The Reformer’s Plight in The Great Idea

I’m a fan of dystopian fiction, but I overlooked Henry Hazlitt’s The Great Idea (subsequently republished as Time Will Run Back) until last December.  I feared a long-winded, clunky version of Hazlitt’s Economics in One Lesson, but I gave it a chance, and my gamble paid off.  I read the whole thing (almost 400 pages) on a red-eye flight – feeling wide awake the whole way.

The book’s premise: Centuries hence, mankind groans under a world Communist government centered in Moscow.  People live in Stalinist fear and penury.  Censorship is so extreme that virtually all pre-revolutionary writings have been destroyed; even Marx has been censored, to prevent anyone from reverse engineering whatever “capitalism” was.  However, due to a marital dispute, Peter Uldanov, the dictator’s son, was raised in an island paradise, free of both the horrors and the rationalizations of his dystopian society.  When the dictator nears death, he brings Peter to Moscow and appoints him his heir.  The well-meaning but naive Peter is instantly horrified by Communism, and sets out to fix it.  In time, he rediscovers free-market economics, and sets the world to right.

Yes, this sounds trite to me, too.  But Hazlitt is a master of pacing.  It takes almost 200 pages before any of Peter’s reforms start to work.  Until then, it’s one false start after another, because so many of the seemingly dysfunctional policies of the Stalinist society are remedies for other dysfunctional policies.  Here’s Peter arguing with Adams, a reform-minded Communist minister.

“…The hard fact is that some people simply have to do more unpleasant chores than others, and the only way we can get the unpleasant chores done is by compulsion. Not everybody can be a manager, or an actor or an artist or a violin player. Somebody has to dig the coal, collect the garbage, repair the sewers. Nobody will deliberately choose these smelly jobs. People will have to be assigned to them, forced to do them.”

“Well, perhaps we could compensate them in some way, Adams—say by letting them work shorter hours than the others.”

“We thought of that long ago, chief. It didn’t work. It unluckily turned out that it was only the pleasant jobs, like acting or violin playing, that could be reduced to short hours. But we simply can’t afford to have people work only a few hours on the nasty jobs. These are precisely the jobs that have to be done. We couldn’t afford to cut our coal production in half by cutting the hours in half, for example; and we just haven’t got the spare manpower to rotate. Besides, we found that on most such jobs a considerable loss of time and production was involved merely in changing shifts.”

“All right,” agreed Peter; “so under our socialist system we can’t have freedom in choice of work or occupation. But couldn’t we provide some freedom of initiative—at least for those who direct production? Our propaganda is always urging more initiative on the part of commissars or individual plant managers. Why don’t we get it?”

“Because a commissar or plant manager, chief, is invariably shot if his initiative goes wrong. The very fact that he was using his own initiative means that he was not following orders. How can you reconcile individual initiative with planning from the center? When we draw up our Five Year Plans, we allocate the production of hundreds of different commodities and services in accordance with what we assume to be the needs of the people. Now if every plant manager decided for himself what things his plant should produce or how much it should produce of them, our production would turn out to be completely unbalanced and chaotic.”

“Very well,” Peter said; “so we can’t permit the individual plant manager to decide what to produce or how much to produce of it. But this is certainly a big disadvantage. For if someone on the Central Planning Board doesn’t think of some new need to be satisfied, or some new way of satisfying an old need, then nobody thinks of it and nobody dares to supply it. But I have in mind something different from that. How can we encourage individual plant managers to devise more efficient ways of producing the things they are ordered to produce? If these plant managers can’t be encouraged to invent new or better consumption goods, at least they can be encouraged to invent new methods or machines to produce more economically the consumption goods they are ordered to produce, or to produce a higher quality of those consumption goods.”

“You’re just back to the same problem,” Adams said. “If I’m a plant manager, and I invent a new machine, I’ll have to ask the Central Planning Board to get somebody to build it, or to allocate the materials to me so that I can build it. In either case I’ll upset the preordained central plan. I’ll have a hard job convincing the Central Planning Board that my invention or experiment won’t fail. If my invention does fail, and it turns out that I have wasted scarce labor and materials, I will be removed and probably shot. The member of the Central Planning Board who approved my project will be lucky if he isn’t shot himself. Therefore, unless the success of my invention or experiment seems absolutely certain in advance, I will be well advised to do what everybody else does. Then if I fail, I can prove that I failed strictly according to the rules…”

Finally Peter settles on a seemingly simpler radical reform:

“Well, I can think of one more kind of freedom,” Peter said, “and I am determined to create it. That is the freedom to criticize the government.”

Adams started. He seemed to waver between incredulity and alarm. “You mean that you would permit people to criticize the actions of the government, and perhaps even denounce the government, and go unpunished?”

“Exactly!”

“Why, chief, you and I would be destroyed in a few weeks! If we allowed people to criticize us with impunity they would lose all fear of us—all respect for us. There would be an explosion of criticism that would blow us out of our seats—out of Wonworld. And what would we accomplish? Our successors would, of course, immediately suppress criticism again, for their own survival. “

What happens surprises them both.

Peter eagerly looked forward to the results of his reform. There weren’t any. None of the things happened that Adams had predicted. On the other hand, none of the consequences followed that Peter had hoped for. There was simply an intensification of the kind of criticism that had already been going on. People in superior positions continued to criticize people in subordinate positions; they continued to put the blame for failure on people who were not in a position to protect themselves; they continued to accuse people in minor positions of being deviationists and wreckers.

This was what had always been known as communist self-criticism. Peter put out still another proclamation. He ordered a stop to this sort of criticism. For a while it greatly diminished. But still no subordinate criticized his superior, and no one criticized the Politburo, the Party, or the government itself.

“What happened, Adams? Or rather, why didn’t anything happen?”

Adams smiled. “I should have foreseen this, chief. It should have been obvious. All that happened is that nobody trusted your proclamation. They thought it was a trick.”

“A trick?”

“Yes—a trick to smoke them out. A trick to find out who were the enemies of the government, and to liquidate them. Everybody waited for somebody else to stick his neck out, to see what would happen to him. Nobody wanted to be the first. So nobody was.”

Much the same happens when Peter orders free elections.  Later, he launches a seemingly plausible experiment in worker management:

“One of our great troubles, Adams, is that we are trying to plan more than any human mind can hold. We are trying to plan every industry—and all their interrelations—and all the rest. Why not let the workers of each industry control and police their own industry? That would decentralize control and break up the planning problem into manageable units.”

“The idea has possibilities, chief . . . but it might lead to results we couldn’t foresee.”

“Precisely,” said Peter; “and that is why we ought to try it out.”

[…]

“Why not try it out, then, only on a small scale? Why not apply the idea, Adams, in only one province—far away from Moscow? Why not throw a censorship around that district, so that no news could get in or out until we were certain that the experiment was a success?”

“Have you decided, chief, who our guinea pigs would be?”

“How about the Soviet Republic of Peru? That’s certainly remote enough!”

Here’s what goes down in Soviet Peru:

At the very start he found himself confronted in Peru by a problem of unexpected difficulty. He wanted each industry to be self-governing and independent. But what was an industry? Where did each industry begin and end?… At the end, when the Peruvian commissars he had appointed had finished their work, they had named fifty-seven different industries…

A temporary head was named for each industry. Someone jokingly nicknamed these heads the industry “czars.” Each industry was told to organize itself in any way it thought fit, provided each worker was allowed an equal vote. The industry could fix its own production, its own prices or terms of exchange, its own hours and conditions of work, its own entrance requirements.

Some Peruvians called the new system “syndicalism”; others called it “guild socialism”; and still others liked the name “corporativism.”

Peter returned to Moscow, promising to be back in Peru in six months to see how the new system was working. He left a secret cable code with the three top commissars to keep him informed.

Before two months had passed he received urgent cables begging for his return.

He came back to find a chaotic situation bordering on civil war. The first thing the workers in each industry had done had been to exclude anybody else from entering the industry. Each industry had quickly discovered that it could exact the best terms of exchange for its particular product by rendering it relatively scarce. There had then developed a competitive race for scarcity instead of for production. The workers in each industry voted themselves shorter and shorter hours. Each industry was either withholding goods or threatening to suspend production altogether until it got the prices it demanded for the particular kind of goods it had to supply.

Peter was indignant. He called in the various syndicates of workers representing each industry and denounced them in blistering terms for the selfish and shortsighted way in which they had “abused” the privileges he had conferred upon them. But as he studied the matter further he cooled off, and took a more objective view. He was forced to acknowledge to himself that the fault was his own. It was inherent in the system he had set up. He had allowed each industry to become an unrestrained monopoly. The more essential or irreplaceable the product that it made, therefore, the more it could and would squeeze everybody else…

He dismantled the new system entirely, and ordered the restoration of the old centralized socialism under the Central Planning Board at Moscow.

In most literary dialogues, at least one of the characters has the answers.  (“Yes, Socrates, you are quite right!”)  What’s novel about Hazlitt’s dialogues is that all the characters are deeply confused.  Even when they sound reasonable, the Complexity of the World repeatedly makes fools of them.

The Great Idea was originally published in 1951.  Stalin was still alive.  Fifteen years ago, Hazlitt wrote a new introduction with a grim forecast:

The Communist rulers cannot permit private ownership of the means of production not merely because this would mean the surrender of the central principle of their system, but because it would mean the restoration of individual liberty and the end of their despotic power. So I confess that the hope that some day an idealistic Peter Uldanov, miraculously finding himself at the pinnacle of power, will voluntarily restore the right of property, is a dream likely to be fulfilled only in fiction. But it is certainly not altogether idle to hope that, with a growth of economic understanding among their own people, the hands of the Communist dictators may some day be forced, more violently than Lenin’s were when the mutiny at Kronstadt, though suppressed, forced him to adopt the New Economic Policy.

Hazlitt was, of course, thoroughly wrong.  As far as we can tell, Gorbachev never had any intention of restoring capitalism.  But Yeltsin – a career Communist – did just that.  And despite all the disappointment Putin has provoked, the former Soviet Union has seen nothing remotely approaching the horrors of the Russian Civil War.  The actually-existing dystopia of the Soviet Union practically died in its sleep, proving Hazlitt’s fiction to be the opposite of wishful thinking.

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On Intellectual Property IV

I heard the claim recently that to use an idea that originated with someone else is to commit a trespass. This begs the question and assumes what proponents of strong intellectual property rights are trying to prove. A trespass is to enter the owner’s property without permission. If ideas cannot be the subject of a property claim, then no trespass can occur by using or copying an idea that originated with someone else. For the sake of argument, let us posit that using someone else’s idea does amount to trespass. Since every new idea is a re-mixture of old ideas, everyone is a trespasser, as I’ve already written. Where does this get us, precisely? Exactly nowhere except gobs and gobs of statecraft in the attempt to balance interests over the use things infinite and unhindered by natural scarcity. It’s all perfectly ridiculous, and insidious. And that’s today’s two cents.

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Intellectual Property & Stealing Future Profits (30m) – Editor’s Break 115

Editor’s Break 115 has Skyler giving his commentary on the following topics: resources and scarcity; the purpose of property rights; ideas as patterns of information; the attempt to apply property rights to non-scarce ideas in the forms of copyright and patent; why intellectual property makes everyone a thief; how intellectual property rights necessarily violate material property rights; the argument that copying ideas is to steal future profits; and more.

Listen to Editor’s Break 115 (30m, mp3, 64kbps)

Subscribe via RSS here, or in any podcast app by searching for “everything voluntary”. Support the podcast at Patreon.com/evc.

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If You Dream Big Things Only for Yourself, Your Dreaming Is Too Small

We’ve often heard it said that the way to a better world is a better self, but the reverse is also true.

The way to a better self is through the making of a better world.

Personal development can’t be separated from sociological development or systems development.

That is, it’s not possible to become your best self unless you’re facing up to the challenge of trying to contribute to someone or something other than yourself.

Don’t confuse this with a high-sounding message about how you have a moral duty to make the world a better place.

Read it selfishly: Generosity isn’t the opposite of personal ambition. It’s the optimization of personal ambition.

The need to only think about yourself arises from a scarcity mindset that closes you off to your own possibilities for abundance.

If you want the best possible life for yourself, you’re likely to grow more and gain more when you look for excuses to improve the people and places around you.

If you only think about yourself, you’re not selfish enough.

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The Insidious Wiles of Foreign Influence: Trump, Bin Salman, and Netanyahu

Even if the Saudi monarchy or Crown Prince Mohammed bin Salman in particular did not murder journalist Jamal Khashoggi, that regime is an especially evil one in both its domestic and international conduct. To see that, one need only consider the horrendous Saudi war against the people of Yemen, with the backing of the U.S. government starting with Barack Obama. That war, with its merciless killing of defenseless thousands and its inevitable benefits to al-Qaeda, is just the latest in a series Saudi atrocities.

Predictably, Donald Trump wants it all ways. He’s made the obligatory mild critical remarks at the same time as he floated his “theory” that Khashoggi’s death may have been carried out by rogue agents. But since that explanation, along with the “interrogation gone wrong” alternative, is hardly likely, Trump seems to be banking on his warm relationship with and confidence in the credibility of King Salman and the crown prince to reassure us. Actually, Trump has two things on his mind: arms sales and Iran.

He believes, first, that he can make the U.S. economy vibrant by being the country’s arms-trafficker-in-chief. He can throw multibillion-dollar figures around like confetti all day, but that he can’t erase the fact that a thriving arms industry is not the key to real and general prosperity. Quite the contrary, its products either destroy lives and wealth or rust. Real prosperity is not captured by aggregate numbers, whether they refer to military contractors’ profits, stock prices, or GDP. Real prosperity means regular people having increasingly easier access to the goods and services they believe will enhance their lives. As long as the laws of physics operate, scarcity — though, thanks to technology and innovation, not its severity — will be with us. So if people are devoting resources to making warplanes, killer drones, and bombs, they aren’t making things that you and I actually use. Arms-industry fatcats and their workers will make money, but they could be making money in ways that actually serve consumers instead of murderous and oppressive dictators, monarchs, presidents, and prime ministers.

Trump is wrong: this is not about the economy. His position is a dangerous mix of economic illiteracy fueled by nationalism and a hegemonic geopolitical vision according to which Iran is throttled and Israel is enabled, with Saudi Arabia as a beneficiary. Those objectives serve neither most Americans nor the rest of the world’s people.

The old admonition about permanent and entangling alliances still holds. As often as it’s been quoted, it’s worth quoting again — Washington’s Farewell Address, that is. Despite all its qualifications, Washington’s essential message is clear:

Against the insidious wiles of foreign influence (I conjure you to believe me, fellow-citizens) the jealousy of a free people ought to be constantly awake, since history and experience prove that foreign influence is one of the most baneful foes of republican government. But that jealousy to be useful must be impartial; else it becomes the instrument of the very influence to be avoided, instead of a defense against it. Excessive partiality for one foreign nation and excessive dislike of another cause those whom they actuate to see danger only on one side, and serve to veil and even second the arts of influence on the other. Real patriots who may resist the intrigues of the favorite are liable to become suspected and odious, while its tools and dupes usurp the applause and confidence of the people, to surrender their interests.

The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible. [Emphasis added.]

While steering clear of alliances is good advice, we may still question why the American regime has, beginning long before Trump, chosen one government for an ally over another. Why, for example, is the U.S. government close to Saudi Arabia rather than Iran? It certainly is not the case that the former is more liberal than the latter. That would be a laughable proposition. To pick a random test, how close are centers of Riyadh and Tehran to the nearest synagogues? I wouldn’t want to live in either place, but if those were my only choices, please give me Tehran. As for Iran’s allegedly creeping hegemony in the Middle East, check your premises. George W. Bush made Iran influential in Iraq by invading and knocking off Iran’s nemesis Saddam Hussein. (Iraq invaded and waged a long war, using chemical weapons, against Iran in the 1980s — with U.S. help — not vice versa.) Then Bush and Obama brought Iran closer to Syria by their continued war in Iraq, giving birth of the Islamic State, and Obama’s and Hillary Clinton’s declaring open season on Bashar al-Assad after the putative civil war broke out. Iran, no matter what Trump tells you, does not aspire and never has aspired to be a nuclear power. (See Gareth Porter’s Manufactured Crisis: The Untold Story of the Iran Nuclear Scare.) Nor does it aspire to attack the United States or Israel, though it does oppose Israeli oppression of the Palestinians. Iran is not on the march.

On the other hand, Saudi Arabia has been an indispensable party to a great deal of mischief, including mischief involving al-Qaeda — you know, the organization that brought down the Twin Towers — throughout the greater region and the Taliban in Afghanistan. The U.S. friendship with Saudi Arabia has benefitted al-Qaeda and even worse offshoots in Syria.

Thus the demonization of Iran and the glorification of Saudi Arabia, whence Muslim extremism was born, has no rational basis.

And Israel? The self-declared State of the Jewish People (a label rejected by countless Jews worldwide) has forged an alliance with Saudi Arabia for the dual purpose of intimidating Iran and cowing the long-suffering Palestinians. America’s entangling alliance with Israel has amounted to a gross offense against humanity, blackening whatever reputation the United States once might have had as a beacon of freedom, justice, and goodwill. Furthermore, the partnership has endangered Americans by provoking a desire for revenge in those who identify with the Muslim victims of U.S.-Israeli policy.

One final matter: the question of whether the U.S. government should block arms sales to the Saudis. We can say for sure that the government should in no way facilitate the sales. That’s an easy one. But maybe the arms makers need neither government material help nor Trump’s salesmanship to close deals with the House of Saud. In refusing to come down too hard on Saudi Arabia over the Khashoggi disappearance, Trump said, “I will tell you up front, right now they’re spending $110 billion purchasing military equipment. And if we don’t sell to them, they’ll say thank you very much, we’ll buy it from Russia or China.” (On the actual size of the deal, see this.)

Is Trump right that Russian or China might have gotten the deal? I don’t know, but if he is right, it raises interesting questions: did Trump make any side promises to close the deal; if so, what were they and would the deal have gone through without them? Most likely, any promises have involved things Trump and perhaps Israel would or would not do with respect to Iran and the Palestinians. We deserve answers.

Assuming American arms makers would sell arms to Saudi Arabia and other regimes without government help, we may complicate the matter further by pointing out that those firms are not actually private enterprises, no matter their appearance. Rather, they are creatures of the American state and deserve no respect from supporters of free enterprise. It’s unlikely they would exist in anything like their current form, if at all, were it not for the U.S. government, its captive taxpayers, and its global imperial apparatus, whose personnel rotate regularly between “national security” jobs and lucrative seats on defense contractors’ boards of directors. The upshot is that these nominally private firms are really state-held, that is, illegitimately held, property and could legitimately be liberated and turned to the production of goods for the consumers. In 1969 Murray Rothbard and Karl Hess wrote provocatively about when an apparently private entity is actually not private and what we might do about it. Some of their solutions are debatable, but Rothbard was surely correct when he wrote: “What we libertarians object to, then, is not government per se but crime, what we object to is unjust or criminal property titles; what we are for is not ‘private’ property per se but just, innocent, non-criminal private property. It is justice vs. injustice, innocence vs. criminality that must be our major libertarian focus.”

The Arms Export Control Act of 1976 (AECA) requires a president to ensure that arms sold to other governments are used for defensive purposes only. Obviously, this act is flouted every day. Imagine if it were applied to Saudi Arabia and Israel! It’s not that I’m a fan of the AECA: a president who wants to see arms sold to a repressive regime will find ways to give that regime a clean bill of health; the AECA would have no force in such a case. On the other hand, it has been used to harass exporters of encryption software to people who would use it to protect themselves from their oppressors’ prying eyes.

So what can we do? Our options are limited at this point. But one ought to do whatever one can to sow public hostility toward these “merchants of death”: public shaming, divestment campaigns, and the like. It’s the least we can do. At least let us make a loud noise!

If someone is going to sell arms to the Saudis and other regimes, I’d rather it be someone other than us Americans because I don’t want to be even remotely associated with the inevitable crimes against humanity that will follow.

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The Cost (and Rewards) of Generosity

Serving others is costly.

A life of service forces you to pay the price of abandoning your scarcity mindset and all the sympathy that comes with it. When you walk around with an “it’s just little ole me” attitude or when you carry yourself as someone who doesn’t have enough to share, no one expects anything of you and they extend pity in your direction.

When you decide to step up and share your gifts with others, however, it gives you the appearance of abundance. When you behave generously, people see you as someone who actually has something to give. It can be really hard to give up comments like “Wow, you really have it rough” in exchange for comments like “Wow, you really have a lot going for you.”

This might sound like the beginnings of an argument for not being generous. It’s not. Because the best part about being generous is how it changes the way you see yourself.

Once you get into the rhythm and groove of looking for opportunities to create value, you start to realize that you always have more to give than what meets the eye. By acting generously, you begin to experience life in a more generous way. It produces a fundamental shift in your mindset that leads to greater opportunities.

If you truly want to experience the universe as a place brimming with possibilities, go solve some problems for people.

Even if you see yourself as the one who has the most problems, the best way out is to push yourself to help someone else with their problems. Instead of competing for the title of “who has a more difficult life”, strive for the greater prize of making life a little less difficult for someone else.

It’s not easy, but it’s the best way to make life easier.

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