first is that of land which passes from the possession of someone whom Carson acknowledges as a legitimate owner, that is, precisely the kind of person of whom he says, “An existing owner may transfer ownership by sale or gift” to someone else, and then this someone else does, indeed, occupy and use the land.

The problem is that, according to Carson, this new party’s mere occupancy and use of the land extinguishes any possible property right in the land on the part of the previous possessor, whom Carson acknowledged as legitimate.

For suppose the first owner and the prospective second owner mutually agree on a rental of the land. According to Carson, once the second owner takes possession of the land and begins using it, he is now the legitimate owner. “A change in occupancy will amount to a change in ownership,” he has just said. If the first owner, who no longer occupies or uses the land, collects rent on it, he is a landowner who is absent from the land on which he collects rent. He is thus, necessarily, an “absentee landlord.” And Carson has also just said: “Absentee landlord rent, and exclusion of homesteaders [i.e., presumably the second occupant-user] from vacant land by an absentee landlord, are both considered illegitimate by mutualists. The actual occupant is considered the owner of a tract of land, and any attempt to collect rent by a self-styled landlord is regarded as a violent invasion of the possessor's absolute right of property.”

Here there is a mutually and voluntarily agreed upon rental contract, but after taking possession, the new occupant decides that he is the owner of the land and will not pay any “absentee landlord rent,” which Carson believes it is his absolute right to decide. Has he not obtained another’s legitimate property and is now refusing to pay for it? And, having taken it, and both refusing to pay for it and refusing to give it back, is he thus not stealing that property?

Would he have been able to obtain the use and occupancy of the land if it had been known or suspected that this is how he would behave, once having obtained it? Obviously, he would not have been able to, and the assurance of his not behaving in this way is a written and signed enforceable rental contract. In that contract it is agreed that in the event of failure to pay the rent, the use and possession of the property reverts to the first user/possessor, who is recognized as the property’s owner despite his absence from the property. The contract also provides that in the event of non-payment of the rent, the owner has the right to dispossess the tenant by force if necessary.

Carson denies the landowner’s rights in a case of this kind and regards the landowner’s act of dispossession as “a violent invasion of the possessor's absolute right of property.” He considers the support given the landlord by the courts and the police in enforcing the contract to be “government intervention.”

Because of these facts, I concluded in my review of his book, as I said near the beginning of this posting, that “Carson considers as government intervention the government’s upholding the rights of a landlord against a thief. He believes he has the right to prohibit me and the tenant from entering into an enforceable contract respecting the payment of rent and that such action is somehow not a violation of our freedom of contract and not government intervention.”

It should be realized that Carson’s hostility to private property rights is not limited to the case of land. He makes clear that it also includes houses and apartments. He advocates the seizure of vacant homes and apartments by homeless squatters. Thus, he declares:

If every vacant or abandoned housing unit in a city is occupied by the homeless, they will at least have shelter in the short term until they are forcibly removed. . . . In the meantime, the squatters' movement performs a major educative and propaganda service, develops political consciousness among urban residents, draws public attention and sympathy against the predatory character of landlordism, and—most importantly—keeps the state and landlords perpetually on the defensive. (pp 377-378.)

On the basis of this and all of the foregoing, I say that Carson’s “Mutualism” is a philosophy for thieves. As I wrote in my full-length review in the JLS:

The logic of Carson’s position extends to legitimizing auto theft: An individual rents a car from Hertz or Avis. He is the user/occupant. Hertz or Avis is the absentee owner demanding rent. It extends to the theft of clothing that is not being worn at the moment by its—absentee—owner. It extends to all property, for once in the possession of the thief, the thief as user/possessor becomes the legitimate owner, according to Carson’s conception of things.

Carson simply does not understand that ownership is not the mere possession and use of property but rather the moral and legal right to determine the possession and use of property.

Ironically, his failure to grasp this last principle totally undercuts his condemnation of the massive seizures of land that have occurred throughout history and which are the ostensible reason for his condemnation and hatred of “landlordism.” To the extent that such seizures were the result of a population of outsiders that not only seized the land of the previous occupants but also proceeded to work it, Carson has no basis of opposition, because his principle is that use determines ownership, and they are now the users. His principle of use determining ownership leaves no basis for opposing any theft, so long as the thief uses what he has stolen.

What Carson is actually opposed to is not violent appropriation of land —indeed, as we have seen, that is precisely what he advocates whenever he thinks it is “just.” What he is actually opposed to is merely the case in which the thief does not use what he has stolen—the leading example being when the thief settles down to become a landlord collecting rent on land that others use.

But, of course, Carson is equally opposed to someone who is not a thief also not using his own property. Non-use is alleged justification for legitimate property being seized, and, as I’ve shown, not just land but also homes and apartments, and by implication, automobiles, clothing, and everything else that is not being used by its owner.

I cannot help but suspect that what Carson is actually opposed to is not at all force, fraud, or actual injustice in the history of mankind but the existence of large inequalities of wealth and income, whatever their basis. The idle wealth of the rich is what he has in mind for seizure and subsequent use by the poor, who would allegedly be its rightful owners by virtue of the mere fact of their use of what they had stolen.

Hopefully, in the future, I will be able to address further the problems connected with violent seizures of land in the past and explain why they are irrelevant to the present and do not justify programs of redistributionist “land reform.” For those who may be interested, I have already written on this subject in my book Capitalism, on pp. 317-322.

For now what it is essential to understand is that Carson’s “Mutualism” is a philosophy that urges theft.
 

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Wednesday, June 14, 2006

Kevin Carson’s new book Studies in Mutualist Political Economy (Fayettvile, Arkansas, 2004, 409 pp.) centers on the incredible claim, self-contradictory on its face, that capitalism, including laissez-faire capitalism, is a system based on state intervention, in violation of the free market: “It is state intervention that distinguishes capitalism from the free market,” declares the book’s preface.” Capitalism, writes Carson, is “a system of privilege in which the State enable[s] the owners of capital to draw monopoly returns on it, in the same sense that the feudal ruling class was able to draw monopoly returns on land; or, as the left-Rothbardian Samuel Konkin put it, `Capitalism is state rule by and for those who own large amounts of capital (p. 92).’” Perhaps not surprisingly, in view of his description of capitalism, Carson hopes his book will provide a foundation for “free market socialist economics (p. 10).”

Exposition and Critique of Carson’s Framework

For the most part Carson is a Marxist. But not entirely. He adds to Marxism a large dose of what he calls “individualist anarchism” and, beyond that, a significant dose of apparent syndicalism.

Carson is a Marxist insofar as he upholds both an essentially absolutist labor theory of value and the Marxian exploitation theory, which follows from such a version of the labor theory of value.[1] According to the exploitation theory, all exchange value and thus all income is produced by labor and therefore properly belongs to wage earners. Under capitalism, however, a more or less considerable part of the income that properly should go to workers as wages is instead unjustly appropriated as profit, interest, and land rent, i.e., as one or another of the various forms of “surplus value.”

Marx held that exploitation is inherent in the nature of commodity production, because the determination of the value of commodities by the quantity of labor expended in their production is a universal law, applicable to labor itself, no less than to its products (hence the expression/complaint that under capitalism, “labor is a commodity”). According to Marx, the labor expended in the production of labor itself, is the labor expended in the production of the wage earner’s minimum necessities. It is this quantity of labor, the so-called necessary labor time that allegedly determines the value of labor.[2]

Thus, for example, if 6 hours of labor are required to produce the necessities that enable a worker to work for 12 hours, all that the capitalist pays for the 12 hours of labor is a wage corresponding to those 6 hours. The capitalist is thereby enabled to obtain the benefit of the employment of 12 hours of labor, and thus the addition of 12 hours of labor value to the value of his materials and machinery consumed in the production process, for a wage corresponding only to the 6 hours. The 6 hours the worker works over and above the necessary labor time, Marx calls “surplus labor time.” It is the alleged basis of all surplus value. As illustration, if $1 of product value corresponds to each hour of labor expended in production, the worker’s 12 hour day adds $12 of value, while the capitalist pays him a wage of only $6, and thereby gains $6 of profit or surplus value.[3]

Carson accepts this analysis, but with one alleged significant difference. Namely, he claims that in what he conceives of as a free market, namely, a market without alleged state intervention on behalf of capitalists, the value of labor would not be determined by the so-called necessary labor time, as Marx claimed, but by the full value that the worker’s labor adds to the value of the materials and machinery used up in the production. In other words, the worker’s wage would correspond to the 12 hours of labor he worked, and not merely to the 6 hours required to produce his minimum necessities. It would be $12 and not $6. It is this that Carson describes as “individualist anarchism's central insight (p. 10).” In Carson’s own words that insight is “that labor's natural wage in a free market is its product, and that coercion is the only means of exploitation. It is state intervention that distinguishes capitalism from the free market.”

Carson does not realize it, but he has fallen into a veritable abyss of error. Not only is the entire Marxian analysis as utterly wrong as an economic theory can be,[4] but in his efforts to modify it, he adds to it still more major errors.

Carson describes numerous forms of state intervention in the course of his book, many of them actual, such as wars of conquest, taxation, tariffs, subsidies, conservation laws, and licensing legislation. All such intervention, of course, is opposed by all consistent advocates of capitalism. Carson, however, includes under the heading of government intervention what he calls, following the anarchist Benjamin Tucker, “the land monopoly” and “the money monopoly,” which he regards as the respective foundations of rent and profit/interest. It is in the absence of this alleged intervention that labor would be able to receive its alleged full product as wages.

What Carson means by the land monopoly, at least as far as it relates to his claim that laissez-faire capitalism is a system of state intervention, is nothing other than that legal protection of the rights of landowners to collect contractually agreed upon rents represents government intervention (Carson, pp. 197, 200). He declares that, according to “Mutualists,” of which he is one, “[t]he actual occupant is considered the owner of a tract of land, and any attempt to collect rent by a self-styled landlord is regarded as a violent invasion of the possessor's absolute right of property” (p. 200).

Thus, for example, if I, a legitimate owner of a piece of property, legitimate even by Carson’s standards, decide to rent it out to a tenant who agrees to pay the rent, the property, according to Carson, becomes that of the tenant, and my attempt to collect the mutually-agreed-upon rent is regarded as a violent invasion of his [the tenant’s] “absolute right of property.” In effect, Carson considers as government intervention the government’s upholding the rights of a landlord against a thief. He believes he has the right to prohibit me and the tenant from entering into an enforceable contract respecting the payment of rent and that such action is somehow not a violation of our freedom of contract and not government intervention.

What Carson means by the money monopoly is equally bizarre: namely, the inability of the banking system to engage in a permanent policy of radically easy money that would drive the rate of interest and rate of profit to “near zero” (Carson, pp. 219-24). He believes that this inability is the result merely of “the state's licensing of banks, capitalization requirements, and other market entry barriers [which] enable banks to charge a monopoly price for loans in the form of usurious interest rates. Thus, labor's access to capital is restricted, and labor is forced to pay tribute in the form of artificially high interest rates” (p. 200).

Although Carson quotes a few paragraphs from Mises, and even claims to agree to the correctness of the time preference theory of interest, he apparently never heard of Mises’s demonstration of why unlimited credit expansion can succeed only in destroying the value of money, not in permanently reducing the rate of interest. He also seems to be unaware that in a free market, competition, if not the laws against fraud, would severely limit or totally eliminate credit expansion and that it is only government intervention that has enabled it to become as great as it has and that the unlimited credit expansion he advocates would require massively more government intervention in money and credit.[5]

Carson also claims that capitalism has been subsidized by history, as though it could be guilty of practicing government intervention retroactively:

the single biggest subsidy to modern corporate capitalism is the subsidy of history, by which capital was originally accumulated in a few hands, and labor was deprived of access to the means of production and forced to sell itself on the buyer's terms. The current system of concentrated capital ownership and large-scale corporate organization is the direct beneficiary of that original structure of power and property ownership, which has perpetuated itself over the centuries. (Carson, 2004, p. 144)

Some readers may be tempted to stop reading further, having reached the conclusion that Carson is nothing but a fool, ignorant of the nature of individual rights, of economics, and of logic, and, in claiming, on such a patently absurd basis, that capitalism rests on state intervention, dishonest to boot, seeking to hijack the concept of the free market into the service of its opposite, much as an earlier generation of socialists did with the word “liberalism.” Nevertheless, as Mises used to point out in his seminar, it is dangerous simply to dismiss people as cranks, or to attack their motives, without fully unmasking their errors. And, following that advice, this is what we must do with Carson [in the remaining 36 pages of this article].

This article is excerpted from the author’s much larger article of the same title which appears in The Journal of Libertarian Studies, Vol. 20, No. 1. The entire issue of the journal, which also contains articles by Walter Block, Roderick Long, and Robert Murphy, is devoted to an analysis of Carson’s book. A closely related article by Murray Rothbard is devoted to a critique of the wider doctrine of individualist anarchism.
____________________________________________________
Notes
[1] See Carson, 2004, p. 14, where he disingenuously quotes Ricardo along these lines, totally ignoring Ricardo’s recognition of the role both of the period of time that must elapse in production and of the rate of profit as determinants of the relative value of reproducible commodities, alongside the quantity of labor required to produce them. In contrast to Ricardo’s doctrine, the absolutist version of the labor theory of value, which was held by Marx, recognizes nothing but the quantity of labor expended in production as the source of exchange value.

[2] Cf. Marx, 1867, vol. 1, pt. 2, chap. 6.

[3] Cf. ibid., pt. 3, chap. 9, sec. 1.

[4] On this subject, see Reisman (1996, chaps. 11 and 14, passim). On the subject specifically of the exploitation theory and Marx’s treatment of interest, see also Böhm-Bawerk (1959, vol. 1, pp.263–271; and idem, 1962, pp. 201-302).

[5] This same point is made by Rothbard in the first essay of the present volume, in application to Carson’s predecessors in the Mutualist school. Despite frequent references to Rothbard, Carson seems totally unaware not only of that essay but also of Rothbard’s (1962, 2001) support of a one-hundred-percent-reserve gold standard as an essential feature of a fully free market and of the fact that in such a market credit expansion would necessarily be totally absent.

References

Böhm-Bawerk, Eugen. 1959 [1914]. Capital and Interest, South Holland, IL: Libertarian Press, George D. Hunke and Hans F. Sennholz, trans.

───. 1962 [1898]. “Karl Marx and the Close of His System,” reprinted as “Unresolved Contradiction in the Marxian Economic System” in Shorter Classics of Eugen von Böhm-Bawerk, South Holland, Ill.: Libertarian Press.

Carson, Kevin A. 2004. Studies in Mutualist Political Economy. Self-published: Fayetteville, AR.

Marx, Karl. 1867. Capital, vol. 1, London.

Reisman, George. 1996. Capitalism: A Treatise on Economics, Ottawa, Illinois: Jameson Books.

Rothbard, Murray N. 1962. Man, Economy, and State, 2 vols., Princeton, N. J.: D. Van Nostrand Company, Inc.

───. 2001. The Case for a 100 Percent Gold Dollar. Auburn, Alabama. The Ludwig von Mises Institute.

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Wednesday, June 07, 2006

A noted economist, Prof. Martin Feldstein of Harvard University, has written an article for the supposedly pro-free-enterprise Wall Street Journal, in which he proposes a system of government gasoline rationing as a means of improving the environment and promoting national security. (The article, titled “Tradeable Gasoline Rights,” appears in the June 5 issue, on p. A10.)

Surprisingly, or perhaps not surprisingly, the word “rationing” does not appear in Prof. Feldstein’s article. Yet that is exactly what he proposes.

Prof. Feldstein would have the government issue what would essentially be ration coupons to motorists, the total amount of which would equal its chosen level of aggregate gasoline consumption. In purchasing gasoline, it would be necessary for the purchaser to supply the necessary coupons along with the money price of the gasoline.

The nature of the process is perhaps somewhat obscured because of the electronic form in which it would take place. Instead of physical ration coupons, such as existed back in World War II, there would be government issued ration “debit cards” that would incur an electronic deduction with every gallon of gasoline purchased at the pump.

But what undoubtedly is most responsible for leading Prof. Feldstein astray is his enchantment with the idea of what he calls “tradeable gasoline rights, or TGRs.” His use of this term is what permits him to bypass and avoid the word “rationing.”

So let us be clear. What Prof. Feldstein proposes is gasoline rationing with a market in the ration coupons.

Some alleged defenders of free markets are attracted to such schemes because they would provide an important measure of flexibility in comparison with government rationing pure and simple: namely, individuals could obtain additional rations by buying additional coupons.

But the actuality is that in the long-run they are a much worse system. Straightforward rationing at least has the virtue of being so bad and painful that people want to get rid of it. But the kind of scheme that Prof. Feldstein proposes would create a major new government entitlement to millions of people, who would never be willing to give it up. These would be all those individuals who found it preferable to sell their gasoline ration coupons rather than use them. They would derive a more or less significant amount of money from the sale of their coupons and soon look upon the proceeds as a regular part of their incomes. This group would have a vested interest in maintaining the system forever.

Feldstein actually approves of the creation of this new entitlement and regards it as a powerful political selling point. He says, “the TGR system creates winners as well as losers” and declares, in the final paragraph of his article, “[t]hat a majority of households could benefit from the TGR system . . . is both an economic and a political advantage. It would be an efficient way to reduce gasoline consumption that Congress could actually pass.”

Prof. Feldstein does not realize that there must always be a net loss under any such arrangement. If because the government arbitrarily restricts the supply of gasoline, I must pay an extra $100 a month, say, to someone else, in order to obtain his ration coupons, there is something more involved than my loss of $100 and his gain of $100. There is the loss of gasoline. The economy as a whole is poorer to the extent of the government’s forced reduction in its supply. In the absence of the government’s reduction, I would have had my $100 and my gasoline. With its interference, not only does someone else have my $100, but someone else is without gasoline.

Furthermore, it never occurs to Prof. Feldstein that comparable “benefits” to many or most households might be achieved in other ways as well, such as by creating TER, TFR, and TCR systems—i.e., “tradeable electricity rights,” “tradeable food rights,” and “tradeable children rights”—and any and all manner of other systems of “tradeable rights,” i.e., systems in which the government adopts a scheme of rationing but allows trade in the coupons. It should not be difficult to see that before long, however the money might be shuffled around, the net effect would be that virtually everyone would have less, for the simple reason that there was less of more and more things.

If one is serious about improving the environment and promoting national security, there is a simple rational solution. And that is to allow economic freedom in energy production.

Opening up the North Slope of Alaska, the whole state of Alaska, indeed, the whole territory of the United States, including the continental shelf, to oil and gas exploration and production, abolishing the restrictions on the strip mining of coal, and allowing the construction of new atomic power plants, would sharply increase the supply of petroleum while reducing the demand for it. (This last would occur because of the greater availability and lower price of the alternatives afforded by natural gas, coal, and atomic power.)

The connection to national security should be obvious. Namely, the resulting dramatically lower price of oil would cause a corresponding dramatic reduction in the oil revenues of the Arab governments that finance terrorism. The money available to finance terrorism would thus be radically reduced.

The improvement in the environment that would result is obscured by the fact that people have lost sight of what the environment means. It is not nature in and of itself, apart from its connection to human life and well-being. Rather, it is the surroundings of man, his external material world, deriving its value from its contribution to his life and well-being. When the chemical elements that constitute the petroleum deposits of the North Slope of Alaska, or anywhere else, are removed from their original location, and appropriately broken down and combined with other chemical elements, brought from elsewhere, and then brought to human beings throughout the United States and around the world in the form of gasoline, the relationship between those chemical elements and human life and well-being is improved. In the ground they did nothing to serve man’s life. As gasoline, they allow human beings to move their persons and goods quickly and easily from one location of their choice to another.

Indeed, judged from the perspective of physics and chemistry, all of production and economic activity has as its essential purpose the improvement of man’s environment. For it consists precisely of the systematic change in the location and combination of the chemical elements in ways that make them stand in a more useful relationship to man’s life and well-being. It is the adaptation of man’s environment to man, hence, its improvement.

This last represents such a radically different perspective on the environment than has become prevalent in the last few decades that most readers will require much more discussion before being convinced of it, or even being willing to consider it, than I can possibly provide in the space of this brief article. So I must close by referring to my extensive discussions of the subject in Chapter 3 of my book Capitalism: A Treatise on Economics.

The adoption of a policy of economic freedom for energy production depends on confronting and overcoming the doctrine of nature’s intrinsic value and its role in the environmental movement. That is what this chapter of my book provides. It serves to cut the ground from beneath all proposals, whether Feldstein’s or others’, that seek to address alleged environmental problems by means of the violation of economic freedom.

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Tuesday, June 06, 2006

Earlier today I would not have believed it possible that I would write something in praise of an Op-Ed piece in The New York Times.

But Nicolas D. Kristof has written an article that demonstrates some serious understanding of a highly charged subject and has had the courage to express it in his column. The title of his article conveys its nature. It’s called “In Praise of the Maligned Sweatshop.”

Datelined, WINDHOEK, NAMIBIA, the article opens with the statement, “Africa desperately needs Western help in the form of . . . sweatshops.”

Kristof understands that the sweatshops would raise the demand for labor and cause a substantial improvement in economic conditions in comparison with what they are in the absence of the sweatshops. In the print-edition of the article, this point is driven home by a callout that reads, “What’s worse than being exploited? Not being exploited.”

Here are a couple of gems that his article contains:

Well-meaning American university students regularly campaign against sweatshops. But instead, anyone who cares about fighting poverty should campaign in favor of sweatshops . . . . If Africa could establish a clothing export industry, that would fight poverty far more effectively than any foreign aid program. . . . [A] useful step would be for American students to stop trying to ban sweatshops, and instead campaign to bring them to the most desperately poor countries.

Kristof even has an answer for advocates of paying a “living wage” in the sweatshops. He points out that because such a wage is above the market rate, the premium is typically pocketed by local managers, who are in a position to collect bribes for awarding the premium-paying jobs to workers of their choice, with the result that “the workers themselves don't get the benefit.”

Kristof’s article has what I experience as a kind of premonitional quality. Namely, it gives a momentary glimpse of what the world might be like if the world’s most intellectually influential newspaper were regularly filled with articles of this kind. How different the intellectual climate of our country would be. How different its political and economic policies would be. How much freer and more rational our society would be.

Of course, this is only a momentary premonition. But it makes me recall another such premonition that I experienced sometime in the mid-1970s, when I read that the Soviet government could no longer rely on the philosophy of Marxism to obtain the support of its people, but instead had to rely on Russian nationalism. That I recognized as a decisive crack in the whole edifice of socialism/communism.

It’s just possible that in Kristof’s column, we have a comparable crack in the left-liberal edifice of The New York Times. And I say this in the knowledge that Kristof has written other columns that are as horrendously bad as this one is remarkably good. 

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Monday, June 05, 2006

Paul Krugman is at it again. In today’s New York Times, in his official capacity as a professional bleeding heart “liberal,” he once again revels in his role of flagellating the pursuit of happiness with the whip of human misery. Specifically, he denounces the prospect of the impending Senate vote to abolish the estate tax, on the grounds that the government’s loss of revenue “will cause 65,000 people, mainly children, to lose health insurance, and lead many people who retain insurance to skip needed medical care because they can't afford increased co-payments.”

True to form, Krugman makes no mention of the fact that in each case the money paid as estate taxes was rightfully the property of the bequestor, who earned it and who had a right to determine to whom his property would go: namely, to his chosen heirs and not to anyone selected by Krugman or government officials, in defiance of his wishes. With Krugman and his ilk, the rights of bequestors and of taxpayers in general count for nothing. They are overridden by the needs of others.

His message is the endlessly repeated one of “stop, don’t use your wealth for your own enjoyment (present or future), because others are suffering and need it more than you do.” His message is that everyone’s life is mortgaged to the needs of others and that no one can breathe free and live for his own happiness and pleasure so long as anyone else, anywhere on earth is suffering and in misery.

Here is a news flash for Mr. Krugman and all others who share his beliefs: The individual owns his life free and clear. His own happiness is full and sufficient justification for his actions, irrespective of the needs, misery, and suffering of others. He did not cause their suffering and his self-sacrifice would not cure it.

An individual may be a multimillionaire (nowadays, he probably needs to be a billionaire) and desire a yacht or personal jet. He values his yacht and/or jet more than feeding the possibly thousands or tens of thousands of starving people around the world for whom the price of his luxuries might buy food. His valuation is not arbitrary or capricious. It is based on the fact that his yacht or plane will make a greater actual contribution to his life and the lives of his loved ones than will the feeding of a mass of people with whom he has no personal connection and who make no actual contribution to his life or well being.

Ironically, Krugman and virtually all the other bleeding heart “liberals” behave in essentially the same way in their own lives as does the billionaire. They too value their luxuries above the necessities of strangers. If they did not, they would live as monks under vows of poverty, in small cells, sleeping on a straw mat, and subsisting on bread and water, so that they could provide for those needier than themselves to the greatest possible extent.

Krugman closes his column with the remark, “Congress has already declared that the budget deficit is serious enough to warrant depriving children of health care; how can it now say that it's worth enlarging the deficit to give Paris Hilton a tax break?” The answer is that while Paris Hilton may not be one of the most inspiring representatives of humankind, the fact remains that like everyone else she too has the right to the pursuit of her own happiness. And neither Krugman nor anyone else is entitled to deprive her of anything that is rightfully hers because they believe that her wealth should be used differently than she would wish to use it. Paris Hilton deserves the tax break because the money is hers in the first place. Krugman’s Medicaid children do not deserve that money because it is not theirs and has been given them only by means of stealing it—i.e., taking it against the will of its owners at the point of a gun wielded by tax collectors.

Cutting Medicaid and all other government programs while reducing and eliminating taxes is precisely the policy that is needed to restore the founding principle of the United States, which is the individual’s right to the pursuit of his own happiness. This principle, not cutting the government’s budget deficit, is the primary. Implementing it means cutting government spending precisely for the purpose of cutting taxes. If there is a deficit, it means cutting government spending still more. It means cutting government spending for the very neediest to make possible the pursuit of happiness by the very wealthiest. If the pursuit of happiness is the principle, it means this above all, because only this will secure the principle.

The philosophy I have expressed above is most closely identified with Ayn Rand and her philosophy of Objectivism. And in truth, she is its most consistent advocate. Nevertheless, I would like to quote a passage from another advocate of the same philosophy, namely, Ludwig von Mises, which has the special virtue of pointing out the close connection between the ethics of egoism and the teachings of economics on the subject of the harmony of self-interests. It is the single passage in all of Mises’s writings that I value most highly and which served to make me a “Misesian” for life, when I first read it over fifty years ago. It summarizes the essence of Mises’s economic theories.

Nothing is gained when the teacher of morals constructs an absolute ethic without reference to the nature of man and his life. The declamations of philosophers cannot alter the fact that life strives to live itself out, that the living being seeks pleasure and avoids pain. All one’s scruples against acknowledging this as the basic law of human actions fall away as soon as the fundamental principle of social co-operation is recognized. That everyone lives and wishes to live primarily for himself does not disturb social life but promotes it, for the higher fulfillment of the individual’s life is possible only in and through society. This is the true meaning of the doctrine that egoism is the basic law of society.—Ludwig von Mises, Socialism An Economic and Sociological Analysis. New Haven: Yale University Press, 1951, p. 402.

Among the most important things that Mises showed is that the pursuit of self-interest is the foundation of the saving and investment and continuous innovation and improvement of products and methods of production that serves to raise the standard of living of all. In a country governed by the principle of the individual’s pursuit of his own happiness, the standard of living of the very poorest comes to surpass the standard of living of the very richest of a few generations back.

In such a country, great business fortunes are accumulated on the basis of the earning of a high rate of profit over a long period of time and the continuous saving and reinvestment of most of that profit. To earn the high rate of profit, repeated innovations are required, as competition serves to eliminate the premium profits on earlier innovations. In their origin and disposition, the great fortunes serve to increase the supply of products and reduce their prices, while raising the demand for labor and its wages, this last being one of the effects of the greater accumulation of capital.

In his ignorance, it is precisely such fortunes that Krugman is out to undermine through his advocacy of the continuation of the estate tax. He thinks the estate tax has no negative consequences for the average person because it “is overwhelmingly a tax on the very, very wealthy; only about one estate in 200,” he says, “pays any tax at all.”

If the estates consisted of mere heaps of personal consumers’ goods, in the manner, say, of the jewels of an Indian maharajah, Krugman might have a point. He has no point when the estates consist of the means of production that serve the general buying public in providing it with goods and services and that underlie most of the demand for labor in the economic system. Estate taxes are at the expense of the supply of consumers’ goods for all and at the expense of the demand for the labor of all. They are urged in opposition to the general standard of living and the well being of all.

Krugman and the other advocates of looting and plundering the wealth of the rich for the alleged sake of the poor contemptuously dismiss these absolutely correct economic doctrines pertaining to the role of innovation and saving as “the trickle-down theory.” In doing so, they serve only to perpetuate the poverty of which they pretend to complain.

Krugman and his ilk actually care nothing whatever for the welfare of the poor. For them the suffering of the poor is merely a weapon with which to beat down the aspirations and success of the rich, which alone can elevate the poor.

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

    Sunday, June 04, 2006

Dear Mr. Reisman-- I enjoyed reading your blog just now, but if you go back and read what I wrote, you'll note that I specifically set a parameter: to qualify a book had to be published in the last two decades. Atlas Shrugged was published, I believe, in 1959. The point I was trying to make is that over the last two decades, as business has become more central to American life--or least a more central topic now that Americans invest their 401Ks etc etc, and as business stories have become a part of the front page as well as the business page, and the subject of many non fiction books, where are the novelists? My point still stands, I believe.

Dear Mr. Nocera:

Thank you for your reply. Unfortunately, I believe it merely serves to dig you deeper into the hole of an indefensible position.

The “parameter” you set of books published in the last two decades was purely arbitrary, and so I chose to ignore it. You could not possibly have chosen it if you had read and appreciated Atlas Shrugged. This is a book of such importance that it automatically dictates a time period long enough to include it.

And your notion that it is such things as 401Ks that are significant in determining the importance of business to people’s lives is incredibly myopic. The importance of business is manifested in the difference between the standard of living in the United States and that of the Third World and the pre-industrial era. Where do you think the advances of the last two centuries or more have come from if not from the continuous innovation and the saving and investment of businessmen? This is an essential part of the message of Atlas Shrugged. It is a lesson that you and your colleagues at The New York Times, and most of the rest of the contemporary intellectual establishment, have not learned and refuse to consider.

George Reisman

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.

Saturday, June 03, 2006

In his New York Times column of June 3, Joseph Nocera asks:

who among our better novelists has put business front and center? . . . Tom Wolfe comes to mind, of course; his first novel, "Bonfire of the Vanities," tackled Wall Street in the 1980's, while "A Man in Full," his second novel, had real estate as its backdrop. Surely, though, there must be others that are escaping me.

Does the name “Ayn Rand” ring a bell? You know, the author of Atlas Shrugged, the novel that describes the collapse of our entire civilization on the basis of its hostility to business and businessmen? It’s only sold several million copies and has reportedly had a more profound influence on more people in the United States than any other book ever written, with the exception of the Bible.

Perhaps Mr. Nocera is simply ignorant of these facts. If so, that should be considered astounding, given his position as a professional business writer who is presumably familiar with a wider intellectual world than exists within the confines of his newspaper and the universities which have shaped the minds of its personnel.

Or perhaps he is aware of these facts but simply chooses to ignore them. If this is the case, it would be a classic illustration of the mentality of those once aptly described as “an effete corps of impudent snobs.” That is, a collection of ignoramuses feigning knowledge while going back and forth between ignoring and ridiculing those, such as Ayn Rand and Ludwig von Mises, who actually possess it.

There may also be a third possibility: a seemingly inexplicable failure of memory on Mr. Nocera’s part. If that is the case, let us hope for his sake that it is nothing more than a bizarre, isolated instance and not an indication of a developing permanent condition.

Copyright © 2006 by George Reisman. All rights reserved. George Reisman, Ph.D., is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996) and is Pepperdine University Professor Emeritus of Economics.