Thread: A famous speech by Murray N. Rothbard on the collapse of Communism

There are a lot of people who seem to talk about economics on here, but in my opinion what we need is a bit of a Room 101 where we can get right into it on a technical level, so that we may go forth into the wider world with sharper ideas. With this idea in mind I present to you one of the leading thinkers of his time. This man was a student of the famous Ludwig von Mises, who went on to influence Hayek and I suppose many others as well. What we really need to know though is what Mises was all about. What made him tick? How did those ideas that were a critique of the mainstream establishment Keynesian fare in the society at the time? This speech is not for the faint-hearted. These people don’t beat about the bush. It was said that the thing about Mises was that he was entirely uncompromising. You will note a great optimism in this speech because it is set in a time when one of the worst organisations that history had ever seen was crumbling, and that capitalism would come out triumphant. This speech makes that argument, and you should spend time to listen to it all the way though, because unlike the cr@p on the BBC you will learn something. If anyone else has any proper educational lectures please share. Its time we got down to what it is all about.

Oh and if you don't know who he is, then here is his Wikipedia page.

Murray Rothbard - Wikipedia, the free encyclopedia

Room 101 is certainly an apt name for this thread.

This man Mises is someone who seems to take the same approach to economic as I do. There are two ways in economics. You either go for what the fashion is, like those cretins peeing inside St. Paul's Cathedral in the name of anti-capitalism, or you start to think. This is the scary part. Thinking is very out of fashion these days, as can be seen by the zero response so far. It is your worst nightmare!

So what did Mises do? It seems to me his main line of approach was empiricism, as in the following in the footsteps of the father of empiricism David Hume. Now what does this mean in terms of economics? At the time of Mises there were two schools of thought. The first one was Marxism and the second Nazism. Now these were considered to be the duality that all intellectual thought was hung from. Either you go for equality, as Marx did, or to go for statism, like the Nazis did, or to put it in a modern context that would represent the views of the BNP, as in the state is the object of worship. As it was in his time, and as it is now as an almost a direct parallel, nowhere was it ever considered that there is a third option, that of the market. Mises contended that Marxism and Nazism were essentially the same. They both featured the role of the state, and to add in here there is corporatism as well. This is the empirical approach. What does it actually mean? How does the system actually function as opposed to which names does one use?

It’s like a breath of fresh air when all around you there is madness. Mises was an outcast who couldn’t get a paid job anywhere, despite his intellectual rigour. He was brutally honest and a man of his convictions, that despite all temptation he stuck to what he knew to be true. I’d like to show you a video of his life, because it is fascinating what he had seen and what he had been though. The moral of the story is one of, if you stick to what you believe you will win out in the end. Unfortunately he never saw the products of his life’s work. Hayek was awarded the Nobel Prize in economics a year after his death, based on his ideas.



I’d also like to show you something he wrote.

This masterwork is much more than a refutation of the economics of socialism (although on that front, nothing else compares). It is also a critique of the entire intellectual apparatus that accompanies the socialist idea, including the implicit religious doctrines behind Western socialist thinking, a cultural critique of socialist teaching on sex and marriage, an refutation of syndicalism and corporatism, an examination of the implications of radical human inequality, an attack on war socialism, and refutation of collectivist methodology.
In short, Mises set out to refute socialism, and instead pulled up the socialist mentality from its very roots. For that reason, Socialism led dozens of famous intellectuals, including a young F.A. Hayek, into a crisis of faith and a realist/libertarian political orientation. All the collectivist literature combined cannot equal the intellectual achievement of this one volume.

Socialism by Ludwig von Mises

I can sense there are people reading this that are now screaming and desperately running for the door!

Baron

The greatest problem with the world is people don't want to hear the truth, people want to believe they can take with out putting in, they don't want to except that they're value in society is less than another's. It is unfair that a nurse who works a 12 hour shift earns not even a fraction of what a banker does but with out the banker who will pay for the nurse.

It's interesting what Rothband said about the socialist taking Mises seriously on his criticisms of socialism and their is a serious reflection on most left wing movements and those with that type of ideology being that when they are criticised it must not be the ideology needs rethinking but that the world and the people need redesigning.

Originally Posted by Roland

Baron

The greatest problem with the world is people don't want to hear the truth, people want to believe they can take with out putting in, they don't want to except that they're value in society is less than another's. It is unfair that a nurse who works a 12 hour shift earns not even a fraction of what a banker does but with out the banker who will pay for the nurse.

It's interesting what Rothband said about the socialist taking Mises seriously on his criticisms of socialism and their is a serious reflection on most left wing movements and those with that type of ideology being that when they are criticised it must not be the ideology needs rethinking but that the world and the people need redesigning.

What Mises said was very powerful stuff. He was virtually ignored, and even today he is someone few have ever heard of. He had the solutions, but he has been eradicated from history.

I started to get these ideas independently. Most would assume I'm copying someone, but it was not the case. I trained as a scientist, but read a lot of philosophy at the time as well. Indeed the subject I studied, which is now called physics, used to be called natural philosophy. There is a lot of similarity. It’s all about analysing a problem from first principles and using logical deduction so you are always in touch with the real world. Economics has become ‘post modern’. It has lost touch with the real world. Physics teaches you to understand systems and system behaviour, and it is indelibly tied to mathematics as the purist form of science. This is what I think Mises did, and in actual fact his brother was a famous physicist. You have to admire that family had a lot of brains.

The point of this is that if we are to achieve anything politically we must have a sound basis for doing so. Populism and referenda is not the answer. The answer lies in economic policy. No party practices this in Britain. In America this is the underlying basis for the Ron Paul movement. It is the right medicine and we should use it. Hopefully I can entice one or two of the more intelligent people on here to take an interest.

Baron von Lotsov: I cannot believe that anyone who has read Murray Rothbard, and Ludwig von Mises for that matter, cannot instantly recognise educated cranks when they meet one. Let us just deal with a couple of things; the gold standard and non-military intervention. The gold standard was only of value when coins were the dominant instrument of exchange. How do you plug-in' a gold standard to a global financial system based on electronic money? What is actually being said? In April 1925, Churchill reintroduced the gold standard at the pre-1913 mint rate which gave an exchange rate of £1= $4.86. After WW1 the government had relaxed wartime price controls, ended rationing and reduced interest rates to encourage economic growth. (I'm sure that you agree with that objective BvL). This combination led to inflation. A flexible exchange rate allows the nominal exchange rate to depreciate to compensate for inflation. This was no longer possible; in order to remain competitive the governemnt increased interest rates and contracted the money supply. Wages were reduced and purchasing power consequently diminished. Even before the Big Depression, returning to the gold standard ensured that we would enter 1929, in poor shape. Churchill soon realised that he had been listening to the wrong people. However. there was worse to come. The Admiralty were complaining that the the cut in their Budget was compromising national security. They wanted to build defences in Singapore and other places, and prepare submarine facilities in Hong Kong for a possible war with Japan. Churchill replied to Baldwin, 'For what? A war with Japan? But why should there be a war with Japan? I do not believe that there is the slightest chance in our lifetime. The Japanese are our allies....Japan is at the other end of the world. She cannot menace our vital security in any way'. (She was not, incidentally, our ally; that Treaty ended in 1922). (See 39. CHAR 18/4/8-9 Churchill Archives Centre. Churchill College Cambridge). These are the consequences of being too impressed with vociferous economists of dubious credentials. The Austrian School has virtually no achievement to its credit. To-day we have been cutting Defence expenditure while a war is almost certain for next year. About 70: 30 would be a fair guess.

Rothbard believes that many of America's economic and political problems resulted from becoming involved in WW2. When in the early hours of a December Sunday morning, your Pacific Fleet is greatly reduced at Pearl Harbour following a visit from the 'Emperor's boys', and the next day the late Fuehrer declares war on the USA, Roosevelt did have a reasonable case for responding I feel. This is the problem with the Austrian School; they ignore the actual economic and political problems which exist, in favour of those which exist only in their own imaginations.

Originally Posted by Geoffrey Collier

Baron von Lotsov: I cannot believe that anyone who has read Murray Rothbard, and Ludwig von Mises for that matter, cannot instantly recognise educated cranks when they meet one. Let us just deal with a couple of things; the gold standard and non-military intervention. The gold standard was only of value when coins were the dominant instrument of exchange. How do you plug-in' a gold standard to a global financial system based on electronic money? What is actually being said? In April 1925, Churchill reintroduced the gold standard at the pre-1913 mint rate which gave an exchange rate of £1= $4.86. After WW1 the government had relaxed wartime price controls, ended rationing and reduced interest rates to encourage economic growth. (I'm sure that you agree with that objective BvL). This combination led to inflation. A flexible exchange rate allows the nominal exchange rate to depreciate to compensate for inflation. This was no longer possible; in order to remain competitive the governemnt increased interest rates and contracted the money supply. Wages were reduced and purchasing power consequently diminished. Even before the Big Depression, returning to the gold standard ensured that we would enter 1929, in poor shape. Churchill soon realised that he had been listening to the wrong people. However. there was worse to come. The Admiralty were complaining that the the cut in their Budget was compromising national security. They wanted to build defences in Singapore and other places, and prepare submarine facilities in Hong Kong for a possible war with Japan. Churchill replied to Baldwin, 'For what? A war with Japan? But why should there be a war with Japan? I do not believe that there is the slightest chance in our lifetime. The Japanese are our allies....Japan is at the other end of the world. She cannot menace our vital security in any way'. (She was not, incidentally, our ally; that Treaty ended in 1922). (See 39. CHAR 18/4/8-9 Churchill Archives Centre. Churchill College Cambridge). These are the consequences of being too impressed with vociferous economists of dubious credentials. The Austrian School has virtually no achievement to its credit. To-day we have been cutting Defence expenditure while a war is almost certain for next year. About 70: 30 would be a fair guess.

Rothbard believes that many of America's economic and political problems resulted from becoming involved in WW2. When in the early hours of a December Sunday morning, your Pacific Fleet is greatly reduced at Pearl Harbour following a visit from the 'Emperor's boys', and the next day the late Fuehrer declares war on the USA, Roosevelt did have a reasonable case for responding I feel. This is the problem with the Austrian School; they ignore the actual economic and political problems which exist, in favour of those which exist only in their own imaginations.

Mises lived at a time when you needed a whole wheelbarrow of currency to buy a loaf of bread. They called him in to do a better job, and he managed to limit inflation to a mere 1200%. That was because of the cost of the war. Now I have never said I'm in favour of the gold standard, and that is because I am not. I'm not in favour of the other extreme either, so I'm more on the Austrian side on this matter than the Keynesian side of things.

The logic I use is that gold is a finite resource, and it is a funny kind of material. It has a few uses in industry because it makes good connections on circuit boards and other types of electrical connector. It is a very soft metal so it helps the two electrical connections to mate and provide better conductivity. Apart form that it’s main use is in jewellery because it looks nice. But really, it is not any representation of the wealth of our economy, and when the gold standard was in use it failed and was was ditched, just like the other big experiment in history, the Bretton Woods currency fixing idea.

As our society moves on we become more advanced and our population expands as well. The wealth of the world is far greater than its total gold reserves, so that is argument number one against it. The other argument is that technology improves. If you go back to the 1970s a colour television was £300, a VCR (a Ferguson 3v16) was £475. Now look where we are. We can buy a colour TV for £100 and a VCR for about the same. A VCR of the 70s would not be worth what was paid for it even if it was preserved in pristine condition.

Anyway, there are a couple of points to chew on. In my view the money supply should increase, but only at a small rate in order to account for larger populations and advancing technology. It was said the average increase in wealth through technology was about 2%/year. I’m not certain what it is now.

This book on socialism is absolutely excellent though.

It was at this moment that Marx appeared. Adept as he was in Hegelian dialectic—a system easy of abuse by those who seek to dominate thought by arbitrary flights of fancy and metaphysical verbosity—he was not slow in finding a way out of the dilemma in which socialists found themselves. Since Science and Logic had argued against Socialism, it was imperative to devise a system which could be relied on to defend it against such unpalatable criticism. This was the task which Marxism undertook to perform. It had three lines of procedure. First, it denied that Logic is universally valid for all mankind and for all ages. Thought, it stated, was determined by the class of the thinkers; was in fact an "ideological superstructure" of their class interests. The type of reasoning which had refuted the socialist idea was "revealed" as "bourgeois" reasoning, an apology for Capitalism. Secondly, it laid it down that the dialectical development led of necessity to Socialism; that the aim and end of all history was the socialization of the means of production by the expropriation of the expropriators—the negation of negation. Finally, it was ruled that no one should be allowed to put forward, as the Utopians had done, any definite proposals for the construction of the Socialist Promised Land. Since the coming of Socialism was inevitable, Science would best renounce all attempt to determine its nature.

Socialists deny the validity of science and logic because it had been logic that had destroyed their utopia! I fought these battles even when I arrived at a state school, that hounded me for my logical scientific thinking.

Originally Posted by Geoffrey Collier

Baron von Lotsov: I am disappearing for a few days but will deal with your points later. However, one point against the gold standard, which you fail to mention is that the economy becomes reliant on the gold producer nations. When we controlled much of that resource via our Empire, that was not too great a risk. The Americans, by contrast, who produce little gold were very mindful of that risk. The money supply will increase considerably by such devices as Q.E. but it will be to address existing debt rather than anything whatever to do with population increase. It will be interesting to see how the British and Americans will force Germany's hand on this point. Should they fail, the consequences will make 1929 'a walk in the park' compared to what will happen.. The Germans have two problems at the moment; resisting Q.E, and seeing any conflict with Iran does not become a NATO problem. I think that it will become a UN one, that would be the most sensible solution.

The financial problem in the Weimar Republic was not primarilyn an economic problem, albeit it became one, the purpose was to avoid the indignity of having to pay reparations. To no small extent they only ever paid less than 10%. was that a success story in some respects. You will find that the hyperinflation problem was largely solved by the end of 1923 with the introduction of the Rentenmark (not even a legal currency). The most talented of the German politicians was their Chancellor Gustave Stressemann; quite brilliant. His early death was a sad day for Germany. Mises used to spend a lot of time criticising Keynes, but he was not in the same league as that gentleman. To attribute the reduction of hyper-inflation to Mises is being too generous of you. I stand by what I have said as a better explanation.

Well I do not support him because of any gold standard, and in watching that video there was one chap who said all Austrians support the Gold Standard, and my immediate reaction was one that for Mises, he would never have supported anything en-masse, as in the case of being loyal to an ideology, because he was bitterly opposed to any ideology. He was a seeker of truth, like a scientist seeks truth. The gold is the truth and it stands above any ideology.

He was one of the first to study economics from the human perspective, because the psychology of the mind is an inseparable part of the overall system. This is where it gets a bit philosophical, because you then ask the question about human nature. If human nature were to be left to its own devices then what would it strive for? He had faith in human nature to opt for the morally good. The main difference in a command economy is that it is driven by distrust in human nature and has to be managed, although this is paradoxical, because the very management is subject to human nature as well.

Further it is argued that such a command economy with officials running it can take on a very perverted form. You know about the saying that power corrupts, well I think in this case it is the isolation between the actions of officials and the consequences they suffer. We see this in the EU. Those EU politicians have become their own breed in a way, and they seem to be dehumanised. We saw this when the Nazis took over and some of the heinous acts they took part in. There were normal men who were forced to run those concentration camps, and in doing so they changed into monsters. See the experiment done in Stockholm, which was later coined as the Stockholm syndrome, which was one of the most frightening experiments done in psychology, and so bad did it turn out that they had to stop the experiment. The other famous one is the Milgram experiment. This tends to show the direction the EU could well end up in, especially in dire economic times. We are almost in the same situation to the run up to WW2 and the rise of Hitler. Bad times end up where normally unpalatable measures can be demanded by the public or at least accepted by them if they believe there is no other way.