Tuesday, December 28, 2010

Anarcho-Capitalism, The New Beginning

Adam Smith is of notable importance in not just the history of America, but also in the history of Economics. He was no economist when he began writing, but he did develop a system by which people could satisfy their necessary wants, in a world of unlimited means. Smith delineated the division of labor (a more notable Ricardian phenomenon), and more importantly the theory of “The Invisible Hand.” This amazing breakthrough gave birth to an important system societies could be structured upon to survive, whilst giving the greatest freedom possible. Smith was no economist to begin with, but he was a philosopher whom by cobbling the various forms of information, with his keen ambition for freedom, and within the environment he lived, was able to transform himself into an economist by expanding on these economic ideas. He did so based upon his experiences. Smith was a man of gentry, of which many made their fortunes with help from the government, yet his love for freedom and his insight to economic logic made him realize that government was tyrannical and the result of many of the problems that existed in his time. Smith still had a lesser understanding of the common man and witnessed chaos he had no explanation of how to quell, and thus thought the government necessary to provide certain services he felt his nascent idea of Capitalism could not concoct within the private sector. Smith was thus a minarchist, and surely missed the fact that small government is still tyranny and a tool of exploitation that ratchets up over time.

Capitalism is not only an important synthesized model of economic thought which thus became an important economic system, but it is also perhaps the best theory aimed toward freedom many modern economists built upon. What Smith missed, was the fact that small government was tyranny and that it could not be quelled or controlled in any sense. His decision to include the ideas of government as a provider of what his experiment could not provide, left that economic theory lacking long-run substance. The Constitution of the United States is a document that is justified in Smith’s work, yet it is a disastrous form of organizing the natural existence of human life. What is more essential is the fact that “The Invisable Hand” in its very nature is plausible and effective, and his extensive writing and explanation of a natural locomotion of society based on personal fulfillment of desires and needs, is what today makes Smith so vital to us.

As various schools of thought continued to arise and as economists furthered their desire to still yet rid society of economic maladies, all of which the problem lied in the government that executed its ineffective programs, Keynesianism retracted the course of freedom toward a desire to restore tyranny through Socialism. This goal would be attained by giving government more powers to institutionalize sectors of the economy that could be better provided by the free-market itself. What minarchists fail to see is that Keynesianism is propped up by the existence on government at any level of fortitude. A large tree grows from the planting of a tiny seed, and of course dies at a certain point in its life, yet when this will happen is completely unpredictable. Timing the growth and death of government is nothing similar to timing the business cycle, unless of course a government exists, in which case one would be watching the fluctuations of the market based upon the growth of government power; something Austrian Economists are aware of and have precisely pegged to the activities of the Fed.

Ludwig Von Mises made great strides in waking the world up to the problems of government, and affirmed the fact that economics is not as complicated as government has made it, nor is it a problem, unless there indeed is a government that exists. Friedrich Von Hayek was Mises’ friend, and both were keen on the idea of displaying the maladies of government. Hayek won the Swedish Central Bank Prize for his work on the changing prices and its effect on individuals (aka The Nobel Prize in Economics), a feat which is quite commendable in respects to economic analysis, yet which was of course more precisely elaborated by Murray Rothbard. Winning a Nobel Prize is only important to have the media shed light on one’s work, but it is not a prize that will pick out the best economic theory that would give light to a newer better system. Hayek was a minarchist, and a man that Conservatives and Constitutionalists could embrace to help them win power in their corrupt game called politics. What people miss about Hayek is that his desire for Minarchy, was a desire for power in the hands of a different specified elite. It was not a broad change of economic theory which would bring true freedom. Hayek’s championing of downsizing government was his best accomplishment as an Austrian, yet the majority of the extensive work into economic theory was done by Rothbard, a man still to be recognized by a society that still worships government.

Rothbard not only elaborated and critiqued both Mises and Hayek, but he also corrected them on their mistakes. Those mistakes were usually a result of a lucid perspective on their mechanics, something a due to their inability to look beyond their desire for government. Murray Rothbard, being a man of immigrant parents from soviet countries, was no man of gentry, and profoundly desired freedom at its essence. Rothbard began as a student of the Austrain School and conventional theory of Capitalism, but as he deepened his analysis on his understanding of lassez-faire economics (Adam Smith’s Capitalism), he confronted a dilemma. The arguments for provision of goods and services applied across the board, and thus he realized that by this being the case, both protection and defense could be offered on the market, instead of by a coercive monopoly (government). Rothbard realized that he would either have to abandon lassez-faire, or embrace individualist anarchy. Rothbard arrived at the choice of keeping what worked well with Smith and “The Invisible Hand,” yet expanded on Smith and critiqued his ideas of minarchy as well.

Rothbard created Anarcho-Capitalism, and the beginning movement of Libertarianism in America. He gave birth to a new economic theory, and left Captialsim in the past. Anarcho-Capitalism is indeed what Mises searched for, and thus accepted it in every dynamic, while Hayek spent his time sticking to his ideas of minarchy. In the end Rothbard’s theory and books became the standard bearers of the Austrian School and now epitomize freedom in general. Rothbard and Anarcho-Capitalism are indeed what we need to embrace to prosper in the future; we must allow spontaneous market order, the privatization of all sectors of the economy, and voluntary exchange within a purely free-market to render the world long-term prosperity. And we must be fearless to apply this experiment as did those governments and people did that applied Smith’s Capitalism. It would simply revive and put into practice the desires of freedom the American revolutionaries expounded. For if one does not take the risk to transpose the system, the maladies and inefficiencies are perpetuated over time. Anarcho-Capitalism removes the state, illuminates the free-market, and creates a milkshake of ever expanding innovation, choice and diversity. The economic system of Anarcho-Capitalism will surely wash away all the inequities of the state (monopolies, war, poverty, unemployment, less choice, etc.), since they were the ones that created them in the first place.

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