By Philip Pilkington, a journalist and writer living in Dublin, Ireland
Recently I wrote an essay claiming that Austrian economics provided a metaphysical-theological basis for what is today called ‘libertarianism’ – a popular, dogmatic political cult in the vein of Marxism-Leninism. The essay was abstract and, quite possibly, a bit obtuse – for that I apologise, but such is the nature of the material.
If I am correct and libertarianism is a political cult and its foundations were laid by the Austrian economists, what real world effects does this have? I pointed out in the aforementioned essay that if the libertarians ever truly seized power the results would probably be – as so often is the case with extremists who preach liberty – totalitarianism. But in all likelihood the libertarians will never get hold of true power – for unlike their Marxist-Leninist brethren, they are a political cult without a broad base of support; they have no proletariat and no peasantry!
So, what effects does the libertarian dogma have on popular debate? In the US quite a great deal, or so it would seem if we took a superficial look at the political landscape. But I think most of this can be accounted for by certain peculiarly American values that were incubated after the Revolutionary War of 1776 and not due to the libertarian dogma per se. Marxism-Leninism tried to impose a whole new culture upon Tsarist Russia, while libertarian soundbites are taken up by everyone from Evangelical Christians to blue-collar plumbers in the US. There’s something altogether different going on in those two examples. The libertarians have not created new cultural value from whole cloth; they’ve instead used existing ones as a Trojan horse for ideas that are radical and in many ways at odds with the political freedoms that America’s founders cherished.
Despite its efforts to reach a broader audience, libertarianism is a marginal discourse and it probably always will be (political cults without real power are always marginal – because they’re so extreme that the majority will not accept them, but may have them imposed on them by the state). But it lingers around the internet, derailing many economic and political debates.
Libertarians – and their Austrian brethren – since they are, at heart, metaphysicians and cultists, are often proselytizing rather than engaging in a discussion, even about the most mundane and non-theoretical of topics; such as, say, the structure of the modern banking system. Anything that calls into question any of their principles is quickly steamrolled over with either mounds of rhetoric or sophistical arguments.
Let us take an example of a ‘liberty-meme’ that bounces around the internet. There are many of these. One could, for example, deal with the 1920-21 recession that is torn out of context and elevated to mythic status. But that is too nuanced a discussion to have in short form (even though I think the evidence that 1920-21 was no more than an unmanaged post-war adjustment and thus has little bearing upon possible government responses to a massive debt deflation).
Instead we should focus our attention on the nature of some of these arguments. The way that these arguments are presented that supports the notion of a cult mindset. We will deal then with a simple one paragraph prediction put forward in the clearest and most definitive prose by Austrian school icon Murray Rothbard. But before we do this we will turn to another of Rothbard’s works to see what sort of scholarship this man habitually engaged in.
Partisanship, Bias, and an Unwillingness to Turn to the Index
My first encounter with Rothbard was in his essay on Karl Polanyi’s classic book The Great Transformation: The Political and Economic Origins of Our Time. Rothbard’s essay is entitled Down With Primitivism: A Thorough Critique of Polanyi.
From the title two things struck me. First of all, why did Rothbard need to insist that his critique was ‘thorough’? It was as if Polanyi had offended his sensibilities in some way needed not just dismissal, but ‘thorough’ dismissal. Secondly, having read Polanyi I had gotten no impressions of ‘primitivism’ – that is, the celebration of and nostalgia for primitive ways of life. Quite the contrary, I had always seen Polanyi as a progressive and a champion of the New Deal and Keynesianism – hardly ‘primitivist’ ventures.
From a title that raises such questions Rothbard’s essay begins on an emotional note:
Karl Polanyi’s The Great Transformation is a farrago of confusions, absurdities, fallacies, and distorted attacks on the free market. The temptation is to engage in almost a line-by-line critique.
Wow! Something in Polanyi’s book really offended Rothbard. Unfortunately, we do not get such a line-by-line critique but instead – perfectly in keeping with the metaphysical mindset of the libertarian cult – Rothbard aims to set out “some of the basic philosophic and economic flaws”. He continues in a metaphysical vein:
One basic philosophic flaw in Polanyi is a common defect of modern intellectuals—a defect which has been rampant since Rousseau and the Romantic Movement: Worship of the Primitive.
We will not yet look to see if this is true quite yet. Instead I ask the reader to reflect on the argument. Rothbard is arguing a broad point here; nothing less than the nature of Man.
From here Rothbard launches his ‘critique’. He starts out by attributing to Polanyi a certain viewpoint and – regardless, for the moment, of whether this mindset is Polanyi’s or not – goes on to engage him purely on these terms. Rothbard is not interested in facts, he is interested in philosophy.
This is a classic libertarian-style, philosophizing argument. Libertarians are not good with empirical detail; it eludes them. Their home turf is on the ground of morals and metaphysics. Rather ironically this dogma – who worships the practical, business-like aspects of human life – could never be taken seriously by any truly practical-minded person.
But Rothbard’s zeal gets the better of his argument in the most embarrassing of ways.
To illustrate this consider a thought experiment. You are going to engage in a critique of a book – nay, a ‘thorough’ critique of a book. You want to characterise this book as worshipping primitive man. What is the very first thing you do? Answer: you turn to the index of the book and look up the term ‘primitive man’ to see if the author has mentioned it, then carefully study the pages therein to ensure that one understands fully the argument being put forward.
Rothbard never bothered. Because if he had he would have found a passage clearly marked in the index as Polanyi’s key proclamation on ‘primitive man’ that was, in its estimation, rather caustic and cynical in its estimation of the concept.
First we will set forth Rothbard’s accusations against Polanyi:
[I]t is implicitly and even explicitly assumed that the way primitive tribes act is more “natural”, is somehow more appropriate to man than the “artifices” of civilization. This is at the root of Rousseauism. The way ignorant, fear-ridden, quasi-animalistic savages act is somehow more natural, because presumably more “instinctual”, than the ways of civilization.
And now Polanyi himself in his key passage on the primitive man:
The work of social anthropology proved to be emphatically right. For if one conclusion stands out more clearly than another from the recent study of early societies, it is the changelessness of man as a social being. His natural endowments reappear with a remarkable constancy in societies of all times and places.
It is easy to spot Rothbard’s rather glaring error. Polanyi was not arguing that modern man needs to return to some purported Rousseauian ‘state of nature’ – to a garden of primitive bliss where the constraints of modern civilisation are done away with. No, Polanyi is actually saying quite the opposite. He is saying that we are far more similar to our primitive brethren than many of us would think.
But Rothbard is not interested in arguing about this. Instead he goes on a long moralistic tirade about the evils of what he calls ‘primitivism’ (that is, this apparent desire to return to a state of supposed nature), while Polanyi believes in no such thing. Polanyi – quite clearly, it must be added – is claiming that we bear many affinities to primitive tribes people. This is precisely the opposite of claiming that we have grown so different from them that we need to return to their way of life.
We could simply chalk this up as a strawman and have done with it. But I believe it highlights something specific about the libertarian mind. The libertarian is generally not interested in arguing about empirical facts or the empirical validity of a theory, just as Rothbard is not interested in examining the possible similarities between Westerners and primitive tribes people and their respective economic systems. Instead, they are only comfortable when making broad-sweeping moral or metaphysical arguments – and so, a typical rhetorical tactic is to assign a moral or metaphysical point-of-view to the opponent and then take this apart. Meanwhile the opponent sits there in a complete daze, trying to get a point in sideways about the structure of the banking system or something so banal while being accused of being a ‘primitivist’, a ‘communist’ or some other such nonsense.
This is the ground, the ground of generalisations and stereotypes that the libertarian inhabits. The world is divided up into ‘good guys’ and ‘bad guys’ with clearly delineated metaphysical positions that can be attacked or approved of. Meanwhile, those of us who eschew such pat generalisations try to argue with facts and are baffled when the libertarians begin once more to talk about their metaphysics. But such is nature of the libertarian mind.
Waiting for Judgement Day
Because the libertarian’s world is divided up into ‘good’ ideologies and ‘bad’ ideologies it is inevitable that they should actively seek out some reason that the ‘bad’ ideologies will eventually be punished. When one engages in this sort of moralistic and theological dividing up of the world, it is not surprising that one soon falls back on the old religious ways of thinking about Judgement and Punishment. What is so fascinating is that, not unlike the stories of the anti-evolutionists, this dogma is so impervious to facts.
And so, we arrive at our next Rothbard example. A prediction, no less. (A premonition, perhaps?)
Back in 1991 Rothbard wrote the following and it has since become a regular online ‘liberty meme’ in the blogosphere and elsewhere:
The important point here is a basic change that has occurred in the psychology of the market and of the public. In contrast to the naive and unquestioning faith of yesteryear, everyone now realizes at least the possibility of collapse of the FDIC. At some point in the possibly near future, perhaps in the next recession and the next spate of bad bank loans, it might dawn upon the public that 1.5 percent is not very safe either, and that no such level can guard against the irresistible holocaust of the bank run.
At that point, ignoring the usual mendacious assurances and soothing-syrup of the Establishment, the commercial banks might be plunged into their ultimate crisis. The United States authorities would then be faced with two stark choices. One would be to allow the entire banking system to collapse, along with virtually all the deposits and depositors in that system. Since, given the mind-set of American politicians, and their evident philosophy of “too big to fail,” it is certain that they would be forced to embrace the second alternative: massive, hyper-inflationary printing of enough cash to pay off all the bank liabilities. The redeposit of such cash in the banking system would bring about an immediate runaway inflation and a massive flight from the dollar.
The libertarians regularly quote this as if it had come true. If you read that quickly you might have been superficially impressed. If so, give it another glance and go a bit slower because Rothbard makes a very specific claim. First, he says that if there was a collapse of the banking system the US would engage in a very specific policy measure. He says that the US government would engage in, and I quote:
…[the] printing of enough cash to pay off all the bank liabilities…
So far so good right? Rothbard knew this because the Federal Reserve had acted as Lender of Last Resort many times in the past. Any economist would have been able to tell you that this would happen in the case of a large-scale banking collapse in the US. This is no more a prediction than saying that if the US were attacked on a reasonably large-scale by a terrorist organisation once again that they would step up the War on Terror.
So far, then, Rothbard’s is not a prediction, per se, but merely a description of what the Federal Reserve generally does when banking crises arise. But then he makes a prediction; a real prediction. I quote:
The redeposit of such cash in the banking system would bring about an immediate runaway inflation and a massive flight from the dollar.
This is as specific a prediction as you will ever get. And because of that it is as falsifiable a prediction as you will ever get.
Rothbard not only says that there will be “runaway inflation” and a “massive flight from the dollar” but he gives us a time-period: “immediate”. “Immediate”. Not “four years down the line”. Not “when the economy recovers”. “Immediate”. “Immediate”.
As everyone now knows, Rothbard was wrong. (He also predicted that there would be apocalyptic bank runs, which was also wrong.) He was wrong because he did not understand how modern banking systems work. But that is a side-issue. What is key here is that he made a very specific prediction and it turned out to be incorrect. After the bailouts the US experienced neither “immediate runaway inflation” or “a massive flight from the dollar”. And yet here’s the most amazing thing: I have encountered that quote (more than once) as proof that Rothbard was correct and he saw it all coming!
Just look at this Mises.org post entitled ‘Rothbard saw the future’ written by this rather unusual individual (who also seems to have also written an essay rationalising drinking liquor in the morning). Incredible!
You would think that a rational person, after reading that would inquire into why Rothbard had gotten it so wrong. But no, not the libertarians. Instead, the cult devotee takes the quote and shamelessly presents it as evidence to his intellectual adversary that his views are correct. Imagine if we could all walk around showing our failures to our opponents and claiming that they were victory. “Logic be damned, even when I’m wrong I’m right!”
These are the popular manifestations of the libertarian ideology. This is what happens when a political cult forms. There are many other examples – indeed, the libertarian style is often an adoption of one of the above positions: either an attempt to lull the opponent into a metaphysical shouting match or an attempt to pass off a watery, unverifiable quote as truth about a given issue or to shamelessly display a failed theory or prediction and claim it as an intellectual victory. And all of this stems out of the same phenomenon: a closed mind.
Libertarians are typically narrow and closed minded individuals. They are in search of Absolute Truths about the world and when they have posited them to themselves these Truths enter an intellectual sphere where they are beyond empirical reproach. For all their hatred of primitivism, the libertarians are the primitive ones. They have not yet entered into the civilised world of disinterested, factual argument. They remain stuck in an adolescence filled with value judgements, vague predictions (that are often incorrect) and metaphysical proclamations.
Andrew Dittmer has pinpointed this tendency in the sixth part his excellent ‘interview’ series on libertarianism. The libertarians even have a pseudo-rational name for this proud perversion of the scientific method: praxeology. Praxeology is to the libertarians as diamat was to the Marxist-Leninists; an a priori pseudo-philosophy that allows them to ignore unwelcome evidence and insulate themselves from criticism.
As Dittmer says to his interlocutor:
Your argument is not very convincing. It is built out of a series of assertions, and none of the assertions makes sense. The argument with the graphs is exactly the same, but with graphs.
And that could pretty much be applied to most libertarian arguments: they are usually based on assertions, and these assertions are typically unconvincing. When you argue with them they, like Rothbard in his ‘debate’ with Polanyi, tend to attack you based on assertions that they attribute to you – and so it becomes a solipsistic argument with a single interlocutor bouncing two assertive dialogues against each other that he himself created. The libertarians may think they win this type of game, but all they’ve done is create an echo chamber.