The Term "Base Money" Is Used because upon the Base of Base Money Sits a much Larger Pyramid of Credit; It Is Incorrect to say that “Banks Create Money”; Only the Federal Reserve Creates Base Money; Banks Can Only Create Credit

The money that is created by the Fed’s magic checking account is known as base money and consists primarily of Federal Reserve Notes (i.e., paper currency, dollar bills) and bank reserves, which are deposits of commercial banks with the central bank and are recorded electronically at the central bank. Only the Fed can create base money, and the Fed can create no other type of money except for base money. Paper bills make up the majority of base money. . . .

The term base money is used because upon the base of base money sits a much larger pyramid of credit. A bank deposit is not money, but is actually a kind of debt instrument, a bond that must be repaid at the request of the lender, called the depositor. As a bond, it pays interest. While the amount of base money available is determined to the dollar by the central bank (at least insofar as bills are not destroyed or lost by their holders or created by counterfeiters), the amount of existing credit can change according to a nearly infinite number of factors.

Thus it is incorrect to say that “banks create money.” Only the Federal Reserve creates base money. Banks can only create credit, which does not alter the supply of base money, but which may have an effect on the demand for base money. Actually, anyone can create credit, simply by making a loan. Credit is not money.

--Nathan Lewis, Gold: The Once and Future Money (Hoboken, NJ: John Wiley and Sons, 2007), 49-50.

Since the Fall of the International Gold Standard in 1914, the Fiat Money "System" Has Wandered through 4 Successive Stages of Disorder: 1914-31, 1931-68, 1969-85, and Mid-1980s to Present (2018-?)

Since the fall of the full international gold standard in 1914, the fiat money "system" has wandered through four successive stages of disorder. In each of these, we can identify the eventual emergence of a "stabilization experiment." The first three all ended in dismal failures, sometimes catastrophic. Either the experiment was deeply flawed or halted prematurely or both. The present--the fourth--is headed in the same direction, driven by essential flaws in concept and implementation. We call this last the "global 2% inflation standard." It could not have been introduced at a worst time. The main uncertainty is whether it will come to an end in an asset price deflation shock, or a goods inflation shock, or both. Then there will be the fifth stage of disorder. Question: could the fifth stabilization experiment, if and when it emerges, be more successful than the previous four? That is running ahead of our story. Let's go back to the beginning.

--Brendan Brown, The Case Against 2 Per Cent Inflation: From Negative Interest Rates to a 21st Century Gold Standard (Cham, CH: Springer International Publishing, 2018), Kobo e-book.

The Bolshevik Nationalization of Russia's Banks in 1917 Came Right Out of the Playbook of the Communist Manifesto: the "Centralization of Credit in the Hands of the State"

The Bolshevik nationalization of Russia’s banks in 1917 came right out of the playbook of the Communist Manifesto. “The proletariat will use its political supremacy,” Marx had instructed, “to wrest, by degrees, all capital from the bourgeoisie.” Such a program “cannot be effected,” he emphasized, “except by means of despotic inroads on the rights of property,” including the “centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.” Lenin, continuing this line of thought, had written earlier in 1917, “The big banks are that ‘state apparatus’ which we need for the realization of Socialism and which we take ready-made from capitalism. . . . This ‘state apparatus’ . . . we can ‘lay hold of’ and ‘set in motion’ at one stroke, by one decree, for the actual work of bookkeeping, control, registration, accounting, and summation is here carried out by employees, most of whom are themselves in a proletarian or semi-proletarian position.”

--Sean McMeekin, History's Greatest Heist: The Looting of Russia by the Bolsheviks (New Haven, CT: Yale University Press, 2009), 11.

The Vision of a New Order Would Come When the Groundwork Done by the Fascists Was Crowned with Socialism

One need only read the pertinent passages about Italian fascism in the very interesting diaries of Victor Serge, a dissident Russian Communist, to understand the deep and lasting connection between the national and international leftist ideologies, socialism-communism and fascism. Serge writes about Nicola Bombacci, a Socialist who later returned to Italy and "collaborated." When Serge met him in his exile in Berlin (1923-1924), Bombacci told him that Mussolini owed much to the ideas of the Communists. "Why," Serge asked, "didn't you get rid of Mussolini at the time of the destruction of the cooperatives?" "Because our most militant and energetic men had gone over to him." Serge confesses that he then realized how much he was tortured by the attraction fascism exercised on the extreme left.

Equally interesting are the confessions of Henri Guilbeaux, another founder of the Komintern, made to Serge. Guilbeaux saw in Mussolini the real heir of Lenin. Serge concluded that fascism attracted so many of the revolutionaries by its "plebeian force and violence" and by its constructive program: to build schools, to drain swamps, to promote industrialization, to found an empire. Moreover, there was the vision of a New Order which, to the leftist mind, would come about when the groundwork done by the Fascists was crowned with socialism. "It is impossible to review the Fascist phenomenon without discovering the importance of its interrelations with revolutionary socialism," Serge confessed.

--Erik von Kuehnelt-Leddihn, Leftism: From de Sade and Marx to Hitler and Marcuse (New Rochelle, NY: Arlington House Publishers, 1974), 159-160.

Socialism Announced Its Intention of Becoming the Religion for the New Humanity; the Heart of Marxist Socialism Is Neither Science Nor Philosophy but Religion

[In the nineteenth and early twentieth centuries] socialism . . . announced its intention of becoming the religion for the new humanity, and its intrinsic link to religion cannot be doubted. . . . It is a complete dogma, a solution to the question of the meaning of life, the purpose of history. It is the preaching of socialist morality [as well as a] religion of self-deification. . . . The heart of Marxist socialism . . . is neither science nor philosophy but religion.

--Nikolai Berdiaev

In 1906, Nikolai Berdiaev, himself initially a Marxist, spoke of the socialism of Lenin and his followers as a surrogate religion, as a belief system “that lays claims to replacing religion.” Lenin’s Social Democracy, Berdiaev insisted, was “the most perfect and finished form of . . . religious socialism.” It found itself in conflict with all forms of religion, he went on, because it was in direct and implacable competition with them.

--A. James Gregor, Totalitarianism and Political Religion: An Intellectual History (Stanford, CA: Stanford University Press, 2012), e-book.

Mussolini Wrote that Fascism Is Opposed to Classical Liberalism (the Philosophy that Underpins Capitalism) because It Denies the State in the Name of the Individual

As with all forms of socialism, fascist ideology was first and foremost an attack on classical liberalism, the philosophy that underpins capitalism, and that was perhaps stated clearest in Ludwig von Mises’ 1927 book Liberalism. The key features of classical liberalism, as defined by Mises, are property rights, freedom, peace, equality under the law, acceptance of the inequality of income and wealth based on the reality of human uniqueness, limited constitutional government, and tolerance.

Socialism in all its varieties is nothing if it is not an attack on every one of these principles, especially private property. Indeed, “THE ABOLITION OF PRIVATE PROPERTY” is the hallmark idea of The Communist Manifesto. Socialist ideologues and propagandists like Benito Mussolini spent years crusading against the principles of classical liberalism and capitalism to lay the ideological groundwork for their brand of socialism. In his book, Fascism: Doctrine and Institutions, Mussolini wrote that “The Fascist conception of life stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. . . . It is opposed to classical liberalism . . . [which] denied the State in the name of the individual” (emphasis added).

--Thomas J. DiLorenzo, The Problem with Socialism (Washington, DC: Regnery Publishing, 2016), e-book.

Time Proved the Anarchists Right: Social Revolution Broke Out in an Agrarian Country, the Dictatorship of the Proletariat Was a Permanent Dictatorship of Nonworkers, and It Was Done by a Direct Assault on Government

The theories formulated by Marx and Engels provided the program of the International Workingmen’s Association, popularly known as the First International, which they founded in London in 1864 to prepare labor for the approaching crisis of capitalism. The organization was from the first riven by disputes between socialists and anarchists. Although the anarchists shared with the socialists a common goal—a classless and stateless society—as well as the means to the end—violent revolution—in three important respects they parted ways with them. The anarchists saw the revolutionary potential not in the industrial working class but in the landless peasantry and the unemployed. Secondly, the social-ists envisaged between collapsing capitalism and triumphant communism a transitional stage (sometimes called “dictatorship of the proletariat”), during which the new ruling class would use the coercive powers of the state to dispossess the bourgeoisie of its capital and nationalize productive assets. The anarchists rejected the state in all its forms, predicting that the “proletarian dictatorship” would turn into a new instrument of oppression, this time run by and for the benefit of intellectuals. Finally, while the Marxists relied on the natural progression of the capitalist economy to bring about a revolution, the anarchists called for “direct action,” that is, an immediate assault on the existing system.

Time proved the anarchists right on all three points: social revolutions broke out not in industrial countries but in agrarian ones, and the “dictatorship of the proletariat” did turn the communist state into a permanent dictatorship of nonworkers over manual laborers and peasants. The Bolshevik revolution in 1917 Russia also was the result of a direct assault on government in a country where capitalism was still in its early phase of development.

Thus, virtually every one of Marx’s predictions turned out to be wrong, as became increasingly apparent during his lifetime and incontrovertibly so after his death.

--Richard Pipes, Communism: A History, Modern Library Chronicles (New York: The Modern Library, 2001), e-book.

What Happened in Red October, Richard Pipes Asserted, Was Not a Revolution, Not a Mass Movement from Below, but a Top-Down Coup d’État

Like 1789, when the French Revolution erupted, 1917 has entered the lexicon of world-historical dates all educated citizens are expected to know and remember. The meaning of 1917, however, remains much contested, not least because two very different revolutions took place in Russia that fateful year. The February Revolution toppled the Russian monarchy and ushered in a brief era of mixed liberal and socialist governance, only to be superseded by the more radical October Revolution, which saw Lenin’s Bolshevik Party impose a Communist dictatorship and proclaim an open-ended world revolution against “capitalism” and “imperialism.” Each of these developments was significant enough to merit serious historical study. Together they constitute one of the seminal events of modern history, which introduced Communism to the world and paved the way for decades of ideological conflict, culminating in the Cold War of 1945–1991.

Because the Bolsheviks were avowed Marxists, our understanding of the Russian Revolution has long been colored by Marxist language, from the idea of a class struggle between “proletarians” and the “capitalist” ruling classes, to the dialectical progression from a “bourgeois” to a socialist revolution. Even many non-Marxist historians tended, in the Cold War years, to accept the basic Marxist framework of discussion about the Russian Revolution, concentrating on such matters as Russia’s economic backwardness vis-à-vis more advanced Western capitalist countries, the stages of her emergence from feudalism and her “belated” industrial development, inequality and Russia’s lopsided social structure, and so on. As late as 1982, Sheila Fitzpatrick, in an influential college textbook titled The Russian Revolution, described Lenin’s aim in the October Revolution unambiguously as “the overthrow of the bourgeoisie by the proletariat.”

This relatively uncritical approach to the Russian Revolution proved surprisingly resistant to revision over the decades, in part because the great anti-Communist writers of the Cold War years, from George Orwell to Alexander Solzhenitsyn to Robert Conquest, focused on Communism in its period of Stalinist “maturity” in the 1930s and 1940s, not on its origins in the Revolution. Serious new studies of the February Revolution did appear, such as George Katkov’s Russia 1917 (1967) and Tsuyoshi Hasegawa’s February Revolution (1981). Not until Richard Pipes’s The Russian Revolution (1990) however, was there a serious reappraisal of the revolutions of 1917 as a whole. What happened in Red October, Pipes asserted, was not a revolution, not a mass movement from below, but a top-down coup d’état, the “capture of governmental power by a small minority.” Far from being a product of social evolution, class struggle, economic development, or other inexorable historical forces foreseen in Marxist theory, the Russian Revolution was made “by identifiable men pursuing their own advantages,” and was therefore “properly subject to value judgment.” Pipes’s judgment of these men was withering.

--Sean McMeekin, introduction to The Russian Revolution: A New History (New York: Basic Books, 2017), xi-xii.

Until Mid-1937 Nazi Economics Was—to a Large Extent— Schachtian Economics; Informal Empire Was Sacrificed on the Altar of Lebensraum

Until mid-1937 Nazi economics was—to a large extent— Schachtian economics. Even afterward most of Schacht’s key policy patterns and economic structures endured. Yet the “Party thugs” he so derided outmaneuvered the banker in Berlin power circles. Intervention in Spain may have been Schachtian in design, but it came to be run by Schacht’s nemesis, Hermann Göring. For his part Hitler moved toward transformative economic choices that sent Germany closer to world war. These choices are detailed in Chapter 6. Schacht’s departure from the higher echelons of Nazi decision making was part of a key transformation in the regime, one that sacrifi ced the possibility of informal empire, an idea inspired by the tradition of Weltpolitik, on the altar of Lebensraum.

--Pierpaolo Barbieri, introduction to Hitler's Shadow Empire: Nazi Economics and the Spanish Civil War (Cambridge, MA: Harvard University Press, 2015), 12.

National Socialism Was Founded on a Doctrine of Inequality between Races but Promised Germans Greater Equality; Hitler Promised the Creation of a Socially Just State to Eradicate All Social Barriers

The National Socialist German Workers Party was founded on a doctrine of inequality between races, but it also promised Germans greater equality among themselves than they had enjoyed during either the Wilhelmine empire or the Weimar Republic. In practice, this goal was achieved at the expense of other groups, by means of a racist war of conquest. Nazi ideology conceived of racial conflict as an antidote to class conflict. By framing its program in this way, the party was propagating two age-old dreams of the German people: national and class unity. That was the key to the Nazis’ popularity, from which they derived the power they needed to pursue their criminal aims. The ideal of the Volksstaat—a state of and for the people—was what we would now call a welfare state for Germans with the proper racial pedigree. In one of his central pronouncements, Hitler promised “the creation of a socially just state,” a model society that would “continue to eradicate all [social] barriers.”

--Götz Aly, Hitler's Beneficiaries: Plunder, Racial War, and the Nazi Welfare State, trans. Jefferson Chase (New York: Metropolitan Books, 2006), 13.

I Think as Most German Businessmen Do Who Today Fear National Socialism As Much As They Did Communism; It Will Be the Turn of the "White Jews" (Aryan Businessmen) After the Jews Have Been Expropriated

This letter will probably be a disappointment to you, but I must confess that I think as most German businessmen do who today fear National Socialism as much as they did Communism in 1932. But there is a distinction. In 1932, the fear of Communism was a phantom; today National Socialism is a terrible reality. Business friends of mine are convinced that it will be the turn of the "white Jews" (which means us, Aryan businessmen) after the Jews have been expropriated. Just when this will happen and the extent to which "Aryan" businessmen will be pillaged depends on the internal struggle within the Nazi party. . . .

You have no idea how far State control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. In this respect they certainly differ from the former Social-Democratic officials. These Nazi radicals think of nothing except "distributing the wealth."

Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.

How can we possibly manage a firm according to business principles if it is impossible to make any predictions as to the prices at which goods are to be bought and sold? We are completely dependent on arbitrary Government decisions concerning quantity, quality and prices for foreign raw materials. There are so many different economic agreements with foreign countries, not to mention methods of payment, that no one can possibly understand them all. Nevertheless Government representatives are permanently at work in our offices, examining costs of production, profits, tax bills, etc.

--Günter Reimann, The Vampire Economy: Doing Business under Fascism (New York: Vanguard Press, 1939), 6-7.

The Self-Serving Communist Notion of "Fascism" as an Expression of "High Capitalism" Is Widely Off the Mark

Mussolini acknowledged the principle of private property, although not as a sacrosanct right but as a privilege bestowed by the state. Consonant with this philosophy, he applied heavy pressure on private enterprise. In the 1920s, he arrogated to himself the authority to interfere with the market, "correcting" profits and compelling business firms to recognize trade unions as an equal partner. On some occasions, the Fascist government replaced the management of private corporations. The self-serving Communist notion of "fascism" as an expression of "high capitalism" is therefore widely off the mark: it was a movement which placed national interest above private interest, and regulated business as much as it did labor. Indeed, in a speech in May 1934 Mussolini informed the Chamber of Deputies that three-quarters of Italy's industrial and agricultural economy were in the hands of the state which, he added, created conditions that would enable him to introduce into Italy either "State Capitalism" or "State Socialism" whenever he thought it necessary.

--Richard Pipes, Property and Freedom (New York: Vintage Books, 2000), 219-220.

This Book Tests 4 Alternative Models of Economic Dictatorship: Scientific Planner, Stationary Bandit, Selfish Dictator, and Referee-Dictator

This book asks another core question: What truly motivated the Soviet dictatorship? What was the dictator’s objective function? What did Stalin and his allies most want to accomplish above all other things? We posit and test four alternative models of economic dictatorship. Our first model is the “scientific planner”–a benevolent dictator prepared to turn resource allocation over to planning experts, content to set only general rules and guidelines. The scientific planning model is that heralded in the official Soviet literature. An all-knowing party (the dictator) plays its leading role but leaves the concrete decisions to scientific planners. The planners follow the general principles and guidelines of the party and plan outputs and inputs using scientific norms and mathematical balances to achieve the best results for society.

The second model is Mancur Olson’s “stationary bandit,” based on Stalin as the exemplar. A stationary bandit is characterized by a long time horizon. No matter how ruthless, despotic, or evil-intentioned, the stationary bandit must maximize growth and development in his own selfish interest. A reasonably efficient, growing economy is necessary to maximize long-run tax revenues, achieve military power, and accumulate resources to reward political allies. The stationary-bandit model suggests that the growth-maximizing policies of the 1930s would have been pursued by any person in Stalin’s shoes. The stationary bandit is, in effect, a development planner. Given that the Soviet Union was backward and surrounded by capitalist enemies, the stationary bandit’s best strategy was to aim for rapid industrialization, high investment rates, and autarky.

A third model is the “selfish dictator,” whose primary goal is the accumulation of political power, which is achieved by strategic gift giving and the buying of political loyalty. The selfish dictator is driven not to maximize growth or welfare but to consolidate totalitarian control. When confronted with choices, the selfish dictator allocates resources to maximize political power not to achieve the best economic results. The selfish dictator gains allies and political support by distributing the economic rents extracted from ordinary citizens. Insofar as citizens will not part with their economic resources voluntarily, the dictator must apply force and coercion. Indeed, Stalin carefully chose and cultivated allies; he reacted with fear and panic to threats to his political power, no matter how small; he bullied and bribed associates. Selfish dictators, who sacrifice economic performance for political power, are not rare. Examples would be those who initiated the Chinese Cultural Revolution, Pol Pot in Cambodia, Mugabe in Zimbabwe, and Castro in Cuba.

The fourth model is the “referee–dictator,” who mediates among the powerful vested interests that constitute the real sources of power. The referee–dictator model would be expected at a mature phase of dictatorship, when the stationary bandit or power-maximizing dictator is no longer able to dominate, but falls under the influence of industrial and regional elites. In market economies, the domination of the political process by interest groups may emerge slowly due to free riding and the difficulty of organizing effective lobbying. Mancur Olson and others have characterized the mature Soviet economy as dominated by interest groups pulling the leadership in different directions and giving it a lack of coherence. Interest groups, however, might form more quickly in young administrative-command economies because of the ready-made concentration of economic power in industrial ministries and regional authorities. Unlike others who relate interest-group power to the mature Soviet system, historian J. Arch Getty has suggested that even Stalin had to bow to lobbies in key decisions in the 1930s.

--Paul R. Gregory, The Political Economy of Stalinism: Evidence from the Soviet Secret Archives (New York: Cambridge University Press, 2004), 11-13.

The Productivity of Labor in a Socialist Community Would Drop Considerably; under Socialism Most Men Will Not Exhibit the Same Zeal in the Performance of the Duties and Tasks Assigned to Them

People are wont to consider socialism impracticable because they think that men lack the moral qualities demanded by a socialist society. It is feared that under socialism most men will not exhibit the same zeal in the performance of the duties and tasks assigned to them that they bring to their daily work in a social order based on private ownership of the means of production. In a capitalist society, every individual knows that the fruit of his labor is his own to enjoy, that his income increases or decreases according as the output of his labor is greater or smaller. In a socialist society, every individual will think that less depends on the efficiency of his own labor, since a fixed portion of the total output is due him in any case and the amount of the latter cannot be appreciably diminished by the loss resulting from the laziness of any one man. If, as is to be feared, such a conviction should become general, the productivity of labor in a socialist community would drop considerably. The objection thus raised against socialism is completely sound, but it does not get to the heart of the matter.

--Ludwig von Mises, Liberalism: The Classical Tradition, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 46.

Income Redistribution Is Not in the Interest of the Poor; Imposing Equal Incomes Will Make Everyone's Income Extremely Low

Forcibly imposing equal incomes on people might make everyone's income the same; however, it will also make everyone's income extremely low. Even poor people will have lower incomes when income equality is imposed on an economic system. Their incomes may be higher relative to that of rich people (because now there are no rich people); however, poor people's incomes, in terms of the goods and services they can purchase, will be lower relative to what their incomes would have been had the rich been able to keep the incomes they earn. Why is this so?

Here, one must, again, keep in mind how someone becomes rich in a capitalist society. One does so by being more productive; i.e., by inventing new products, improving upon old ones, using better methods of production, and producing those goods for which people have a demand. This means when income is taken from the rich and given to the poor, it is being taken from the most productive members of society and given to the least productive members of society. This means the productive capability of the economic system will be lower and the rate of economic progress will be lower. Over time, any one-time gain by poor people from income redistribution will be erased by the loss in purchasing power of their additional money income due to the lower rate of economic progress and thus the slower year-to-year increase in the standard of living. In other words, the poor may have more money to spend with income redistribution but because of the decreased incentive to produce, and because money is being taken from the more productive members of society, very little will be produced and thus there will be very little for the poor to buy with their additional money income. In a society with complete income redistribution, where everyone has the exact same income, everyone will be--equally--miserably poor.

So income redistribution is not in the interest of the poor, as many so-called humanitarians believe. In fact, income redistribution is positively against the self-interest of the rich and the poor. It is in the interest of everyone to have each individual's right to keep the income he earns protected, no matter how large or small that income. This is what is required to provide people with the incentive to produce and thus make possible a high and rising standard of living for everyone, rich and poor alike.

--Brian P. Simpson, Markets Don't Fail! (Lanham, MD: Lexington Books, 2005), Adobe Digital Editions, 174.

The Underlying Consistency (or Inconsistency) between Consumer Preferences and Production Plans Will Determine Whether the Market Process Will Play Itself Out or Do Itself In

The explicit attention to intertemporal allocation of resources allows for a sharp distinction between sustainable and unsustainable growth. The underlying consistency (or inconsistency) between consumer preferences and production plans will determine whether the market process will play itself out or do itself in. Our graphical framework demonstrates the coherence of the Austrian macroeconomics that was inspired early in the last century by Mises, who drew ideas from still earlier writers. It also sheds light on contemporary political debate. Nowadays candidates for the presidency and other high offices vie with one another for votes on the basis of their pledges to “grow the economy”; opposing candidates differ primarily in terms of just how they plan to grow it. The political rhetoric overlooks the fundamental issues of the very nature of economic growth. Is growth something that simply happens when the economy is left to its own devices? Or, is it something that a policy-maker does to the economy?

--Roger W. Garrison, Time and Money: The Macroeconomics of Capital Structure, Foundations of the Market Economy (London: Routledge, 2002), 35.

Economic Calculation in Monetary Terms Is Conditioned by Certain Social Institutions: Division of Labor and Private Ownership of the Means of Production in which Goods and Services of All Orders Are Bought and Sold Against Money

Monetary calculation is the guiding star of action under the social system of division of labor. It is the compass of the man embarking upon production. He calculates in order to distinguish the remunerative lines of production from the unprofitable ones, those of which the sovereign consumers are likely to approve from those of which they are likely to disapprove. Every single step of entrepreneurial activities is subject to scrutiny by monetary calculation. The premeditation of planned action becomes commercial precalculation of expected costs and expected proceeds. The retrospective establishment of the outcome of past action becomes accounting of profit and loss.

The system of economic calculation in monetary terms is conditioned by certain social institutions. It can operate only in an institutional setting of the division of labor and private ownership of the means of production in which goods and services of all orders are bought and sold against a generally used medium of exchange, i.e., money.

Monetary calculation is the method of calculating employed by people acting within the frame of society based on private control of the means of production. It is a device of acting individuals; it is a mode of computation designed for ascertaining private wealth and income and private profits and losses of individuals acting on their own behalf within a free enterprise society. All its results refer to the actions of individuals only.

--Ludwig von Mises, Human Action: A Treatise on Economics, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2007), 1:229.

Popper Excoriated the Marxist View that History Had a Discernible Direction; No Historical Evidence Could 'Disprove' the Idea that History Was Moving through Stages towards the Goal of a Communist Society

The Cold War reassertion of objectivity which underpinned Namier’s overwhelming influence in Britain in the 1950s and early 1960s also took place in the philosophy of science, where Sir Karl Popper, a philosopher of Viennese origin who dedicated much of his life to disputing the claims of Marxism to be a scientific doctrine, reasserted the objective nature of scientific knowledge in two highly influential works, The Poverty of Historicism and The Open Society and Its Enemies. Popper argued that objective knowledge could best be approached through propositions for which one could specify the conditions under which they might be falsified. Theories – such as Marxism – which accounted for everything, and which could be adapted to any circumstances, were merely metaphysical; only theories which did not claim to explain everything, and yet which resisted attempts to prove them false, were truly scientific. Popper excoriated the Marxist view that history had a discernible direction, and was subject to laws; objective knowledge of history, he said, could only be obtained in respect of short- or medium-term developments, where it was clear what evidence was needed to falsify the interpretations put forward. No historical evidence could ‘disprove’ the idea that history was moving through stages towards the goal of a communist society, because every conceivable kind of evidence could be adapted to fit the theory if so desired. On the other hand, the idea that (for example) the First World War was caused by German aggression could be falsified (in theory at least), because it was possible to specify the kind of evidence that would be needed to prove or disprove it.

--Richard J. Evans, In Defence of History, new ed. (London: Granta Books, 2012), Kindle e-book.

Lenin and His Entourage Advertised Themselves as Marxists and Many Western Scholars Thought of the Soviet Experiment as an Effort to Realize the Marxist Dream of Equality and Peace

That a "Marxist" revolution would occur, in whatever circumstances, in a primitive economic environment, characterized more by peasant life than by proletarian consciousness, did not seem to puzzle very many Western thinkers. Many were clearly disposed, as was John Reed, to see the Bolshevik revolution as a signal of an imminent universal Marxist revolution. V.I. Lenin and his entourage did advertise themselves as Marxists--defenders of the proletariat--and a surprising number of Western scholars continued for seven decades to think of the Soviet experiment as an effort to realize the Marxist dream of equality and peace. There is no other way to explain the admiration with which Western intellectuals like George Bernard Shaw, Syndney and Beatrice Webb, André Gide, Ignazio Silone, Arthur Koestler, or Howard Fast studied the Soviet revolution.

What this contributed to was a systematic difference in the scholarly employment of the two concepts, fascism and communism. References to fascism were almost always mercurial and fugitive and almost invariably carried moral opprobrium in their train. For the half-century after the end of the Second World War, the term fascism, almost without exception, was used to designate "pathological" political phenomena. Fascists and fascism were consistently spoken of as "narcissistic and megalomaniac," as well as "sadistic, necrophiliac" and "psychopathological."

"Marxist," "Marxist-Leninist," or "communist" systems, on the other hand, were rarely treated with such unqualified condemnation. Early in the history of the Soviet Union, E.H. Carr could argue that V.I. Lenin and Josef Stalin really sought to increase "the sum of well-being and human opportunity" through achievements that "impressed the rest of the world."

Even when such systems were convincingly identified with purges, mass murder, and pandemic political violence, they were rarely deemed "psychopathological" or "sadistic." As late as 1984, Norman Mailer could still lament the treatment of the Soviet Union as an "evil force," and others refused to acknowledge that political terror might function in some intrinsic fashion in the communist systems of Josef Stalin, Mao Zedong, or Kim Il Sung. For a very long time, there was an abiding sense, among many Western intellectuals, that the Soviet Union was no more "evil" than the United States.

--A. James Gregor, The Faces of Janus: Marxism and Fascism in the Twentieth Century (New Haven, CT: Yale University Press, 2000), 2.

The Massive Volumes of Marx's "Capital" Have Become a Quasi-Magic Touchstone, a Source of Assurance that Somewhere and Somehow a Genius "Proved" Capitalism to be Wrong and Doomed

Despite the massive intellectual feat that Marx's Capital  represents, the Marxian contribution to economics can be readily summarized as virtually zero. Professional economics as it exists today reflects no indication that Karl Marx  ever existed. This neither denies nor denigrates Capital as  an intellectual achievement, and perhaps in its way the  culmination of classical economics. But the development of  modern economics has simply ignored Marx. Even economists who are Marxists typically utilize a set of analytical  tools to which Marx contributed nothing, and have   recourse to Marx only for ideological, political, or historical  purposes.

In professional economics, Capital was a detour into a  blind alley, however historic it may be as the centerpiece of a worldwide political movement. What is said and done in  its name is said and done largely by people who have never read through it, much less followed its labyrinthine reasoning from its arbitrary postulates to its empirically false conclusions. Instead, the massive volumes of Capital have become a quasi-magic touchstone—a source of assurance  that somewhere and somehow a genius "proved" capitalism  to be wrong and doomed, even if the specifics of this proof are unknown to those who take their certitude from it.

--Thomas Sowell, Marxism: Philosophy and Economics (New York: Quill William Morrow, 1985), 220-221.

The Issuance of Money Is Subject to an Inherent Conflict; The User Has a Strong Interest in the Stability of Money's Purchasing Power but the Issuer Wants to Maximize the Seigniorage of Money Production

Already the Romans had a sophisticated financial sector. Coins were used for smaller payments. Larger payments were made with "Littera" or "Nomina", in effect debt obligations or bonds redeemable in coins. And of course Rome knew how to make profits from money creation through debasement (by reducing the intrinsic value of coins through mixing precious metals with cheaper material). Following the downfall of the Roman Empire, there was no comparable central power in Europe. Europe was populated by numerous smaller and larger kingdoms and principalities, where exchange among inhabitants took place in a primitive credit system instead of a monetary system. Only after a longer pause did a new monetary order develop in the early Middle Ages, which reflected the political dismemberment of Europe. Most of the ruling houses issued their own money in order to collect the "seigniorage," which promised a more stable source of income than taxes. The term comes from the French word for feudal lord who had the right of coinage in the Middle Ages. Seigniorage emerges when the costs of money production are below the revenue from money issuance. This is the case in coin production, when the nominal value of the coins is higher than the material value and the production costs.

The issuance of money is subject to an inherent conflict. On the one hand, the user has a strong interest in the stability of the purchasing power of money that he uses as a means of transaction and store of value. On the other hand, the issuer wants to maximize the seigniorage of money production by issuing as much money as possible, which undermines its purchasing power. This conflict played a decisive role in the history of money.

--Thomas Mayer, Austrian Economics, Money and Finance, Banking, Money and International Finance 8 (London: Routledge, 2018), Kobo e-book.

There Arose 3 Broad Conclusions based on Say's Law: (1) Goods Buy Goods, (2) Demand Is Constituted by Supply, and (3) There Is No Such Thing As a General Glut

From this principle, there arose three broad conclusions that were accepted by the mainstream of the economics profession through until 1936. These are the conclusions based on an understanding of Say's Law:

1. 'Goods buy goods': to buy, one first has to produce goods of one's own, sell these goods for money and then use the money received to buy the goods produced by others; thus it is the production of one's own goods that leads to the ability to purchase someone else's, even though money is used as the medium of exchange
2. 'Demand is constituted by supply': in an exchange economy one cannot buy unless they have first supplied, since unless someone supplies they have no money with which to demand
3. 'There is no such thing as a general glut': it is impossible for an economy to produce so much output that there would not be enough buyers for what has been produced, so long as what has been produced is what people want to buy; therefore demand deficiency across an entire economy can never be a realistic explanation for recession.

It was the reversal of this last principle in particular, following the publication in 1936 of The General Theory of Employment, Interest and Money by the economist John Maynard Keynes--the most influential text on economics written during the whole of the twentieth century--that led to what became known as the 'Keynesian Revolution'.

--Steven Kates, Free Market Economics: An Introduction for the General Reader, 3rd ed. (Cheltenham, UK: Edward Elgar Publishing, 2017), Kobo e-book.

Roberts Shows How Fascism Could Be at Once Populist and Elitist, Modernizing and Traditionalist, Procapitalist and Anticapitalist, Nationalist and anti-Italian, Totalitarian and Anticollectivist

This interpretive work confronts the central questions about Italian fascism in contemporary history. It focuses on the syndicalist intellectual tradition, which began as a revisionist form of Marxism around the turn of the century and gradually became the most important theoretical component in Italian fascism.

The revised syndicalist program showed young, politically inexperienced fascists how to proceed as they sought to construct an alternative to both parliamentary liberalism and Marxist socialism in the aftermath of World War I. By considering both the neosyndicalist blueprint and the frustrations and hopes of these younger fascists, the author demonstrates that a reasonably coherent populist current was at work in Italian fascism and that it had a major impact on the shape of the regime. Though hardly heroes or intellectual giants, these fascists were trying to devise rational, forward-looking solutions to a wide range of genuine problems, some peculiarly Italian, some more universal. While the author takes the fascists seriously, on their own terms, he does not seek to rehabilitate them. In fact, his account illuminates the inadequacies in the fascist program and the weaknesses in the movement itself.

The serious study of fascism only began about twenty years after World War II, and it has been directed mostly toward nazism, not Italian fascism. Scholars have tended to approach Italian fascism from an adversary position, easily dismissing it with a few generalizations. Consequently, the central question of how a left-wing movement was transformed into fascism has been largely ignored. It is precisely here that Roberts's study makes its central contribution. His systematic exploration of fascist perceptions and purposes enables us to understand, for the first time, how fascism could be at once populist and elitist, modernizing and traditionalist, procapitalist and anticapitalist, nationalist and anti-Italian, totalitarian and anticollectivist. The author traces the emergence of the fascist perspective in terms of the crisis of classical Marxism and sheds new light on the role of Italian fascism in the greater drama of European history.

--David D. Roberts, The Syndicalist Tradition and Italian Fascism (Chapel Hill: The University of North Carolina Press, 1979), book jacket.

Jean-Baptiste Say Popularized the Arguments of Adam Smith in France, Introduced a Fourth Factor of Production: The Entrepreneur, and Popularized an Economic Principle Now Called Say's Law

Given his subsequent importance, the French economist Jean-Baptiste Say must be brought into the story. Say was for the most part a popularizer of the arguments that had been presented by Adam Smith. His Treatise on Political Economy was published in 1803 to acquaint the French public with Smith's ideas. But it was not merely a restatement of Smith: Say had a number of innovations of his own.

The first of these was the introduction of a fourth factor of production beyond land, labour and capital. This was the additional input that was brought to the production process by the entrepreneur. Say explicitly recognized the crucial importance of the entrepreneur as the initiator and organizer of the production process. It was, as he wrote, through the entrepreneur that value-adding activity was able to take place.

For reasons unknown, independent discussion of the role of the entrepreneur remains relatively uncommon even to this day. Yet without the entrepreneur to identify value-adding possibilities, introduce innovation and then superintend the process all along the way, value-adding production would remain far less common and prosperity would possibly have remained as elusive as it had been in all of the centuries prior to the arrival of the industrial revolution.

But Say's other innovation was the popularization of an economic principle which would be given the name Say's Law, but not until more than a century had gone by since its first discussion by Say in his Treatise. 

Although there were a number of strands to the surrounding principle, in brief it may be stated as: demand for goods and services is created by value-adding production and by nothing else. For goods to be bought not only must goods be produced, but precisely those goods that others would be willing to buy must be the ones that need to be produced.

--Steven Kates, Free Market Economics: An Introduction for the General Reader, 3rd ed. (Cheltenham, UK: Edward Elgar Publishing, 2017), Kobo e-book.

Perhaps the Most Egregious Example of "Illegitimate Historical Revisionism" Is the Complete Rewriting of the History of Russia by the Communist Party; this Illegitimate Revision of History Is Also Happening in Canada

The falsification of the historical record for the purpose of creating a past that fits with the ideological goals of the present has been a common characteristic of revolutionary regimes seeking to legitimize themselves by portraying their actions and goals as if they were conterminous with the aims of history or the venerable beliefs of the past. Perhaps the most egregious example of "illegitimate historical revisionism", as contrasted to the legitimate re-assessment of the past on the basis of improved evaluation of records, is the complete re-writing of the history of Russia by the Communist Party of the Soviet Union, particularly during the reign of Stalin in the mid-1920s to early 1950s; history was not only written according to the "correct" Marxist theory, but state officials commonly went about erasing major historical figures from documents, books, and even photographs the moment they were deemed to be "enemies of the people".

This illegitimate revision of the historical record is also happening in Canada, but in a difficult to detect way, for it does not involve any book burning, outright denials of certain events, or use of forged documents. It is taking place in a rather calmed, seemingly reasonable way, ostensibly in accordance with the protocols of "verifiability", "peer review", and "openness to criticism". Let me be clear: I am not referring here to intentionally polemical books about the "suppressed" history of Canadian women, the "inhumane" treatment of natives, and the like. The books I have in mind are general surveys intended to be summations of the existing state of knowledge, not polemical exegeses, that is, surveys for undergraduate courses read by thousands of impressionable students across the nation. These surveys are now dominated by the dictates of the multicultural agenda, however neutral they may appear at first sight.

Basically what has happened, and is happening, is that historians have been expected to view the older Anglo-Saxon narrative of Canada, or the "two founding races" narrative, as "monolithic mythologies", as "models" that were "violently imposed" on history against "the other", against the actual "complexity" of Canada as a nation created by multiple ethnic groups, to cite the words of John Ralston Saul, the putative philosopher of Canada. "Monolithic", in the establishment world Saul inhabits, means a view that "denies complexity" and holds the "illusion of racial unity or cultural unity". "Mythology" means that it is not truly reflective of the actual historical realities. Saul expresses these thoughts in his superficially contrived Reflections of a Siamese Twin: Canada at the Beginning of the Twentieth Century published in 1998. Academics love to use these words when they describe their ways of thinking. Portraying Canada as "richly diverse", a "complex cultural mosaic" from its origins, means that one can grasp complexities, one is "subtle" and "nuanced". By contrast, writing that Canada was fundamentally a British nation bespeaks of crudeness and simple mindedness.

What about the facts? Well, historians have further learned from the more ideologically oriented social scientists that the "old style of history", which took for "granted" Canada's Anglo identity, was a discourse "socially constructed" by dominant Anglo men. The claim that Canada was founded by the British and French was "constructed by white males" to justify their subjugation of minorities. Historians know better now. They are more "sensitive" to the long suppressed diverse voices of Canada's past, and, in this vein, they have constructed a "new discourse" that better captures the "complexity" of Canada as a "multicultural nation" from its beginnings.

--Ricardo Duchesne, Canada in Decay: Mass Immigration, Diversity, and the Ethnocide of Euro-Canadians (London, UK: Black House Publishing, 2018), Kobo e-book.

Popular Sovereignty, Locke's Famous Acknowledgment of the Right of Revolution, and the Fathers of Canadian Confederation

Popular sovereignty has a more radical dimension: "The people" can withdraw their "original consent"; they can reject Parliament as their representative; they can reject the very idea of government. Locke famously acknowledges the right of revolution. It is true that he would allow recourse to revolution only after--in the well-known phrase--"a long train of Abuses." But he does not deny the right. All legitimate government rests on the consent of the people. When the people no longer consent, the government is no longer legitimate.

It is said that the Fathers of Canadian Confederation were unfamiliar with the notion of popular sovereignty or deliberately ignored it. Just as they were not inclined to philosophy, so they did not ponder questions of "original consent," let alone the "right of revolution." Thus Peter Russell argues that the Fathers regarded popular sovereignty as "heresy": "The idea that a constitution to be legitimate must be derived from the people [was] a dreadful heresy." He continues: "at Canada's founding its people were not sovereign, and there was not even a sense that a constituent sovereign people would have to be invented."

But consider these statements from the debates on Confederation in the colonial legislatures, the "ratification" debates: "[T]he people [are] the only rightful source of all political power" (James O'Halloran in the Canadian Legislative Assembly); "The principle which lies at the foundation of our constitution is that which declares the people to be the source of political power" (William Lawrence in the Nova Scotia House of Assembly); "[The] only way in which the constitution of a free, intelligent, and independent people can be changed at all is by revolution or the consent of the people" (William Gilbert in the New Brunswick Assembly). Note Gilbert's reference to "revolution." All the legislators see themselves as revolutionaries of a sort. They are considering whether to break with the old regime and institute a new one. As ratifiers of the new, they are being asked to say "yea" or "nay" to the old. Joseph Cauchon put the matter this way: "That which is going on at the present moment before our eyes is neither more nor less than a revolution, a bloodless one if you will, but as complete a revolution in ideas and things as if we had reached it by the spilling of blood."

In Prince Edward Island, Alexander Laird argued that the population of the Red River colony had "every right" to rebel against being "literally sold" to the Dominion of Canada. Red River was annexed by Canada in 1870, entering Confederation as the province of Manitoba. The transfer of a people from one government to another without its consent is perhaps the archetypal offence against popular sovereignty.

--Janet Ajzenstat, The Canadian Founding: John Locke and Parliament, McGill-Queen's Studies in the History of Ideas 44 (Montreal: McGill-Queen's University Press, 2007), 23-25.

Fascism Was a Revision of Marxism and Not a Variety of Marxism or a Consequence of Marxism; It Arose from a Marxist (French and Italian Sorelian) Revolt Against Materialism

Having clarified this question, let us now return to our definition of fascism. If the Fascist ideology cannot be described as a simple response to Marxism, its origins, on the other hand, were the direct result of a very specific revision of Marxism. It was a revision of Marxism and not a variety of Marxism or a consequence of Marxism. One of the aims of this book is to study this antimaterialistic and antirationalistic revision of Marxism. It is absolutely necessary to insist on this essential aspect of the definition of fascism, for one can scarcely understand the emergence of the fundamental concepts of fascism and of the Fascist philosophy and mythology if one does not recognize, at the same time, that it arose from an originally Marxist revolt against materialism. It was the French and Italian Sorelians, the theoreticians of revolutionary syndicalism, who made this new and original revision of Marxism, and precisely this was their contribution to the birth of the Fascist ideology.

--Zeev Sternhell, Mario Sznajder, and Maia Asheri, introduction to The Birth of Fascist Ideology: From Cultural Rebellion to Political Revolution, trans. David Maisel (Princeton, NJ: Princeton University Press, 1994), 5.

Hitler: National Socialism Is What Marxism Might Have Been If It Could Have Broken Its Absurd and Artificial Ties with the Democratic Order

The official Communist creed was rationalistic and lionized the legacies of the Enlightenment, while the Nazi ideologues (Alfred Rosenberg, Joseph Goebbels, Alfred Baumler, Otto Strasser) insisted on the power of irrational, vital energies and scorned the allegedly sterilizing effects of reason. The reality was that, underneath the ostensible philosophical incompatibilities between the two rival ideologies, Nazism contained a number of tactical affinities with the much-decried Marxism. Hitler himself admitted that he found inspiration in Marxist patterns of political struggle: “I have learned a great deal from Marxism, as I do not hesitate to admit. I don’t mean their tiresome social doctrine or the materialist conception of history, . . . and so on. But I have learned from their methods. The difference between them and myself is that I have really put into practice what these peddlers and pen-pushers have timidly begun. The whole National Socialism is based on it . . . National Socialism is what Marxism might have been if it could have broken its absurd and artificial ties with the democratic order.”

--Vladimir Tismaneanu, prologue to The Devil in History: Communism, Fascism, and Some Lessons of the Twentieth Century (Berkeley, CA: University of California Press, 2012), 12-13.

Economic Self-Interest Dictated Loyalty to Britain; While the Mainland Colonies Were Outgrowing the Imperial Economy, the Island Colonies Were Increasingly Dependent on the Discriminatory Duties Guaranteeing Their Home Market Monopoly

Sugar also made the planters economically dependent on Britain. For much of the eighteenth century, British sugar planters were unable to compete with the price of sugar offered by rival French producers. The inability of the islands to compete openly with the French was a cause of friction with North America, where northern merchants preferred to buy from the French West Indies. Only the monopoly of the British market allowed British sugar planters to flourish. Hence, while the mainland colonies were outgrowing the imperial economy, the island colonies were increasingly dependent on the discriminatory duties that guaranteed their monopoly of the home market. In the event of an imperial rift, economic self-interest dictated loyalty to Britain.

--Andrew Jackson O'Shaughnessy, An Empire Divided: The American Revolution and the British Caribbean, Early American Studies (Philadelphia: University of Pennsylvania Press, 2000), 58-59.

“Ahistoric” and “Counterrevolutionary” Elements Had Somehow Succeeded in Overwhelming Marxism and Political Progressivism that Had Been Commissioned, by History, to Transform the World

Given his Marxist convictions, Gramsci was certain that the First World War had irretrievably impaired the survival capacity of industrial capitalism. Capitalism had entered its “final crisis.” Any effort at revival was doomed to failure. Any political movement that sought the rehabilitation of capitalism, in any form, was hopelessly reactionary—seeking to restore what history had deemed irretrievably lost. Worldwide proletarian revolution was on history’s immediate agenda. Whether composed of Nationalists, National Syndicalists, or Fascists, any movement opposed to the unalterable course of history could only proffer contradictory, irrational, and abstract doctrines.

As a Marxist, Gramsci knew history’s future course. He held that any political movement not committed to that course was, of necessity, not only irrational and counterrevolutionary, but reactionary as well. Such movements must, necessarily, represent nonproletarian agrarian and industrial elements condemned by history to its “ashbin”—to reaction, counterrevolution, and confusion.

Given that set of convictions, one did not have to consider the intrinsic merits of the non-Marxist ideological formulations found in Fascist thought. The very best of non-Marxist doctrinal statements could be nothing other than “ideological abstractions.” Since capitalism had finally lapsed into that last “general crisis” foretold by Marx in the mid-nineteenth century, the future was clear. All twentieth-century political movements not committed to proletarian revolution must necessarily be contradictory as well as irrational—and because counterrevolutionary, violent.

By the time of Fascism’s accession to power on the peninsula, Marxists of all kinds, and their fellow travelers, were desperately searching for the key to the understanding of the complex events that had overtaken them. “Ahistoric” and “counterrevolutionary” elements had somehow succeeded in overwhelming Marxism and political progressivism that had been commissioned, by history, to transform the world. It was at that juncture that Clara Zetkin affirmed that Mussolini’s success was not the simple consequence of military victory; it was “an ideological and political victory over the working class movement.”

That did not mean, in the least, that Fascism employed an ideology that enjoyed superiority over that of Marxism. What it meant was that Marxists had not employed inherited “theory” to best advantage. Prior to its victory, Marxists had not understood the “essence” of Fascism. Once understood, there was an aggressive effort among members of the Third International to formulate a convincing account of Italian Fascism to better counteract its toxin. Unfortunately, there was never to be any consistency among the Marxist assessments. Marxist theoreticians settled on only one consistency: Fascism was deemed counterrevolutionary, opposed to the course of history. So disposed, Fascism had to be, necessarily, irrational—and, as irrational, contradictory.

--A. James Gregor, Mussolini's Intellectuals: Fascist Social and Political Thought (Princeton, NJ: Princeton University Press, 2005), 11-12.

The Communist Regimes Were Criminal Enterprises in Their Very Essence; Bolshevism from the Outset Subordinated Justice to Party Interests

As Martin Malia stated in the foreword to the American edition [of The Black Book of Communism]: “The communist regimes did not just commit criminal acts (all states do on occasion); they were criminal enterprises in their very essence: on principle, so to speak, they all ruled lawlessly, by violence, and without regard for human life.” In spite of its overblown rhetoric about emancipation from oppression and necessity, the leap into the kingdom of freedom announced by the founding fathers turned out to be an experiment in ideologically driven, unbounded social engineering. The very idea of an independent judiciary was rejected as “rotten liberalism.” The party defined what was legal and what was not: as in Hitler’s Germany, where the heinous 1935 Nuremberg Laws were a legal fiction dictated by Nazi racial obsessions, Bolshevism from the outset subordinated justice to party interests. For Lenin, the dictatorship of the proletariat was rule by force and unrestricted by any law. His famous reply to Kautsky speaks volumes about the true ethos of his ideology: “The revolutionary dictatorship of the proletariat is rule won and maintained through the use of violence by the proletariat against the bourgeoisie, rule that is unrestricted by any laws.”

--Vladimir Tismaneanu, The Devil in History: Communism, Fascism, and Some Lessons of the Twentieth Century (Berkeley, CA: University of California Press, 2012), 30.