Collectivism Is the Epitome of Power-Based Thinking, that It Is Appropriate for Some People to Exercise Coercive Authority over the Lives and Property of Others

In his great book Boundaries of Order, Shaffer argues that people can best solve their problems and progress through peaceful social cooperation. To cooperate peacefully, they need to delimit property rights. As Shaffer puts it, “If we are to have the resilience to make life-enhancing responses to the world—to assess risks and other costs, and to settle upon an efficacious course of action—we must enjoy the autonomy to act upon our portion of the world without interference from others, a liberty to be found only in a system of privately owned property.”

Shaffer takes great pains to show how people can resolve whatever problems arise from their mutual interaction through setting the appropriate boundaries of their property rights. In settling their disputes on an individual basis, they manifest their respect for one another:

Private property, as a system of social order, reflects the extent to which we are willing to acknowledge one another’s autonomy and to limit the range of our own activities. Private property is the operating principle that makes real Immanuel Kant’s admonition: “Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only.”

Unfortunately, there is another way that people can choose to act. They can decide to solve their problem collectively, through resort to the State. Shaffer leaves us in no doubt what he thinks of this:

The twentieth century demonstrated to thoughtful men and women the totally inhumane nature of any system premised on political collectivism. A sign on a church in the former East Berlin that read “nothing grows from the top down,” succinctly identified the anti-life nature of all forms of institutionally-directed, collective control over people. Collectivism is the ultimate expression of the pyramidal model of the universe. It is the epitome of power-based thinking (i.e., that it is appropriate for some people to exercise coercive authority over the lives and property of others).

--David Gordon, introduction to A Libertarian Critique of Intellectual Property, by Butler Shaffer (Auburn, AL: Mises Institute, 2013), 11-13.

Everything That Is Truly Competitive and Rivalrous in the Real World Gets Labeled as Monopolistic and Resource Misallocating in the Alice-in-Wonderland Purely Competitive World

There are two avenues of criticism that one might take with respect to neoclassical monopoly theory. In the first place, one might criticize the purely competitive model which is employed as a benchmark and as a basis of comparison with monopolistic situations. And secondly, one might criticize the whole concept of nonlegal barriers to entry, arguing, instead, that it is simply consumer preference that "limits competition" and that consequently no misallocation of resources occurs.

Most economists would agree that pure competition is not actually possible. Some would agree, perhaps reluctantly, that it might not even be desirable or optimal if it could exist. (If they agree to this, of course, then they must also agree that moving toward pure competition is not necessarily desirable, either.) But few economists have noticed or emphasized the fundamental flaw of the purely competitive model, namely, that it is not a description of competition at all. Pure competition is a static, equilibrium condition whose very assumptions are such that competitive process is ruled out by definition. Or to put the matter more charitably, while pure competition may describe the final outcome of a particular competitive situation, the ultimate end result, it does not describe the competitive process that produced that particular outcome. The purely competitive theory is not a theory of competition as such.

The neoclassical habit of confusing competitive process with a final, static equilibrium condition makes for gross errors in economic analysis. For instance, product differentiation, advertising, price competition (including price discrimination), and innovation are rather routinely condemned as "monopolistic" and, thus, as resource misallocating and socially undesirable. This condemnation follows "logically" since not one of these activities is possible under purely competitive conditions. Hence everything that is truly competitive in the real world, truly rivalrous, gets labeled as "monopolistic" and resource misallocating in the Alice-in-Wonderland, purely competitive world. The analytical conclusions one is forced to come to, employing the purely competitive perspective, are not just wrong, not just unrealistic, but the very opposite of the truth. Far from being able to "predict," or tell us anything meaningful concerning competitive behavior, pure competition can only describe what things would be like if the world contained zombie-like consumers with homogeneous tastes, atomistically structured firms identical in every important respect, with no locational advantages, no advertising, no entrepreneurship, and no rivalry whatever. Surely this is the major flaw and absurdity inherent in the purely competitive perspective.

--D. T. Armentano, "A Critique of Neoclassical and Austrian Monopoly Theory," New Directions in Austrian Economics, ed. Louis M. Spadaro (Kansas City: Sheed Andrews and McMeel, 1978), 95-97.

What Economists Call Game Theory Psychologists More Accurately Call the Theory of Social Situations; the Branch Most Widely Used in Economics Is the Theory of Non-Cooperative Games

The heart of modern “rational” economic theory is the concept of a non-cooperative or “Nash” equilibrium of a game. If you saw the movie A Beautiful Mind this theory – created by Nobel Laureate John Nash – is briefly described, albeit inaccurately. But to put the oxen before the cart, let us first describe what a game is. A game in the parlance of a game theorist or economist does not generally refer to a parlor game such as checkers or bridge, nor indeed to Super-Mario III. Instead, what economists call game theory psychologists more accurately call the theory of social situations. There are two branches of game theory, but the one most widely used in economics is the theory of non-cooperative games – I shall describe that theory here.

The central topic of non-cooperative game theory is the question of how people interact. A game in the formal sense used by economists is merely a careful description of a social situation specifying the options available to the “players,” how choices among those options result in “outcomes,” and how the participants “feel” about those outcomes. The timing of decisions and the information available to players when undertaking those decisions must also be described.

The critical element in analyzing what happens in a game (or social situation) is the beliefs of the players: what do they think is likely to happen? How do they think other players are likely to play? From a formalistic perspective the beliefs of players are generally described by probability distributions – we assign a probability to an outcome – although in more advanced theories – such as epistemic game theory – beliefs are more sophisticated and mathematically complicated objects. Please observe that the notion that we are uncertain about the world we live in and about the people we interact with is at the very core of game theory.

Given beliefs about consequences and sentiments about those outcomes it is almost tautological to postulate that players choose the most favorable course of action given their beliefs. At one level this is what it means for players to be “rational” and should scarcely be controversial… yet many dense books have been written criticizing this notion of rationality.

--David K. Levine, ed., Is Behavioral Economics Doomed? The Ordinary versus the Extraordinary (Cambridge, UK: Open Book Publishers, 2012), 5-6.

Intellectual Property Rights Are a Power to Stop Other People from Exercising Their Own Property Rights; the Law of Copyrights and Patents Violates the Very Rights Locke Defended

This means that IP rights are not property rights, but are in fact a power to stop other people from exercising their own property rights. If I own a copyright in a book, I can use the force of government to stop someone from using their own paper and ink to produce their own copies of the book. If I own a patent on an invention, I can use the force of government to shut down someone else’s factory that produces copies of my invention, even though the other person is using his or her own equipment, machinery, and components. I can even do this if the other person is not using a ‘‘copy’’ of my invention, but independently invented it all on his or her own. For a libertarian, this is unjust because it is using aggressive force against peaceful people. As law professor Tom W. Bell has put it:

By invoking state power, a copyright or patent owner can impose prior restraint, fines, imprisonment, and confiscation on those engaged in peaceful expression and the quiet enjoyment of tangible property. Because it thus gags our voices, ties our hands, and demolishes our presses, the law of copyrights and patents violates the very rights Locke defended.

So according to libertarian theory, IP rights are not ‘‘property rights’’ at all, but are a government-issued license to attack property rights—and therefore should be abolished.

Rand’s attempt to justify IP fails under this framework because it presumes that ownership of ideas is possible and legitimate. So does Rothbard’s attempt to ground IP in contract. We can see why by comparing Rothbard’s contract-based copyright to a case in which Jones makes a contract with Smith to tell him a secret. A contract to keep a secret, standing alone, is legitimate—people can always make deals to do or not do things. If Smith tells everyone Jones’s secret, Jones rightly can sue Smith because he broke their deal. Jones cannot, however, sue everyone else in the world who now knows the secret to stop them from repeating it; he did not have contracts with those people and therefore cannot claim any rightful ownership over them, the ideas in their heads, or their property. And so it is with copyright: a seller can make his buyers agree not to copy a book, but he may not stop others who happen to see it from doing so. Likewise, an inventor may not stop someone who sees his or her invention (say, a machine) from using this knowledge to make a similar or better machine.

--Jacob H. Huebert, Libertarianism Today (Santa Barbara, CA: Praeger, 2010), 208.

According to F. A. Hayek, in the Field of Patents, Copyright, and Trade-Marks, a Slavish Application of the Concept of Property Has Greatly Fostered the Growth of Monopoly

Although defenders of patents often try to deny that patents constitute monopoly privileges by arguing that the term “monopoly” is inapplicable, such an argument is merely semantic. There is no contradiction or incompatibility between the notions of “patent as property” and “patent as monopoly,” and, in practice, they are closely related, since the monopolistic nature of patents is precisely what confers economic value upon them. According to Sigmund Timberg:

A patent serves a fourfold purpose. Viewed morally and socially, and perhaps psychologically, it is a reward for unusual inventive ability. From the standpoint of economics and commercial law, it is a property right. Neither of these purposes—the reward to the inventor or the creation of a property right—have any restrictive economic effect in and of themselves. But then we come to the patent’s third phase—from the vantage point of the state, a patent is a grant of a monopoly to the inventor based on the public interest in promoting the growth and diffusion of technology. It is the monopoly grant that makes tangible the inventor’s reward and converts a formal into a realistic property right. Moreover, the monopoly grant has a prima facie impact on trade, because the monopoly conferred by the patent is the right to exclude others from manufacturing or selling the patented product, or from practicing the patented process.

Hayek argues:

The problem of the prevention of monopoly and the preservation of competition is raised much more acutely in certain other fields to which the concept of property has been extended only in recent times. I am thinking here of the extension of the concept of property to such rights and privileges as patents for inventions, copyright, trade-marks, and the like. It seems to me beyond doubt that in these fields, a slavish application of the concept of property as it has been developed for material things has done a great deal to foster the growth of monopoly, and that here drastic reforms may be required if competition is to be made to work. 

--Julio H. Cole, "Patents and Copyrights: Do the Benefits Exceed the Costs?" Journal of Libertarian Studies 15, no. 4 (Fall 2001): 81-82.

Intellectual Property Rights Are Difficult to Justify under the Humean Economic Theory of Property Since These Rights Do Not Arise from Scarcity; Instead Artificial Scarcity Is Created by the Law

Although the term “intellectual property” is commonly used in the legal field, it is rather problematic in economics, since it is difficult to justify this type of property right with the same arguments that are used to justify private property in tangible goods.

According to the economic theory of property (following David Hume), society benefits from the delimitation and protection of private property rights because goods are scarce. There is no point in defining property rights over abundant goods. On the other hand, when goods are scarce and property is communal, they are not used efficiently. Private property guarantees that scarce goods will be put to their most efficient and productive uses.

It is difficult to justify intellectual property rights under this concept of property, since these rights do not arise from the scarcity of the appropriated objects; rather, their purpose is to create scarcity, thereby generating a monopoly rent for holders of such rights. In such case, the law does not protect property over a scarce good, since the law itself created the scarcity, and this artificial scarcity generates the monopoly rents that confer value upon those rights. The big difference between patents and copyrights on the one hand, and tangible goods on the other, is that the latter will be scarce even if there are no well-defined property rights; in the case of patents and copyrights, the scarcity arises only after the property right is defined.

--Julio H. Cole, "Patents and Copyrights: Do the Benefits Exceed the Costs?" Journal of Libertarian Studies 15, no. 4 (Fall 2001): 81.

Justifications for Copyright Protection Have Taken a Mercantilist Turn; The Shift from Neoclassical Welfare Economics to Mercantilist Justifications Defines US Trade Policy for Intellectual Property

Over the last twenty years, justifications for broader copyright protection have taken an increasingly mercantilist turn. In the recent debates over the Protect Intellectual Property Act (PIPA) and the Stop Online Piracy Act (SOPA), proponents did not seriously argue that these measures would enhance welfare by encouraging the production of more and better works of authorship. Rather, they argued that these bills would increase revenues to domestic copyright owners and thereby create jobs. This shift from neoclassical welfare economics to mercantilist justifications for policy is not unique to PIPA and SOPA, however. Rather, it has become a defining feature of United States trade policy with respect to copyright and intellectual property, more generally, over the last few decades. Moving away from the tenets of free trade, trade policy in the intellectual property arena has sought increasingly to protect domestic industries from foreign competition and to ensure thereby more revenue for and more jobs in those industries within the United States.

--Glynn S. Lunney Jr., "Copyright's Mercantilist Turn," Florida State University Law Review 42, no. 1 (Fall 2014): 95-96.

On the Surprisingly Weak Economic Case for Copyright; for 400 Years Copyright Has Been Justified by the Fear That in Its Absence, We Will Have Too Few Original Works

From an economics perspective, the central justification for copyright has changed little since the Stationers’ Guild articulated it to the Star Chamber in 1586. In that year, the Stationers’ Guild wrote:

And further if privileges [that is, copyright] be revoked no books at all should be printed, within a short time, for commonly the first printer is at charge for the Author’s pains, and some other such like extraordinary cost, where an other that will print it after him, comes to the Copy gratis, and so may he sell better cheaper than the first printer, and then the first printer shall never utter [that is, sell] his books.

Almost exactly four centuries later, Professors Landes and Posner offered essentially the same justification, though phrased more contemporaneously:

In [the] absence [of copyright protection], anyone can buy a copy of the book when it first appears and make and sell copies. The market price of the book will eventually be bid down to the marginal cost of copying, with the unfortunate result that the book will not be produced in the first place, because the author and publisher will not be able to recover their costs of creating the work.

In short, for 400 years, copyright has been justified by fear – the fear that in its absence, we will have no, or perhaps more accurately, too few original works.

In the same way, for 400 years, the central limit on copyright has remained equally unchanged. Copyright raises the price of books, music, and other copyrighted works. That higher price simultaneously provides the incentive to create additional original works and limits access to existing works. The search for optimal copyright is therefore thought to entail a search for the optimal balance between incentives and access. . . .

In devising an optimal copyright system, this supposed balance between incentives and access has become the central guide. Too little copyright and we will have too few original works. Too much and we will not be able to enjoy the works we have. Only when we balance incentives and access appropriately, when we have neither too little nor too much copyright, will copyright be just right – or at least, that’s the conventional wisdom.

--Glynn Lunney, Copyright's Excess: Money and Music in the US Recording Industry (Cambridge, UK: Cambridge University Press, 2018), e-book.

What Gives Locke's Social Contract Its Air of Unreality, of Toothlessness, Is That It Is a Reversion to the Old Thomist Idea of Revocability without the Retention of Armed Force in Civil Society

Here lies the crux of the difference between the old Thomist and the new Hobbesian contract; the first deals with a society that has kept its arms, the second with one that has 'chosen' to disarm itself. In the first, resistance to the prince who transgresses natural law takes the form of resort to force or the threat of it. In the second, resistance is unnecessary, but would be impossible if it were necessary. In Rousseau's intellectually weaker, in some ways decadent, quasi-Hegelian version of the irrevocable social contract, resistance to the general will would be tantamount to resisting one's own will, properly understood (the condition of proper understanding being the tautological one that one's own will conforms to the general will). What gives Locke's social contract its air of unreality, of toothlessness, and of placebo, is that it is a reversion to the old Thomist idea of revocability without the retention of armed force in civil society which would make performance by the contracting parties mutually contingent, and resistance to unlawful government meaningful.

--Anthony de Jasay, Social Contract, Free Ride: A Study of the Public Goods Problem (Oxford: Clarendon Press, 1989), 72-73.

"Beggar-Thy-Neighbour" Policies in International Trade Illustrate the Prisoners' Dilemma As Applied to States; the "Dominant Strategy" of Each State Is to engage in Discriminatory Trade Practices

On a less apocalyptic level, "beggar-thy-neighbour" policies in international trade seem to be a perfectly good practical illustration of the prisoners' dilemma as applied to states. Generally speaking, all states could be better off if, by cooperative conduct, they allowed the potential gains from trade to be fully realized, just as all prisoners would be better off if none betrayed the other by confessing. The "dominant strategy" of each state (as the "optimum tariff" argument demonstrates), however, is to engage in discriminatory trade practices, high tariffs, competitive devaluations and so forth. This strategy is "dominant" on the argument that if other states behave nicely and adopt free-trader conduct, the first state will reap advantages from its misbehaviour, while if other states misbehave, it would suffer by not also misbehaving. The supposed outcome of every state adopting its dominant strategy is an escalating trade war with everybody rapidly getting poorer and being unable to do anything about it in the absence of a super-state with powers of coercion. In actual fact, many, states much of the time behave reasonably well in international trade. They either do not have a dominant strategy, or, if they do, it is not to misbehave. Most states most of the time adhere to GATT rules (which stand for the "cooperative solution" in game-theory parlance). Trade wars are generally minor skirmishes, limited to a few products of a few states and instead of escalating as they should, they usually subside. Such "partial free trade" is achieved, just like "partial peace," without benefit of a state above states and the transfer of power to it. Complete free trade, like total peace, may from most points of view be more satisfactory, but the cost of the added satisfaction must appear prohibitive to the participants; states do not willingly submit to domination even if the dominant entity is to be called the Democratic Federation of Independent Peoples.

--Anthony de Jasay, The State, The Collected Papers of Anthony de Jasay (Indianapolis: Liberty Fund, 1998), 46.

The Iterated Prisoner's Dilemma Has Become the E. coli of Social Psychology; the Prisoner's Dilemma Is Used to Model Arms Races, Oligopolistic Competition, Collective Action Problems, Vote Trading, etc.

Since the Prisoner's Dilemma is so common in everything from personal relations to international relations, it would be useful to know how best to act when in this type of setting. However, the proposition of the previous chapter demonstrates that there is no one best strategy to use. What is best depends in part on what the other player is likely to be doing. Further, what the other is likely to be doing may well depend on what the player expects you to do.

To get out of this tangle, help can be sought by combing the research already done concerning the Prisoner's Dilemma for useful advice. Fortunately, a great deal of research has been done in this area.

Psychologists using experimental subjects have found that, in the iterated Prisoner's Dilemma, the amount of cooperation attained—and the specific pattern for attaining it—depend on a wide variety of factors relating to the context of the game, the attributes of the individual players, and the relationship between the players. Since behavior in the game reflects so many important factors about people, it has become a standard way to explore questions in social psychology, from the effects of westernization in Central Africa (Bethlehem 1975) to the existence (or nonexistence) of aggression in career-oriented women (Baefsky and Berger 1974), and to the differential consequences of abstract versus concrete thinking styles (Nydegger 1974). In the last fifteen years, there have been hundreds of articles on the Prisoner's Dilemma cited in Psychological Abstracts. The iterated Prisoner's Dilemma has become the E. coli of social psychology.

Just as important as its use as an experimental test bed is the use of the Prisoner's Dilemma as the conceptual foundation for models of important social processes. Richardson's model of the arms race is based on an interaction which is essentially a Prisoner's Dilemma, played once a year with the budgets of the competing nations (Richardson 1960; Zinnes 1976, pp. 330-40). Oligopolistic competition can also be modeled as a Prisoner's Dilemma (Samuelson 1973, pp. 503-5). The ubiquitous problems of collective action to produce a collective good are analyzable as Prisoner's Dilemmas with many players (G. Hardin 1982). Even vote trading has been modeled as a Prisoner's Dilemma (Riker and Brams 1973). In fact, many of the best-developed models of important political, social, and economic processes have the Prisoner's Dilemma as their foundation.

There is yet a third literature about the Prisoner's Dilemma. This literature goes beyond the empirical questions of the laboratory or the real world, and instead uses the abstract game to analyze the features of some fundamental strategic issues, such as the meaning of rationality (Luce and Raiffa 1957), choices which affect other people (Schelling 1973), and cooperation without enforcement (Taylor 1976).

--Robert Axelrod, The Evolution of Cooperation, rev. ed. (New York: Basic Books, 2006), 27-29.

People Find It Hard to wrap Their Heads Around the Concept that Ideas Can Be Rewarded Without a Copyright or Patent. Without a Copyright, How Will the Author Get Paid?

People find it hard to wrap their heads around the concept that ideas can be rewarded without a copyright or patent. Without a copyright, how will the author of a novel get paid? Consider the facts.

Start with English authors selling books in the United States in the nineteenth century. “During the nineteenth century anyone was free in the United States to reprint a foreign publication” without making any payment to the author, besides purchasing a legally sold copy of the book. This was a fact that greatly upset Charles Dickens, whose works, along with those of many other English authors, were widely distributed in the United States, and “yet American publishers found it profitable to make arrangements with English authors. Evidence before the 1876–8 Commission shows that English authors sometimes received more from the sale of their books by American publishers, where they had no copyright, than from their royalties in [England],” where they did have copyright. In short,without copyright, authors still got paid, sometimes more without copyright than with it.

How did it work? Then, as now, there is a great deal of impatience in the demand for books, especially good books. English authors would sell American publishers the manuscripts of their new books before their publication in Britain. The American publisher who bought the manuscript had every incentive to saturate the market for that particular novel as soon as possible, to avoid the arrival of cheap imitations soon after. This led to mass publication at fairly low prices. The amount of revenues British authors received up front from American publishers often exceeded the amount they were able to collect over a number of years from royalties in the United Kingdom. Notice that, at the time, the U.S. market was comparable in size to the U.K. market.

--Michele Boldrin and David K. Levine, Against Intellectual Monopoly (New York: Cambridge University Press, 2008), 22-23.

Timberlake (1963) Claims That Political Corruption by the Alcohol Industry Was the Major Reason for Establishing Prohibition

The control of corruption is of vital interest in any free and democratic society. An important goal of prohibition is the reduction of corruption. Timberlake (1963) claims that political corruption by the alcohol industry was the major reason for establishing Prohibition: "Like many other businesses, the liquor industry sought to influence or control all levels of government in order to promote its interests and to protect itself against unfavorable legislation. But unlike most businesses, it had a special reason to engage in politics: no other enterprise paid such high taxes or contributed such large sums to government" (106). Prohibition seeks to reduce corruption in both the specific sense of the bribery of public officials and in the general sense of maintaining individual integrity, virtue, and moral principles. Experience, however, shows that, on the contrary, the corruption of public officials increases. As Mises notes, "Unfortunately the office-holders and their staffs are not angelic. They learn very soon that their decisions mean for the businessmen either considerable losses or—sometimes—considerable gains. Certainly there are also bureaucrats who do not take bribes; but there are others who are anxious to take advantage of any 'safe' opportunity of'sharing with those whom their decisions favor' " (1949, 734). This corruption, in the case of prohibition, represents a failure to achieve the goals of prohibition and a major impediment to the enforcement of prohibition.

--Mark Thornton, The Economics of Prohibition (Salt Lake City: University of Utah Press, 1991), 126-127.

F. A. Hayek Sees a Causal Connection between Copyright Laws and Socialism; Abolishing Copyright May Liquidate the Defenders of the Welfare-Warfare State

One of the most important points that would have to be examined in such a discussion would be how far the growth of this [intellectual] class has been artificially stimulated by the law of copyright.

It would be interesting to discover how far a seriously critical view of the benefits to society of the law of copyright or the expression of doubts about the public interest in the existence of a class which makes its living from the writing of books would have a chance of being publicly stated in a society in which the channels of expression are so largely controlled by people who have a vested interest in the existing situation.

--F. A. Hayek, "The Intellectuals and Socialism," University of Chicago Law Review 16, no. 3 (Spring 1949): 420, 420n.

The Not-Real-Socialism Defence Is Only Invoked Retrospectively, When a Socialist Experiment Has Already Been Widely Discredited

Socialism is popular in the UK – not just among students, but also among people in their 30s and 40s. This is confirmed by survey after survey. Surveys also show that support for socialism in general terms is matched by support for a broad range of individual policies that could reasonably be described as socialist.

Curiously, support for socialism in the abstract is not matched by positive perceptions of any actual example, contemporary or historical, of a socialist system in action. People with a rose-tinted view of, for example, the former Warsaw Pact countries, of Maoist China, of North Vietnam or North Korea are a small minority in Britain today. Socialists have successfully distanced themselves from the over two dozen failed attempts to build a socialist society. Their claim that these systems were never ‘really’ socialist, but represented a distortion of the socialist ideal, has become conventional wisdom. Today, holding the failures of, for example, the former Soviet Union against a contemporary socialist is considered crass and boorish.

Yet while socialists distance themselves from contemporary and historical examples of socialism, they usually struggle to explain what exactly they would do differently. Socialists tend to escape into abstraction, and talk about lofty aspirations rather than tangible institutional characteristics. Those aspirations (for example, ‘democratising the economy’), however, are nothing new. They are the same aspirations that motivated earlier socialist projects. Socialism has never fulfilled those aspirations, but this is not for a lack of trying.

The not-real-socialism defence is only ever invoked retrospectively, namely, when a socialist experiment has already been widely discredited. As long as a socialist experiment is in its prime, almost nobody disputes its socialist credentials. On the contrary: practically all socialist regimes have gone through honeymoon periods, during which they were enthusiastically praised and held up as role models by plenty of prominent Western intellectuals. It is only after the event (i.e. once they have become an embarrassment for the socialist cause) that their version of socialism is retroactively redefined as ‘unreal’.

--Kristian Niemietz, summary of Socialism: The Failed Idea That Never Dies (London: Institute of Economic Affairs, 2019), xi-xii.

For Carl Menger, Economics Is the Study of Purposeful Human Choice, the Relationship between Means and Ends; Menger Used Cause and Effect Unlike Jevons and Walras Who Used Simultaneous Determination

“There never lived at the same time,” wrote Ludwig von Mises, “more than a score of men whose work contributed anything essential to economics.” One of those men was Carl Menger (1840–1921), professor of political economy at the University of Vienna and founder of the Austrian School of economics. Menger’s pathbreaking Grundsätze der Volkswirtschaftslehre (Principles of economics), published in 1871, not only introduced the concept of marginal analysis, it presented a radically new approach to economic analysis, an approach that still forms the core of the Austrian theory of value and price.

Unlike his contemporaries William Stanley Jevons and Léon Walras, who independently developed their own concepts of marginal utility during the 1870s, Menger favored an approach that was deductive, teleological, and, in a primary sense, humanistic. While Menger shared his contemporaries’ preference for abstract reasoning, he was primarily interested in explaining the real-world actions of real people, not in creating artificial, stylized representations of reality. Economics, for Menger, is the study of purposeful human choice, the relationship between means and ends. “All things are subject to the law of cause and effect,” he begins his treatise. “This great principle knows no exception.” Jevons and Walras rejected cause and effect in favor of simultaneous determination, the technique of modeling complex relations as systems of simultaneous equations in which no variable “causes” another. Theirs has become the standard approach in contemporary economics, accepted by nearly all economists but the followers of Carl Menger.

--Peter G. Klein, foreword to Principles of Economics, by Carl Menger (1976; repr., Auburn, AL: Ludwig von Mises Institute, 2007), 7.

The Public's Understanding of What Money Is and Its Origins Has Greatly Devolved and the Average Person Now "Trusts" the Wise Men and Women Working Secretly in Central Banks

The public’s understanding of what money is and its origins has devolved to the point where the government monetary authorities can now inflate with impunity, with the ultimate result to be the destruction of the division of labor undoing all of mankind’s progress to date. The average Joe and Jane must trust the wise men and women working secretly in central banks around the world with what passes for money—paper and digits on a computer screen. These banks are the largest employers of academically-trained economists. But under the guidance of the Keynesian-schooled, the central banks engage in monetary operations that fulfill the funding needs demanded by politicians for political ends.

The hopes, dreams, and living standards of millions are affected daily by these faceless bureaucrats that supposedly know exactly which monetary buttons to push and levers to pull to insure our prosperity. However, history shows that central bankers have but one strategy to cure all things, especially their past mistakes: print more money, with their plans for stabilization resulting in just the opposite. . . .

Written in the same year that he testified before the Currency Commission in Austria-Hungary, Carl Menger explains that it is not government edicts that create money but instead the marketplace. Individuals decide what the most marketable good is for use as a medium of exchange. “Man himself is the beginning and the end of every economy,” Menger wrote, and so it is with deciding what is to be traded as money.

It was Menger who developed a complete theory of social institutions which arise as humans interact, each with his own subjective knowledge and experiences. It is the spontaneous evolution of these human actions that create institutions whereby individuals discover certain patterns of behavior that aid each person in attaining their goals more efficiently. Nothing is more central to this evolution than the development of money,  making the division of labor possible, and satisfaction of wants attainable.

--Douglas E. French, foreword to On the Origins of Money, by Carl Menger (Auburn, AL: Ludwig von Mises Institute, 2009), 7-9.

In the Sphere of Economics There Exist Certain Laws Against Which the Will of Man, and Even the Powerful Will of the State, Remain Impotent

Economic theory, from its very beginnings, has endeavored to discover and formulate the laws governing economic behavior. In the early period, which was under the influence of Rousseau and his doctrines of the laws of nature, it was customary to apply to these economic laws the name and character of physical laws. In a literal sense, this characterization was, of course, open to objection, but possibly the term “physical” or “natural” laws was intended merely to give expression to the fact that, just as natural phenomena are governed by immutable eternal laws, quite independent of human will and human laws, so in the sphere of economics there exist certain laws against which the will of man, and even the powerful will of the state, remain impotent; and that the flow of economic forces cannot, by artificial interference of societal control, be driven out of certain channels into which it is inevitably pressed by the force of economic laws.

--Eugen von Böhm-Bawerk, Control or Economic Law (Auburn, AL: Ludwig von Mises Institute, 2010), 7.

MP John Lewis Ricardo Saw Patents as Monopolistic Obstacles to Laissez-Faire and Denied Outright that Patents Accelerated Invention; Patents Were Equivalent to the Corn Laws

As remarkable as the creation of a real patent system, however, was the simultaneous advent of real and sustained calls for patents to be abolished altogether. Among the first of those prepared to voice this possibility was the MP John Lewis Ricardo, nephew of David Ricardo, the great political economist, and himself a convinced opponent of the Corn Laws. The younger Ricardo was the chairman of one of the early telegraph companies—telegraphy being by far the most advanced and exciting commercial science of the day. He had found himself forced to buy up patents to forestall litigation, and was therefore inclined by his own experience to see them as monopolistic obstacles to laissez-faire. He pointed out—as many would repeat in the next generation—that patents had not been required to stimulate the invention of printing, gunpowder, or paper. Only “trivial” improvements tended to be patented, he claimed. In the end, Ricardo denied outright that patents accelerated invention. He maintained instead that they were an unnecessary impediment—the equivalent, in effect, to the navigation acts or the Corn Laws themselves.

--Adrian Johns, Piracy: The Intellectual Property Wars from Gutenberg to Gates (Chicago: University of Chicago Press, 2009), 262.

Advocates of Laissez-Faire Began to argue that Literary Property Was Just Another Restraint Imposed on a Market that Ought to be Free; therefore, Pirates Were Exemplars of Free Trade

For the reprinters themselves, the problem was that there was not just one case to be made for their practice, but two—and they were mutually exclusive. On the one hand, mercantilist principles emphasized the virtue of replacing imported manufactures with home production. On this score, pirates were vanguards of national economic prowess. But on the other, advocates of laissez-faire began to argue that literary property—that mysterious and novel concept—was just another restraint imposed on a market that ought to be as free as possible. It was, they declared, at once absolutist, monopolistic, iniquitous to the public good, and philosophically absurd. On this account, pirates were exemplars of free trade—indeed, of freedom in general. Needless to say, while the first kind of argument tended to hold good in metropolitan centers like Vienna, the second sprang from upstart founts of enlightenment like Edinburgh, Dublin, and Philadelphia. Both stood opposed to metropolitan assertions of authorial property.

--Adrian Johns, Piracy: The Intellectual Property Wars from Gutenberg to Gates (Chicago: University of Chicago Press, 2009), 51-52.

One Consequence of Price Discrimination by Intellectual Monopolists Is that They Artificially Degrade Their Products in Certain Markets As Not to Compete with Other More Lucrative Markets

Effective price discrimination is costly to implement and this cost represents pure waste. For example, music producers love digital rights management (DRM) because it enables them to price discriminate. The reason that DVDs have country codes, for example, is to prevent cheap DVDs sold in one country from being resold in another country where they have a higher price. Yet the effect of DRM is to reduce the usefulness of the product. One of the reasons that the black market in MP3s is not threatened by legal electronic sales is that the unprotected MP3 is a superior product to the DRM-protected legal product. Similarly, producers of computer software sell crippled products to consumers in an effort to price discriminate and preserve their more lucrative corporate market. One consequence of price discrimination by monopolists, especially intellectual monopolists, is that they artificially degrade their products in certain markets so as not to compete with other more lucrative markets.

--Michele Boldrin and David K. Levine, Against Intellectual Monopoly (New York: Cambridge University Press, 2008), 71.

The Difference between the Right and the Left Is a Fundamental Disagreement Concerning an EMPIRICAL Question about the Existence of Individual Human MENTAL Differences

This brings me to the topic of “Left ” and “Right.”

The difference between the Right and the Left, as Paul Gottfried has often noted, is a fundamental disagreement concerning an empirical question. The Right recognizes, as a matter of fact, the existence of individual human differences and diversities and accepts them as natural, whereas the Left denies the existence of such differences and diversities or tries to explain them away and in any case regards them as something unnatural that must be rectified to establish a natural state of human equality.

The Right recognizes the existence of individual human differences not just with regard to the physical location and make-up of the human environment and of the individual human body (its height, strength, weight, age, gender, skin- hair- or eye-colour, facial features, etc., etc.). More importantly, the Right also recognizes the existence of differences in the mental make-up of people, i.e., in their cognitive abilities, talents, psychological dispositions, and motivations. It recognizes the existence of bright and dull, smart and dumb, short- and far-sighted, busy and lazy, aggressive and peaceful, docile and inventive, impulsive and patient, scrupulous and careless people, etc., etc. The Right recognizes that these mental differences, resulting from the interaction of the physical environment and the physical human body, are the results of both environmental and physiological and biological factors. The Right further recognizes that people are tied together (or separated) both physically in geographical space and emotionally by blood (biological commonalities and relationships), by language and religion, as well as by customs and traditions. Moreover, the Right not merely recognizes the existence of these differences and diversities. It realizes also that the outcome of input-differences will again be different and result in people with much or little property, in rich and poor, and in people of high or low social status, rank, influence or authority. And it accepts these different outcomes of different inputs as normal and natural.

The Left on the other hand is convinced of the fundamental equality of man, that all men are “created equal.” It does not deny the patently obvious, of course: that there are environmental and physiological differences, i.e., that some people live in the mountains and others on the seaside, or that some men are tall and others short, some white and others black, some male and others female, etc. But the Left does deny the existence of mental differences or, insofar as these are too apparent to be entirely denied, it tries to explain them away as “accidental.” That is, the Left either explains such differences as solely environmentally determined, such that a change in environmental circumstances (moving a person from the mountains to the seaside and vice versa, for instance, or giving each person identical pre- and post-natal attention) would produce an equal outcome, and it denies that these differences are caused (also) by some — comparatively intractable — biological factors. Or else, in those cases where it cannot be denied that biological factors play a causal role in determining success or failure in life (money and fame), such as when a 5 foot tall man cannot win an Olympic gold medal in the 100 meter dash or a fat and ugly girl cannot become Miss Universe, the Left considers these differences as pure luck and the resulting outcome of individual success or failure as undeserved. In any case, whether caused by advantageous or disadvantageous environmental circumstances or biological attributes, all observable individual human differences are to be equalized. And where this cannot be done literally, as we cannot move mountains and seas or make a tall man short or a black man white, the Left insists that the undeservedly “lucky” must compensate the “unlucky” so that every person will be accorded an “equal station in life,” in correspondence with the natural equality of all men.

With this short characterization of the Right and the Left I return to the subject of libertarianism. Is libertarian theory compatible with the worldview of the Right? And: Is libertarianism compatible with leftist views?

--Hans-Hermann Hoppe, Getting Libertarianism Right (Auburn, AL: Mises Institute, 2018), 26-28.

Max Stirner Has Been Called the Father of Anarchism and the Only Writer to develop Fully the Implications of a Total Rejection of External Authority

James Huneker relates the following incident:

One hot August afternoon in the year 1896 at Bayreuth, I was standing in the Marktplatz when a member of the Wagner Theater pointed out to me a house opposite, at the corner of the Maximilian-strasse, and said: "Do you see that house with the double gables? A man was born there whose name will be green when Jean Paul and Richard Wagner are forgotten." It was too large a draught upon my credulity, so I asked the name. "Max Stirner," he replied. 

Thus far, Huneker's informant has proved to be a poor prophet. The philosophy of Max Stirner has been largely ignored since its creation over one hundred years ago. One commentator asserts that "scholars are mostly content to recollect him, if they recollect him at all, by his associations, the tacit assumption being that it is only through these associations that he has any historical significance or contemporary interest."

 Stirner has, indeed, important associations in abundance. He was a student of Hegel, the most extreme member of the school of Young Hegelians who turned their master's method against his conclusions. He then turned his dialectic against his fellow Young Hegelians and became embroiled in controversy with them; one of these was Karl Marx. His associations include membership in several other important intellectual traditions. He has been called "a key figure" in German nineteenth-century romantic individualism, "the one in a line including Goethe, Wagner, and Nietzsche who went the furthest in exploring a philosophy of the glorification of the ego in the context of political and socio-economic ideas." There is little evidence of a direct influence of Stirner upon Nietzsche, but many striking anticipations of Nietzschean ideas can be found in Stirner: "cleric" and "herd" morality, the "moralizing of ethically neutral words," the death of God, the will to power. There are also many anticipations of Freudian concepts in Stirner, among them projection and unconscious motivation, libidinal repression, and the egoistic character of all human acts. He has also been regarded as a precursor of existentialism.

When Stirner has been considered at all, however, it has usually been as an expounder of anarchism. He has been called "the father of anarchism" and "the only writer to develop fully the implications of a total rejection of external authority."

--Philip Breed Dematteis, Individuality and the Social Organism: The Controversy between Max Stirner and Karl Marx, Men and Movements in  the History and Philosophy of Anarchism (Brooklyn, NY: Revisionist Press, 1976), 1-2.

The Traditional "Dunning School" of Reconstruction Scholarship Has Been Attacked Since the Civil Rights Era by Marxist/Liberal Revisionists Who Label Dunning School Scholars as "Racists"

A great deal of excellent scholarship on Reconstruction was published during the early twentieth century by such historians as Claude Bowers and the Columbia University historian William Archibald Dunning and his cadre of graduate students. The historians James Ford Rhodes and James G. Randall painted a picture of Reconstruction as a vindictive, abusive, corrupt, political racket. Dunning, Rhodes, Bowers, and Randall were Northerners who documented in great detail how the Republican Party—which is to say, the federal government, since the party enjoyed a political monopoly—ignored presidential vetoes and federal court rulings, disenfranchised white Southerners while giving the vote to ex-slaves (who were instructed to vote Republican), formed new state puppet governments run by Republican Party political operatives, and used the power gained from this to plunder the taxpayers of the South for more than a decade after the war ended.

Beginning in the 1930s, and especially since the 1960s, a group of “revisionist” historians have come to the forefront to challenge what has come to be known as the “Dunning School” of Reconstruction scholarship. This group of scholars, which, according to Kenneth M. Stampp, includes “Marxists of various degrees of orthodoxy,” rarely disputes the facts that were set out by the Dunning School. They acknowledge that much of what Dunning's disciples have said about Reconstruction is true. Facts are facts. Relying heavily on Marxian class analysis, however, these revisionists have painted a more “enlightened” picture of the era. (The most prominent contemporary historian of Reconstruction is the Marxist Eric Foner, who calls Reconstruction “America's unfinished revolution.”)

These Marxist and “liberal” revisionists argue that Reconstruction wasn't all that bad compared to, say, what happened after the Japanese invaded Nanking in the 1930s, or the Nazi occupation of Europe, or the deeds of the Russian army in Germany at the end of World War II. After all, Kenneth Stampp has argued, there were not even any mass executions of former Confederates after the war. Southerners were indeed “lucky” in this regard, according to the revisionist view.

Because Dunning and his disciples provided accurate descriptions of the ex-slaves and their role in Southern politics shortly after the war, the Marxist/Liberal revisionists have sought to discredit the Dunning School's views by labeling them as racist. Dunning and his students, for example, questioned the wisdom of immediately extending to uneducated and propertyless ex-slaves the right to vote without first providing at least a couple of years of education for them. The revisionist historians have deemed this “racist.” As Kenneth Stampp remarked, “As ideas about race have changed, historians have become increasingly critical of the Dunning interpretation of Reconstruction.”

But the revisionists create a problem when they use this criterion (allegedly racist attitudes) in judging the credibility of Reconstruction scholarship. Every one of the revisionists virtually deifies Lincoln. The problem here is that Lincoln himself was a white supremacist all his life, a man who didn't believe that the two races should even mingle (see chapter 2). In their work, the Dunning School scholars, by contrast, never made the kinds of racially disparaging remarks that Lincoln did. They never proclaimed the white race to be the “superior” race as Lincoln did; they never advocated shipping all blacks back to Africa or to some other foreign land; and they never pontificated in their writing about the alleged evils of interracial marriage, as Lincoln did.

If the revisionists are to dismiss Dunning's interpretation of Reconstruction on the grounds that he and his students were insensitive to blacks, then to be consistent they should be just as skeptical of what has been written about Lincoln over the past 100 years and even reevaluate much of their own scholarship.

--Thomas J. DiLorenzo, The Real Lincoln: A New Look at Abraham Lincoln, His Agenda, and an Unnecessary War (New York: Three Rivers Press, 2003), 202-204.

The Connection between Violence and Central Planning Is Still Not Understood; the Tendency of Economists to admire Hitler's Economic Program Is a Case in Point

The same could be said about all forms of central planning. It is wrong to attempt to examine the economic policies of any leviathan state apart from the political violence that characterizes all central planning, whether in Germany, the Soviet Union, or the United States. The controversy highlights the ways in which the connection between violence and central planning is still not understood, not even by the ADL [Anti-Defamation League ]. The tendency of economists to admire Hitler’s economic program is a case in point.

In the 1930s, Hitler was widely viewed as just another protectionist central planner who recognized the supposed failure of the free market and the need for nationally guided economic development. Proto-Keynesian socialist economist Joan Robinson wrote that “Hitler found a cure against unemployment before Keynes was finished explaining it.”

What were those economic policies? He suspended the gold standard, embarked on huge public works programs like Autobahns, protected industry from foreign competition, expanded credit, instituted jobs programs, bullied the private sector on prices and production decisions, vastly expanded the military, enforced capital controls, instituted family planning, penalized smoking, brought about national health care and unemployment insurance, imposed education standards, and eventually ran huge deficits. The Nazi interventionist program was essential to the regime’s rejection of the market economy and its embrace of socialism in one country.

Such programs remain widely praised today, even given their failures. They are features of every “capitalist” democracy.

--Llewellyn H. Rockwell Jr., The Left, the Right, and the State (Auburn, AL: Ludwig von Mises Institute, 2008), 106.