Laissez Faire Economics Quotes

He who is unfit to serve his fellow citizens wants to rule them.

Socialism is an alternative to capitalism as potassium cyanide is an alternative to water.

Whenever someone starts talking about 'fair competition' or indeed, about 'fairness' in general, it is time to keep a sharp eye on your wallet, for it is about to be picked.

Freedom is indivisible. As soon as one starts to restrict it, one enters upon a decline on which it is difficult to stop.

There can be no socialism without a state, and as long as there is a state there is socialism. The state, then, is the very institution that puts socialism into action; and as socialism rests on aggressive violence directed against innocent victims, aggressive violence is the nature of any state.

A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society.

Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime. Steal a fish from one guy and give it to another--and keep doing that on a daily basis--and you'll make the first guy pissed off, but you'll make the second guy lazy and dependent on you. Then you can tell the second guy that the first guy is greedy for wanting to keep the fish he caught. Then the second guy will cheer for you to steal more fish. Then you can prohibit anyone from fishing without getting permission from you. Then you can expand the racket, stealing fish from more people and buying the loyalty of others. Then you can get the recipients of the stolen fish to act as your hired thugs. Then you can ... well, you know the rest.

It was Thomas Edison who brought us electricity, not the Sierra Club. It was the Wright brothers who got us off the ground, not the Federal Aviation Administration. It was Henry Ford who ended the isolation of millions of Americans by making the automobile affordable, not Ralph Nader. Those who have helped the poor the most have not been those who have gone around loudly expressing 'compassion' for the poor, but those who found ways to make industry more productive and distribution more efficient, so that the poor of today can afford things that the affluent of yesterday could only dream about.

Libertarians make no exceptions to the golden rule and provide no moral loophole, no double standard, for government.

If any man's money can be taken by a so-called government, without his own personal consent, all his other rights are taken with it; for with his money the government can, and will, hire soldiers to stand over him, compel him to submit to its arbitrary will, and kill him if he resists.

The free market punishes irresponsibility. Government rewards it.

People and institutions that refuse to admit error eventually discredit themselves.

Poverty can be brought about by law; it cannot be forbidden by law.

Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at.

Money is not an invention of the state. It is not the product of a legislative act. Even the sanction of political authority is not necessary for its existence. Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.

The law is guilty of the evils it is supposed to punish.

A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings.

But who would build the roads if there were no government? You mean to tell me that 300 million people in this country and 7 billion people on the planet would just sit around in their houses and think “Gee, I’d like to go visit Fred, but I can't because there isn’t a flat thing outside for me to drive on, and I don’t know how to build it and the other 300 million or 7 billion people can’t possibly do it because there aren’t any politicians and tax collectors. If they were here then we could do it. If they were here to boss us around and steal our money and really inefficiently build the flat places, then we would be set. Then I would be comfortable and confident that I could get places. But I can’t go to Fred’s house or the market because we can’t possibly build a flat space from A to B. We can make these really small devices that enable us to contact people from all over the word that fits in our pockets; we can make machines that we drive around in, but no, we can’t possibly build a flat space.

Conflict is not unavoidable. However, it is nonsensical to consider the institution of a state as a solution to the problem of possible conflict, because it is precisely the institution of a state which first makes conflict unavoidable and permanent.

A valid contract requires voluntary offer, acceptance, and consideration.

People are not embracing collectivism because they have accepted bad economics. They are accepting bad economics because they have embraced collectivism.

While liberals are in favor of any sexual activity engaged in by two consenting adults, when these consenting adults engage in trade or exchange, the liberals step in to harass, cripple, restrict, or prohibit that trade. And yet both the consenting sexual activity and the trade are similar expressions of liberty in action.

Entrepreneurial capitalism takes more people out of poverty than aid.

The military state is the final form to which every planned economy tends rapidly.

Where there is commerce there is peace.

Laissez faire (in its full true meaning) opens the way to the realization of the noble dreams of socialism.

Without anarchy, there would be chaos.

The profit of the one is the profit of the other.

Have you ever noticed how statists are constantly “reforming” their own handiwork? Education reform. Health-care reform. Welfare reform. Tax reform. The very fact they’re always busy “reforming” is an implicit admission that they didn’t get it right the first 50 times.

Experience cannot beat logic, and interpretations of observational evidence which are not in line with the laws of logical reasoning are no refutation of these but the sign of a muddled mind (or would one accept someone’s observational report that he had seen a bird that was red and non-red all over at the same time as a refutation of the law of contradiction rather than the pronouncement of an idiot?).

It is be­cause freedom means the renun­ciation of direct control of individual efforts that a free society can make use of so much more knowledge than the mind of the wisest ruler could comprehend.

Nowadays the job of the judge is not to do justice. The judge is more of a functionary . He's like a civil servant whose job is to interpret words written down by another branch of the government, whether those words are just or not.

When economic power desires to be left alone it uses the philosophy of laissez faire to discourage political restraint upon economic freedom. When it wants to make use of the police power of the state to subdue rebellions and discontent in the ranks of its helots, it justifies the use of political coercion and the resulting suppression of liberties by insisting that peace is more precious than freedom and that its only desire is social peace.

The essential quality of a market system, contrary to popular thinking, is not that it promotes greed; but rather, that it renders greed harmless.

Government programs didn’t arise because the people demanded them or because the free market was unable to provide needed services. They arose because the politicians found them to be a convenient way to buy votes with other people’s money, a convenient way to enlarge their own power, a convenient way to reward their political cronies, and a convenient way to keep people dependent on government.

Socialism is not really an option in the material world. There can be no collective ownership of anything materially scarce. One or another faction will assert control in the name of society. Inevitably, the faction will be the most powerful in society -- that is, the state. This is why all attempts to create socialism in scarce goods or services devolve into totalitarian systems of top-down planning.

In spite of its alluring name, the welfare state stands or falls by compulsion. It is compulsion imposed upon us with the state’s power to punish noncompliance. Once this is clear, it is equally clear that the welfare state is an evil the same as every restriction of freedom.

There is not the slightest analogy between playing games and the conduct of business within a market society. The card player wins money by outsmarting his antagonist. The businessman makes money by supplying customers with goods they want to acquire.

Countries adopting free-market capitalism have increased output 70-fold, halved work days and doubled lifespans.

In particular, the State has arrogated to itself a compulsory monopoly over police and military services, the provision of law, judicial decision-making, the mint and the power to create money, unused land ("the public domain"), streets and highways, rivers and coastal waters, and the means of delivering mail...the State relies on control of the levers of propaganda to persuade its subjects to obey or even exalt their rulers.

In the natural sciences, some checks exist on the prolonged acceptance of nutty ideas, which do not hold up well under experimental and observational tests and cannot readily be shown to give rise to useful working technologies. But in economics and the other social studies, nutty ideas may hang around for centuries. Today, leading presidential candidates and tens of millions of voters in the USA embrace ideas that might have been drawn from a 17th-century book on the theory and practice of mercantilism, and multitudes of politicians and ordinary people espouse notions that Adam Smith, David Ricardo, and others exploded more than two centuries ago. In these realms, nearly everyone simply believes whatever he feels good about believing.

What ranks above all else for economic and political reconstruction is a radical change of ideologies. Economic prosperity is not so much a material problem; it is, first of all, an intellectual, spiritual, and moral problem.

The government enforces a monopoly over the production and distribution of its alleged 'services' and brings violence to bear against would-be competitors. In so doing, it reveals the fraud at the heart of its impudent claims and gives sufficient proof that it is not a genuine protector, but a mere protection racket.

Libertarians make no exceptions to the golden rule and provide no moral loophole, no double standard, for government. That is, libertarians believe that murder is murder and does not become sanctified by reasons of state if committed by the government. We believe that theft is theft and does not become legitimated because organized robbers call their theft "taxation." We believe that enslavement is enslavement even if the institution committing that act calls it "conscription." In short, the key to libertarian theory is that it makes no exceptions in its universal ethic for government.

The instant that any government obtains a monetary printing press, it becomes a deeply dishonest government, empowered to rob people by stealth. A government with the power to print money knows no limits.

Copyright: a system of monopoly privilege over the expression of ideas that enables government to stop consumer-friendly economic development and reward uncompetitive and legally privileged elites to fleece the public through surreptitious use of coercion.

Can social progress be made without government? It's like saying 'can happiness be achieved without the initiation of violence? Can romance be achieved without rape? Can profitability be achieved without theft? Can economic growth be achieved without the mass indebted enslavement and counterfeiting of the federal reserve?'.

There are two methods, or means, and only two, whereby man's needs and desires can be satisfied. One is the production and exchange of wealth; this is the economic means. The other is the uncompensated appropriation of wealth produced by others; this is the political means.

It must be remembered that a vast majority of mankind’s history has been spent living under the rule of tyrants and authoritarians. The ideas of Liberty are very new when you consider the big picture. By contrast, various forms of socialism and fascism have been adopted over and over again. Be wary of those who try to present these old and tired ideas as something new and exciting. Liberty and free markets are the way forward if we truly desire peace and prosperity.

Recall that the minimum wage was initially conceived as a method to exclude undesirables from the workforce.

Ultimately, all arguments against markets are arguments against anarchy. Marx understood this much, at least.

As long as government has the power to regulate business, business will control government by funding the candidate that legislates in their favor. A free-market thwarts lobbying by taking the power that corporations seek away from government! The only sure way to prevent the rich from buying unfair government influence is to stop allowing government to use physical force against peaceful people. Whenever government is allowed to favor one group over another, the rich will always win, since they can "buy" more favors, overtly or covertly, than the poor.

A government is a compulsory territorial monopolist of ultimate decision-making (jurisdiction) and, implied in this, a compulsory territorial monopolist of taxation. That is, a government is the ultimate arbiter, for the inhabitants of a given territory, regarding what is just and what is not, and it can determine unilaterally, i.e., without requiring the consent of those seeking justice or arbitration, the price that justice-seekers must pay to the government for providing this service.

There is only a certain amount of wealth in the world, this thinking goes. Economics is a matter of acquiring and allocating, not creating. This was the view of the world’s smartest people, all top philosophers and not stupid people, for many thousands of years before the age of the enlightenment. It still is.

For anyone who thinks "profit" is evil, I have a challenge for you: try NOT to get any profit in the next week. Profit simply means increasing how much valuable stuff you have, and if you don't profit, you die. Literally. For example, don't buy any food for a week, because when you buy food (or anything), it's because you value the food MORE than you value the money you trade for it. If you didn't, you wouldn't make the trade. So you PROFIT (and so does the seller) every time you buy something. And every time you sell something, or work for money, etc. So before condemning "profit" (or "greed" or "selfishness," for that matter), see if you can survive without it. Then stop repeating vague collectivist BS, and learn to distinguish between "win/win" events (voluntary exchange) where BOTH sides profit, and "win/lose" events, where one side benefits by harming the other side. By the way, "government" is ALWAYS the latter.

Growing economies are built by billions of actors behaving according to their own interests, coordinated through institutions that no one in particular created. Realizing this requires humility, a trait that is in short supply among would-be dictators, politicians, and bureaucrats, which is precisely why these groups are the proven enemies of prosperity in all times and places.

Here is a principle to use in all aspects of economics and policy. When you find a good or service that is in huge demand but the supply is so limited to the point that the price goes up and up, look for the regulation that is causing it. This applies regardless of the sector, whether transportation, gas, education, food, beer, or daycare. There is something in the way that is preventing the market from working as it should. If you look carefully enough, you will find the hand of the state making the mess in question.

The essential difference between rich societies and poor societies does not stem from any greater effort the former devote to work, nor even from any greater technological knowledge the former hold. Instead it arises mainly from the fact that rich nations possess a more extensive network of capital goods wisely invested from an entrepreneurial standpoint. These goods consists of machines, tools, computers, buildings, semi-manufactured goods, software, etc., and they exist due to prior savings of the nation's citizens. In other words, comparatively rich societies possess more wealth because they have more time accumulated in the form of capital goods, which places them closer in time to the achievement of much more valuable goals.

The movement that I’m in favor of is a movement of libertarians who do not substitute whim for reason. Now some of them do, obviously, and I’m against that. I’m in favor of reason over whim. As far as I’m concerned, and I think the rest of the movement, too, we are anarcho-capitalists. In other words, we believe that capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism. Not only are they compatible, but you can’t really have one without the other. True anarchism will be capitalism, and true capitalism will be anarchism.

The overwhelming tendency of markets is to bring people together, break down prejudices, persuade people of the need to cooperate regardless of class, race, religion, sex/gender, and physical ability. The same is obviously and especially true of sexual orientation. It is the market that rewards people who put aside their biases and seek gains through trade. This is why states devoted to racialist and hateful policies always resort to violence in control of the marketplace.

The problems on campus life today are not about free speech. They are about how the students have absolutely nothing to do with their lives but sit and listen to lectures, find the best parties to attend, and otherwise discover first-world problems to stew about and protest. That's the root of the problem. This is not a commercial environment where people are incentivized to find value in each other. Campuses have become completely artificial 4-year holding tanks for infantilized kids with zero experience in actual life in which people find ways to get along. These students are not serving each other in a market exchange, and very few have worked at day in their lives, so their default is to find some offense and protest. It's all they've been taught to do and all they know how to do. Idle hands and parents' money = trouble.

The traditional, correct pre-Marxist view on exploitation was that of radical laissez-faire liberalism as espoused by, for instance, Charles Comte and Charles Dunoyer. According to them, antagonistic interests do not exist between capitalists, as owners of factors of production, and laborers, but between, on the one hand, the producers in society, i.e., homesteaders, producers and contractors, including businessmen as well as workers, and on the other hand, those who acquire wealth non-productively and/or non-contractually, i.e., the state and state-privileged groups, such as feudal landlords.

Commerce tends toward rewarding inclusion, broadness, and liberality. Tribal loyalties, ethnic and religious bigotries, and irrational prejudices are bad for business. The merchant class has been conventionally distrusted by tribalist leaders -- from the ancient to the modern world -- precisely because merchantcraft tends to break down barriers between groups.

In neo-classical economic theory, it is claimed without evidence that people are basically self-seeking, that they want above all the satisfaction of their material desires: what economists call "maximising utility". The ultimate objective of mankind is economic growth, and that is maximized only through raw, and lightly regulated, competition. If the rewards of this system are spread unevenly, that is a necessary price. Others on the planet are to be regarded as either customers, competitors or factors of production. Effects upon the planet itself are mere "externalities" to the model, with no reckoning of the cost - at least for now. Nowhere in this analysis appears factors such as human cooperation, love, trust, compassion or hatred, curiosity or beauty. Nowhere appears the concept of meaning. What cannot be measured is ignored. But the trouble is that once our basic needs for shelter and food have been met, these factors may be the most important of all.

Here's something I still can't get over. Amazes and thrills me every time. I'm sitting here and want a certain book. So I search, click, and then I have the book. Every time, my heart does a little leap of joy. What a beautiful world the market is making.

First of all, historically, markets simply did not emerge as some autonomous domain of freedom independent of, and opposed to, state authorities. Exactly the opposite is the case. Historically, markets are generally either a side effects of government operations, especially military operations, or were directly created by government policy. This has been true at least since the invention of coinage, which was first created and promulgated as a means of provisioning soldiers; for most of Eurasian history, ordinary people used informal credit arrangements and physical money, gold, silver, bronze, and the kind of impersonal markets they made possible remained mainly an adjunct to the mobilization of legions, sacking of cities, extraction of tribute, and disposing of loot. Modern central banking systems were likewise first created to finance wars. So there's one initial problem with the conventional history. There's another even more dramatic one. While the idea that the market is somehow opposed to and independent of government has been used at least since the nineteenth century to justify laissez faire economic policies designed to lessen the role of government, they never actually have that effect. English liberalism, for instance, did not lead to a reduction of state bureaucracy, but the exact opposite: an endlessly ballooning array of legal clerks, registrars, inspectors, notaries, and police officials who made the liberal dream of a world of free contract between autonomous individuals possible. It turned out that maintaining a free market economy required a thousand times more paperwork than a Louis XIV-style absolutist monarchy. (p. 8-9)

For freedom and equality are sworn and everlasting enemies, and when one prevails the other dies. Leave men free, and their natural inequalities will multiply almost geometrically, as in England and America in the nineteenth century under laissez-faire. To check the growth of inequality, liberty must be sacrificed, as in Russia after 1917. Even when repressed, inequality grows; only the man who is below the average in economic ability desires equality; those who are conscious of superior ability desire freedom; and in the end superior ability has its way.

Laissez-faire capitalism, or anarchocapitalism, is simply the economic form of the libertarian ethic. Laissez-faire capitalism encompasses the notion that men should exchange goods and services, without regulation, solely on the basis of value for value. It recognizes charity and communal enterprises as voluntary versions of this same ethic. Such a system would be straight barter, except for the widely felt need for a division of labor in which men, voluntarily, accept value tokens such as cash and credit. Economically, this system is anarchy, and proudly so.

The valuations which result in determination of definite prices are different. Each party attaches a higher value to the good he receives than to that he gives away. The exchange ratio, the price, is not the product of equality of valuation, but on the contrary, the product of a discrepancy in valuation.

Voluntary communism, together with laissez-faire capitalism, has nothing to be ashamed of on moral and economic grounds. They can each hold up their heads, high. Far from enemies, they are merely opposite sides of the same voluntaristic coin. Together, they must battle state coercion, whether called State Capitalism or State Socialism. The point is, “left” vs. “right” is a red herring. The reddest and perhaps most misleading red herring in all political-economic theory.

The occupation with scholarship, when it is not guided and limited by any higher educational maxim, but instead is increasingly unfettered, adhering to the principle “the more the better,” is certainly just as pernicious for the scholar as the economic doctrine of laissez-faire is for the morality of entire nations.

It's WW2 and there are wage controls in place. Instead of health care, companies decide to offer employees shoes. Having absorbed those costs, they later lobby for every company to be required to offer shoes. That calls forth regulation and monopolization of the shoe industry. Shoes are heavily subsidized. Every shoe must be approved. Producers must be domestic. They must adhere to a certain quality. They can't discriminate based on foot size or individual need. Prices rise, and some people lack shoes, so the Affordable Shoe Act forces everyone to buy into an official shoe plan or pay a fee. Here we have a perfect plan for making shoes egregiously expensive. The entire country would be consumed with the fear of being shoeless if they lose their job. The left wing calls for a single shoe provider to offer universal shoes and the right wing meekly suggests that shoe makers be permitted to sell across state lines. Meanwhile, libertarians suggest that we just forget the whole thing and let the market make and deliver shoes of every quality to anyone from anyone. Everyone screams that this is an insane and dangerous idea.

Government as we now know it in the USA and other economically advanced countries is so manifestly horrifying, so corrupt, counterproductive, and outright vicious, that one might well wonder how it continues to enjoy so much popular legitimacy and to be perceived so widely as not only tolerable but indispensable. The answer, in overwhelming part, may be reduced to a two-part formula: bribes and bamboozlement (classically "bread and circuses"). Under the former rubric falls the vast array of government "benefits" and goodies of all sorts, from corporate subsidies and privileges to professional grants and contracts to welfare payments and health care for low-income people and other members of the lumpenproletariat. Under the latter rubric fall such measures as the government schools, the government's lapdog news media, and the government's collaboration with the producers of professional sporting events and Hollywood films. Seen as a semi-integrated whole, these measures give current governments a strong hold on the public's allegiance and instill in the masses and the elites alike a deep fear of anything that seriously threatens the status quo.

No people and no part of a people shall be held against its will in a political association that it does not want.

In advanced societies it is not the race politicians or the "rights" leaders who create the new ideas and the new images of life and man. That role belongs to the artists and intellectuals of each generation. Let the race politicians, if they will, create political, economic or organizational forms of leadership; but it is the artists and the creative minds who will, and must, furnish the all important content. And in this role, they must not be subordinated to the whims and desires of politicians, race leaders and civil rights entrepreneurs whether they come from the Left, Right, or Center, or whether they are peaceful, reform, violent, non-violent or laissez-faire. Which means to say, in advanced societies the cultural front is a special one that requires special techniques not perceived, understood, or appreciated by political philistines.

Adam Smith's entire economic doctrine of laissez-faire implicitly assumed the same lack of correspondence between intention and effect, for the systemic benefits of capitalism were no part of the intention of capitalists.

Fascism is not an ordered set of beliefs, like laissez-faire or Socialism or Communism; it is essentially an emotional protest, part of those members of the middle-class (such as small shopkeepers) who suffer from modern economic developments, partly of anarchic industrial magnates whose love of power has grown into megalomania. It is irrational, in the sense that it cannot achieve what its supporters desire; there is no philosophy of Fascism, but only psychoanalysis. If it could succeed, the result would be widespread misery; but its inability to find a solution for the problem of war makes it impossible that it should succeed for more than a brief moment.

Monopoly is a market, or part of a market, reserved to the exclusive possession of one or more sellers by means of the initiation of physical force by the government, or with the sanction of the government. Monopoly exists insofar as the freedom of competition is violated, with the freedom of competition being understood as the absence of the initiation of physical force as the preventive of competition. Where there is no initiation of physical force to violate the freedom of competition, there is no monopoly. The freedom of competition is violated only insofar as individuals are excluded from markets or parts of markets by means of the initiation of physical force. Monopoly is thus a market or part of a market reserved to the exclusive possession of one or more sellers by means of the initiation of physical force. It is thus something imposed upon the market from without—by the government. (Private individuals—gangsters—can initiate force to reserve markets only if the government allows it and thereby sanctions it.) Thus, monopoly is not something which emerges from the normal operation of the economic system, and which the government must control.

It rests on the attempt since the 1970s to translate a pathological degeneration of the principle of laissez-faire into economic reality by the systematic retreat of states from any regulation or control of the activities of profit-making enterprise. This attempt to hand over human society to the (allegedly) self-controlling and wealth- or even welfare-maximising market, populated (allegedly) by actors in rational pursuit of their interests, had no precedent in any earlier phase of capitalist development in any developed economy, not even the USA. It was a reductio ad absurdum of what its ideologists read into Adam Smith, as the correspondingly extremist 100% state-planned command economy of the USSR was of what the Bolsheviks read into Marx.

The first people to get the new money are the counterfeiters, which they use to buy various goods and services. The second receivers of the new money are the retailers who sell those goods to the counterfeiters. And on and on the new money ripples out through the system, going from one pocket or till to another. As it does so, there is an immediate redistribution effect. For first the counterfeiters, then the retailers, etc. have new money and monetary income they use to bid up goods and services, increasing their demand and raising the prices of the goods that they purchase. But as prices of goods begin to rise in response to the higher quantity of money, those who haven't yet received the new money find the prices of the goods they buy have gone up, while their own selling prices or incomes have not risen. In short, the early receivers of the new money in this market chain of events gain at the expense of those who receive the money toward the end of the chain, and still worse losers are the people (e.g., those on fixed incomes such as annuities, interest, or pensions) who never receive the new money at all.

It was in the wake of these erosions of economic controls that intellectual challenges were then made to the role of government in the economy, first by the Physiocrats in France, who coined the term "laissez-faire," and then by Adam Smith in Britain, who became its leading champion.

When viewed historically the development of philosophical liberalism has to be seen as inseparable from economic liberalism (laissez-faire capitalism). The effect for Nietzsche of the domination of the polity by a money-economy is that the basis for a strong communal, ethical life is undermined, and culture is overtaken by philistinism. The expression, and realisation, of true individuality becomes almost impossible in the modern world. For Nietzsche liberalism emancipates the ‘private person’ (of bourgeois society), but not the ‘true individual’. It lacks a conception of culture.

Like its bête noire, Marxism, laissez-faire economics claimed to be scientific, based upon immutable laws of nature, and also like Marxism, it has not stood the test of experience. If it were a scientific theory, it would have long ago been rejected.37 Free-market fundamentalism is an article of faith.

As it developed in the late eighteenth and early nineteenth centuries, the intellectual movement that went under the name of liberalism emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society. It supported laissez faire at home as a means of reducing the role of the state in economic affairs and thereby enlarging the role of the individual; it supported free trade abroad as a means of linking the nations of the world together peacefully and democratically. In political matters, it supported the development of representative government and of parliamentary institutions, reduction in the arbitrary power of the state, and protection of the civil freedoms of individuals.

These are, in outline, the real “rights of man”—the right to life, liberty, and the pursuit of happiness on equal terms with all. Besides these economic rights, political rights are unimportant unrealities. Changes in the form of government amount to nothing where economic life is not free; and a laissez-faire monarchy is much better than a socialistic democracy.

It is important not to confuse opposition against this kind of planning with a dogmatic laissez faire attitude. The liberal argument is in favor of making the best possible use of the forces of competition as a means of coordinating human efforts, not an argument for leaving things just as they are. It is based on the conviction that, where effective competition can be created, it is a better way of guiding individual efforts than any other. It does not deny, but even emphasizes, that, in order that competition should work beneficially, a carefully thought-out legal framework is required and that neither the existing nor the past legal rules are free from grave defects. Nor does it deny that, where it is impossible to create the conditions necessary to make competition effective, we must resort to other methods of guiding economic activity.

Because they have their strategy-the strategy of laissez­ faire; the strategy of individual versus collective effort, of appealing to that little bit of selfishness that exists in each person to beat out the rest. They appeal to that petty superiority complex that every­ one possesses that makes one think they are better than everybody else. The monopolies instill in individuals, from childhood on, the view that since you are better and work harder, that it is in your interest to struggle individually against everyone else, to defeat ev­eryone else and become an exploiter yourself. The monopolies go to great lengths to prove that collective ef­fort enslaves and prevents the smarter and more capable from get­ting ahead. As if the people were made up simply of individuals, some more intelligent, some more capable. As if the people were something other than a great mass of wills and hearts that all have more or less the same capacity for work, the same spirit of sacrifice, and the same intelligence. They go to the undifferentiated masses and try to sow divisions: between blacks and whites, more capable and less capable, literate and illiterate. They then subdivide people even more, until they single out the individual and make the individual the center of so­ciety.

Smith’s concept of the mercantile system evolved—completely out of context—into the modern concept of mercantilism: a simplistic, blanket economic term used to characterize early modern economic thinkers as proponents of an interventionist, taxing, subsidizing, and warring state whose goal was to simply hoard gold. In 1931, the Swedish economic historian Eli Heckscher, in his monumental study Mercantilism, juxtaposed Colbert’s “mercantile” economics with a pure, laissez-faire system, which he felt Smith embodied, that allowed for individual and commercial freedoms without state intervention. A powerful and simplistic binary continued thereafter, one that informs our own vision of the free market today. We can see it still in Friedman’s work.

[A] constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez faire. It is made for people of fundamentally differing views, and the accident of our finding certain opinions natural and familiar or novel and even shocking ought not to conclude our judgment upon the question whether statutes embodying them conflict with the Constitution of the United States. . . . [T]he word liberty in the Fourteenth Amendment is perverted when it is held to prevent the natural outcome of a dominant opinion, unless it can be said that a rational and fair man necessarily would admit that the statute proposed would infringe fundamental principles as they have been understood by the traditions of our people and our law.

It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half. But to consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning. Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive. The bad economists rationalize this intellectual debility and laziness by assuring the audience that it need not even attempt to follow the reasoning or judge it on its merits because it is only "classicism" or "laissez faire" or "capitalist apologetics" or whatever other term of abuse may happen to strike them as effective.

This and Rothbard’s own life-long cultural conservatism notwithstanding, however, from its beginnings in the late 1960s and the founding of a libertarian party in 1971, the libertarian movement had great appeal to many of the counter-cultural left that had then grown up in the U.S. in opposition to the war in Vietnam. Did not the illegitimacy of the state and the non-aggression axiom imply that everyone was at liberty to choose his very own non-aggressive lifestyle, no matter what it was? Much of Rothbard’s later writings, with their increased emphasis on cultural matters, were designed to correct this development and to explain the error in the idea of a leftist multi-counter-cultural libertarianism, of libertarianism as a variant of libertinism. It was false—empirically as well as normatively—that libertarianism could or should be combined with egalitarian multiculturalism. Both were in fact sociologically incompatible, and libertarianism could and should be combined exclusively with traditional Western bourgeois culture; that is, the old-fashioned ideal of a family-based and hierarchically structured society of voluntarily acknowledged rank orders of social authority. Empirically, Rothbard did not tire to explain, the left-libertarians failed to recognize that the restoration of private-property rights and laissez-faire economics implied a sharp and drastic increase in social “discrimination.” Private property means the right to exclude. The modern social-democratic welfare state has increasingly stripped private-property owners of their right to exclude. In distinct contrast, a libertarian society where the right to exclude was fully restored to owners of private property would be profoundly unegalitarian. To be sure, private property also implies the owner’s right to include and to open and facilitate access to one’s property, and every private-property owner also faces an economic incentive of including (rather than excluding) so long as he expects this to increase the value of his property.

However, it is important not to lose sight of exactly how the neoliberal system works. As David Harvey has demonstrated, by drawing on Karl Polanyi’s masterful work, the free market has never been incompatible with state intervention, and the management of crises is part of the neoliberal project. We therefore need to inquire into how this crisis was presented by recalling, if we take the American example, that President George W. Bush kept forcefully repeating that the foundations of the economy were solid. Then suddenly, in the fateful month of September, as if faced with the sudden surge of a more or less unexpected “economic hurricane,” he asked for $700 billion to avoid a severe economic meltdown. It was necessary to save the banks and businesses that were too big to fail. This complex crisis called for a reaction that was as fast as it was extreme, starting with $350 billion distributed by Treasury Secretary Henry Paulson, the former chairman and chief executive officer of Goldman Sachs. We should note in passing that this sort of crisis discourse recalls all of the exceptional measures put in place or intensified after September 11, 2001: the usa patriot Act, the Military Commissions Act, illegal wiretappings, extraordinary rendition, the network of secret prisons, the redefinition of torture by the Office of Legal Council, and so on. It is not by chance that this crisis was presented as a complex and uncontrollable natural phenomenon, whose severity was largely unforeseen, for it is similar to the historical logic outlined above. By naturalizing the economy and transforming it into an autonomous authority independent of the decisions made by specific agents, this historical order promotes passivity (we can only bow before forces stronger than us), the removal of responsibility (no one can be held accountable for natural phenomena), and historical nearsightedness (the situation is so critical that we must respond quickly, without wasting time by debating over distant causes: time is short!). If we were to step back and assess the overall situation, we would see numerous specters rising up in the cemetery that is neoliberalism, and we would need to begin questioning—following Polanyi—whether the very project of laissez-faire economics has ever been anything other than socialism for the rich or, more precisely, topdown class warfare enforced by state intervention

by requiring some social contribution in order to receive the stipend, we would foster a far different ideology than the laissez-faire individualism of a UBI. Providing a stipend in exchange for participation in prosocial activities reinforces a clear message: It took efforts from people all across society to help us reach this point of economic abundance. We are now collectively using that abundance to recommit ourselves to one another, reinforcing the bonds of compassion and love that make us human.

Picture a small South American dictatorship, weakened by economic stresses and a popular demand for more freedom, resulting from the existence of a laissez-faire society nearby. What would the dictator of such a country do if faced by a large and powerful insurance company and its defense service (or even a coalition of such companies) demanding that he remove all taxes, trade restrictions, and other economic aggressions from, say, a mining firm protected by the insurance company? If the dictator refuses the demand, he faces an armed confrontation which will surely oust him from his comfortable position of rule. His own people are restless and ready to revolt at any excuse. Other nations have their hands full with similar problems and are not eager to invite more trouble by supporting his little dictatorship. Besides this, the insurance company, which doesn’t recognize the validity of governments, has declared that in the event of aggression against its insured it will demand reparations payments, not from the country as a whole, but from every individual directly responsible for directing and carrying out the aggression. The dictator hesitates to take such an awful chance, and he knows that his officers and soldiers will be very reluctant to carry out his order. Even worse, he can’t arouse the populace against the insurance company by urging them to defend themselves—the insurance company poses no threat to them. A dictator in such a precarious position would be strongly tempted to give in to the insurance company’s demands in order to salvage what he could (as the managers of the insurance company were sure he would before they undertook the contract with the mining firm). But even giving in will not save the dictator’s government for long As soon as the insurance company can enforce noninterference with the mining company, it has created an enclave of free territory within the dictatorship. When it becomes evident that the insurance company can make good its offer of protection from the government, numerous businesses and individuals, both those from the laissez-faire society and citizens of the dictatorship, will rush to buy similar protection (a lucrative spurt of sales foreseen by the insurance company when it took its original action). At this point, it is only a matter of time until the government crumbles from lack of money and support, and the whole country becomes a free area. In this manner, the original laissez-faire society, as soon as its insurance companies and defense agencies became strong enough, would generate new laissez-faire societies in locations all over the world. These new free areas, as free trade made them economically stronger, would give liberty a tremendously broadened base from which to operate and would help prevent the possibility that freedom could be wiped out by a successful sneak attack against the original laissez-faire society. As the world-wide, interconnected free market thus formed became stronger and the governments of the world became more tyrannical and chaotic, it would be possible for insurance companies and defense agencies to create free enclaves within more and more nations, a sales opportunity which they would be quick to take advantage of.

The choice is not laissez-faire vs. the status quo, because we cannot possibly keep the status quo anyway. Tremendous socioeconomic forces, set in motion long ago by governmental plundering and power-grabbing, are sweeping the present order out from under our feet. We can only choose whether we will allow ourselves to be pushed into economic chaos and political tyranny or whether we will resist the bureaucratic tyrants and looters and work to set up a free society where each man can live his own life and “do his own thing.” Whichever we choose, the road ahead will probably be rough; but the important question is, “What kind of society do we want to arrive at in the end?

true plantsman knows, gardening is far from laissez-faire. In their book The Gardens of Democracy, Eric Liu and Nick Hanauer argue that moving from ‘machinebrain’ to ‘gardenbrain’ thinking calls for a simultaneous shift away from believing that things will self-regulate to realising that things need stewarding. ‘To be a gardener is not to let nature take its course; it is to tend,’ they write. ‘Gardeners don’t make plants grow but they do create conditions where plants can thrive and they do make judgments about what should and shouldn’t be in the garden.’46 That is why economic gardeners must throw themselves in, nurturing, selecting, repotting, grafting, pruning and weeding the plants as they grow and mature.

There is only one antidote to racism: the philosophy of individualism and its politico-economic corollary, laissez-faire capitalism. Individualism regards man—every man—as an independent, sovereign entity who possesses an inalienable right to his own life, a right derived from his nature as a rational being. Individualism holds that a civilized society, or any form of association, cooperation or peaceful coexistence among men, can be achieved only on the basis of the recognition of individual rights—and that a group, as such, has no rights other than the individual rights of its members.

The years 1880–1913 constitute the great era of laissez-faire in world economic history—the reign of the classical gold standard, in which governments around the globe had allowed an unprecedented degree of economic activity within and between their nations to be regulated by the market-driven transfer of gold claims across borders (the physical stuff itself just shifted around in central bank vaults). The year 1933, in stark contrast, saw the world mired in the Great Depression, with the gold standard in tatters, trade decimated, and unemployment at previously unimagined levels.

Thus, while demonstrating that authoritarianism is indeed the principal determinant of intolerance of difference worldwide, I also provide definitive evidence regarding what it is not. It is not a desire to preserve the status quo whatever that may be. It does not preclude support for social change, so long as we are changing together in pursuit of common goals. And it is not preference for laissez-faire economics. It does not necessitate opposition to government interventions that might serve to enhance oneness and sameness. As I noted at the close of Chapter 4, apart from confusing theory and confounding evidence for half a century, these common misconceptions create needless skepticism and resistance among those (quite reasonably) reluctant to accept that distaste for change implies distaste for other races, or that commitment to economic freedom somehow suggests an interest in moral regulation and political repression. This confusion --- among both scholars and political elites --- has significant political and social implications. It can drive those who are merely averse to change into unnatural and unnecessary political alliances with the hateful and intolerant, when they could be rallied behind tolerance and respect for difference under the right conditions. These conditions would include authoritative reminders of how privileged are those ideals in one's national tradition; reassurances regarding established brakes on the pace of change, and the settled rules of the game to which all will adhere; and confidence in the leaders and institutions managing social conflict, and regulating the extent and rate of social change. I find compelling indications that status quo conservatives, if properly understood and marshaled, can be a liberal democracy's strongest bulwark against the dangers posed by intolerant social movements. Those by nature averse to change should find the "shining path" to the "glorious future" far more frightening than exciting, and can be expected to defend faithfully any established order --- including one of institutionalized respect for difference and protection of individual freedom --- against "authoritarian revolution." (p.326--327)

It is often asked: Why was capitalism destroyed in spite of its incomparably beneficent record? The answer lies in the fact that the lifeline feeding any social system is a culture’s dominant philosophy and that capitalism never had a philosophical base. It was the last and (theoretically) incomplete product of an Aristotelian influence. As a resurgent tide of mysticism engulfed philosophy in the nineteenth century, capitalism was left in an intellectual vacuum, its lifeline cut. Neither its moral nature nor even its political principles had ever been fully understood or defined. Its alleged defenders regarded it as compatible with government controls (i.e., government interference into the economy), ignoring the meaning and implications of the concept of laissez-faire. Thus, what existed in practice, in the nineteenth century, was not pure capitalism, but variously mixed economies. Since controls necessitate and breed further controls, it was the statist element of the mixtures that wrecked them; it was the free, capitalist element that took the blame.

is often asked: Why was capitalism destroyed in spite of its incomparably beneficent record? The answer lies in the fact that the lifeline feeding any social system is a culture’s dominant philosophy and that capitalism never had a philosophical base. It was the last and (theoretically) incomplete product of an Aristotelian influence. As a resurgent tide of mysticism engulfed philosophy in the nineteenth century, capitalism was left in an intellectual vacuum, its lifeline cut. Neither its moral nature nor even its political principles had ever been fully understood or defined. Its alleged defenders regarded it as compatible with government controls (i.e., government interference into the economy), ignoring the meaning and implications of the concept of laissez-faire. Thus, what existed in practice, in the nineteenth century, was not pure capitalism, but variously mixed economies. Since controls necessitate and breed further controls, it was the statist element of the mixtures that wrecked them; it was the free, capitalist element that took the blame.

The hobby scientists flourished under laissez faire, but laissez-faire Britain came to an end in 1914. Before 1914 the Government sequestered less than 10 per cent of the nation's wealth in taxes, but between 1918 and 1939 the Government increased this to about 25 per cent of GNP, and since 1945 the Government has spent between 40-50 per cent GNP. Because of the attrition of inherited wealth and of private means, the hobby scientist is now practically extinct.

But the secret of Japan's success is simple - laissez faire. The Emperor may have initiated his capitalist Restoration in 1868, but after 1884 it became State policy to leave industry to its own devices. Having germinated it, the Japanese government understood that capitalism runs best unfettered. This is ironic, since the popular perception abroad has been that Japan has prospered because of MITI’s direction of the economy, whereas the reality is that since 1884 Japan's government has seen itself as the servant of industry, anxious to tax it and its customers as lightly as possible. A 1988 survey by the British Central Statistical Office showed that Japan was one of the three most lightly-taxed industrialised countries, the other two being the USA and Switzerland. Those three countries' governments only sequester 32-35 per cent of GNP compared to the British State's 44 per cent, the West German's 45 per cent, and the French 52 per cent.

But the principles of laissez-faire have had other allies besides economic textbooks. It must be admitted that they have been confirmed in the minds of sound thinkers and the reasonable public by the poor quality of the opponent proposals - protectionism on one hand, and Marxian socialism on the other. Yet these doctrines are both characterised, not only or chiefly by their infringing the general presumption in favour of laissez-faire, but by mere logical fallacy. Both are examples of poor thinking, of inability to analyse a process and follow it out to its conclusion. The arguments against them, though reinforced by the principle of laissez-faire, do not strictly require it. Of the two, protectionism is at least plausible, and the forces making for its popularity are nothing to wonder at. But Marxian socialism must always remain a portent to the historians of opinion - how a doctrine so illogical and so dull can have exercised so powerful and enduring an influence over the minds of men and, through them, the events of history. At any rate, the obvious scientific deficiencies of these two schools greatly contributed to the prestige and authority of nineteenth-century laissez-faire.

As the state became everything, the individual became marginalized. As it marched toward the future, Israel erased the past. There was no place for the previous landscape, no place for previous identities. Everything was done en masse. Everything was imposed from above. There was an artificial quality to everything. Zionism was not an organic process anymore but a futuristic coup. For its outstanding economic, social, and engineering achievements, the new Israel paid a dear moral price. There was no notion of human rights, civil rights, due process, or laissez-faire. There was no equality for the Palestinian minority and no compassion for the Palestinian refugees. There was little respect for the Jewish Diaspora and little empathy for the survivors of the Holocaust. Ben Gurion’s statism and monolithic rule compelled the nation forward.

Nobel Prize–winning economist Joseph Stiglitz thinks we need to rethink the laissez-faire economics of Rand and Friedman: “If markets are based on exploitation, the rationale for laissez-faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.

Colourblind racism has also been labelled ‘laissez faire racism’ because it is based on the myth of individuals with equal starting points competing in a free market, thus chiming with neoliberal economic nostrums. Indeed, it has been argued by Randolph Hohle

The relative success of British and Irish economic performance since the 1990s has helped to give credibility to a more Anglo-Saxon approach in social matters—based on deregulation and flexibility, rather than interventionist policies (see Box 4). But more important still has been the sustained success of the American economy, with its low unemployment and high growth, from which the conclusion could be drawn that flexibility suits the current stage of technological development. While the degree of laissez-faire in the American approach to social policy is resisted, a certain consensus may be emerging in the EU that methods such as bench-marking and peer pressure are more suitable than social legislation for reducing unemployment, as well as for some measures to create a dynamic and competitive economy.

The only ‘fair’ is laissez-faire, always and forever.

If we want to understand the crisis that has engulfed laissez-faire liberalism all over the world, we must grasp the phenomenon in its full meaning. The laissez-faire philosophy is in irreconcilable conflict with the restless activist mental attitude characteristic of our age. Modern social consciousness finds it intolerable to let things go as they please in the political and economic spheres. It is insufferable to face social and economic problems with passive resignation while in all other spheres we assume that we must grapple with any problem systematically and in full confidence of eventual success.

Another common error is to confuse freedom with planlessness. Some writers these days argue that if the system of economic laissez-faire—“letting everyone do as he wishes”—were altered as history marches on, our freedom would vanish with it. The argument of these authors often goes something like this: “Freedom is like a living thing. It is indivisible. And if the individual’s right to own the means of production is taken away, he no longer has the freedom to earn his living in his own way. Then he can have no freedom at all.” Well, if these writers were right it would indeed be unfortunate—for who then could be free? Not you nor I nor anyone else except a very small group of persons—for in this day of giant industries, only the minutest fraction of citizens can own the means of production anyway. Laissez-faire was a great idea, as we have seen, in earlier centuries: but times change, and almost everyone nowadays earns his living by virtue of belonging to a large group, be it an industry, or a university, or a labor union. It is a vastly more interdependent world, this “one world” of our twentieth century, than the world of the entrepreneurs of earlier centuries or of our own pioneer days; and freedom must be found in the context of economic community and the social value of work, not in everyone’s setting up his own factory or university. Fortunately, this economic interdependence need not destroy freedom if we keep our perspective. The pony express was a great idea, also, back in the days when sending a letter from coast to coast was an adventure. But certainly we are thankful—complain as we may about mail service these days—that now when we write a letter to a friend on the coast, we don’t have to give more than a passing thought to its method of travel; we drop it in the box with an air-mail stamp and forget about it. We are free, that is, to devote more time and concern to our message to our friend, our intellectual and spiritual interchange in the letter, because in a world made smaller by specialized communication we don’t have to be so concerned about how the letter gets there. We are more free intellectually and spiritually precisely because we accept our position in economic interdependence with our fellow men.

Too often we're told that advocates of new policies are putting values of fairness above practical concerns, while supporters of laissez-faire are the ones who are serious about the economy. This isn't correct. For today's economy, the question is not whether we should help families with handouts; it's how to help families so they can thrive as workers and consumers. To boost long-term economic growth, businesses need a highly skilled workforce, ready and able to work. In today's economy, where most workers also have care responsibilities, this means we must find ways to address conflicts between work and life. These conflicts aren't trivial private travails; they're serious economic problems.

A great deal of the talk about laissez faire [in the nineteenth century] must be discounted, or at least put into its proper context. In many cases the argument concealed an admission that a problem was insoluble, or that it must be endured, because no one could think of any method of solving it. From this point of view, the policy of laissez faire was not the result of a new and optimistic belief in the progress of society through private enterprise. It was rather an acknowledgement that the fund of skill and experience at the service of society was limited, and that, in the management of their common a airs, men would not be able to find the elasticity and adaptiveness [sic] which individuals showed in devising schemes for their own self-interest. e treatment of social and economic questions was more haphazard and empirical than Englishmen were ready to acknowledge. If a practical solution suggested itself, if a tentative experiment could be made, the doctrine of laissez faire would be thrust aside, only to be used again after another failure to discover the way out of a difficulty (Woodward, [1938] 1962 , p. 16).

In a free market, actors behave selfishly and try in rational ways to succeed and maximize their gains, which leads, as if by an “invisible hand” (Adam Smith 1776), to economic efficiency and benefits society. The traditional idea was, and for some still is, that business best benefited others, served the public good, by being left to its own devices (“laissez faire, laissez passer”).

Evangelicals usually fail to challenge the system not just out of concern for evangelism, but also because they support the American system and enjoy its fruits. They share the Protestant work ethic, support laissez-faire economics, and sometimes fail to evaluate whether the social system is consistent with their Christianity.

And so the catastrophe of 1929–33 did to the certainties of laissez-faire economics what science did to nineteenth-century religion and what the slaughter of World War I did to old-fashioned patriotism: it knocked out the props. “Everything nailed down is coming loose,” people used to say back then: The Depression made business leaders into laughingstocks and transformed economic orthodoxy into so many fairy tales.

In reality, government subsidized railroad construction, maintained high protective tariffs and a tight money supply, used its power to crush strikes, and in other ways supported the nation’s most powerful economic interests. But the laissez-faire myth still framed political debate. The

The doctrine of laissez-faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest,”36 Soros wrote. Like its bête noire, Marxism, laissez-faire economics claimed to be scientific, based upon immutable laws of nature, and also like Marxism, it has not stood the test of experience. If it were a scientific theory, it would have long ago been rejected.

Think about it this way. It has now been more than thirty years since the supply-side revolution conquered Washington, since laissez-faire became the dogma of the nation’s ruling class, shared by large numbers of Democrats as well as Republicans. We have lived through decades of deregulation, deunionization, privatization, and free-trade agreements; the neoliberal ideal has been projected into every corner of the nation’s life. Universities try to put themselves on a market-based footing these days; so do hospitals, electric utilities, churches, and museums; so does the Post Office, the CIA, and the U.S. Army. And now, after all this has been going on for decades, we have a people’s uprising demanding that we bow down before the altar of the free market. And this only a short while after the high priests of that very cosmology led the world into the greatest economic catastrophe in memory. “Amazing” is right. “Unlikely” would also be right. “Preposterous” would be even righter.

Ricardo’s other necessary condition for comparative advantage is that a country’s capital seeks its comparative advantage in its home country and does not seek more productive use abroad. Ricardo confronts the possibility that English capital might migrate to Portugal to take advantage of the lower costs of production, thus leaving the English workforce unemployed, or employed in less productive ways. He is able to dismiss this undermining of comparative advantage because of “the difficulty with which capital moves from one country to another” and because capital is insecure “when not under the immediate control of its owner.” This insecurity, “fancied or real,” together “with the natural disinclination which every man has to quit the country of his birth and connections, and entrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign lands.

Ricardo’s other necessary condition for comparative advantage is that a country’s capital seeks its comparative advantage in its home country and does not seek more productive use abroad. Ricardo confronts the possibility that English capital might migrate to Portugal to take advantage of the lower costs of production, thus leaving the English workforce unemployed, or employed in less productive ways. He is able to dismiss this undermining of comparative advantage because of “the difficulty with which capital moves from one country to another” and because capital is insecure “when not under the immediate control of its owner.” This insecurity, “fancied or real,” together “with the natural disinclination which every man has to quit the country of his birth and connections, and entrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign lands.”   Today, these feelings have been weakened. Men of property have been replaced by corporations. Once the large excess supplies of Asian labor were available to American corporations, once Congress limited the tax deductibility of CEO pay that was not “performance related,” once Wall Street pressured corporations for higher shareholder returns, once Wal-Mart ordered its suppliers to meet “the Chinese price,” once hostile takeovers could be justified as improving shareholder returns by offshoring production, capital and jobs departed the country.   Capital has become as mobile as traded goods.

Countries competing against one another in the same array of products and services is not covered by Ricardian trade theory.   Offshoring doesn’t fit the Ricardian or the competitive idea of free trade. In fact, offshoring is not trade.   Offshoring is the practice of a firm relocating its production of goods or services for its home market to a foreign country. When an American firm moves production offshore, US GDP declines by the amount of the offshored production, and foreign GDP increases by that amount. Employment and consumer income decline in the US and rise abroad. The US tax base shrinks, resulting in reductions in public services or in higher taxes or a switch from tax finance to bond finance and higher debt service cost.   When the offshored production comes back to the US to be marketed, the US trade deficit increases dollar for dollar. The trade deficit is financed by turning over to foreigners US assets and their future income streams. Profits, dividends, interest, capital gains, rents, and tolls from leased toll roads now flow from American pockets to foreign pockets, thus worsening the current account deficit as well.   Who benefits from these income losses suffered by Americans? Clearly, the beneficiary is the foreign country to which the production is moved. The other prominent beneficiaries are the shareholders and the executives of the companies that offshore production. The lower labor costs raise profits, the share price, and the “performance bonuses” of corporate management.   Offshoring’s proponents claim that the lost incomes from job losses are offset by benefits to consumers from lower prices. Allegedly, the harm done to those who lose their jobs is more than offset by the benefit consumers in general get from the alleged lower prices. Yet, proponents are unable to cite studies that support this claim. The claim is based on the unexamined assumption that offshoring is free trade and, thereby, mutually beneficial.   Proponents of jobs offshoring also claim that the Americans who are left unemployed soon find equal or better jobs. This claim is based on the assumption that the demand for labor ensures full employment, and that people whose jobs have been moved abroad can be retrained for new jobs that are equal to or better than the jobs that were lost.   This claim is false.

The Chicago boys and their mentors had the good sense to maintain the highly efficient, nationalized copper producer Codelco, the world’s largest. That’s, of course, a radical violation of market principles, of neoliberal principles, but worthwhile since the company was the source of much of Chile’s export earnings and the basis of the state’s fiscal revenues. In general, it was close to a perfect experiment. It looked like a great success, if you ignored the human costs. In 1982, Friedman published the second edition of his manifesto, Capitalism and Freedom, celebrating the triumph of the cause. The timing was auspicious. In 1982 the Chilean economy crashed and had to be bailed out by state intervention. The state then controlled more of the economy than it had under Allende. Analysts who had their eyes open called it “the Chicago road to socialism.” The prominent OECD (Organisation for Economic Co-operation and Development) economist Javier Santiso described the “paradox [that] able economists committed to laissez-faire showed the world yet another road to a de facto socialized banking system

Page 204: In an 1848 address, he (Karl Marx) observed: "Generally speaking, the Protective system in these days is conservative, while the Free Trade system works destructively. It breaks up old nationalities and carries antagonism of proletariat and bourgeoisie to the uttermost point. In a work, the Free Trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favor of Free Trade." … the neo-fascist right is more likely than the cosmopolitan left to benefit from erosion of living standards by free-market globalism. Laissez-faire globalism may breed its own nemesis, in the form of the most radical and destructive kinds of ethnic nationalism and economic statism.

he embraced only a presumption of laissez-faire. That is, the burden is on the proponent of government to show that the greater happiness requires intervention: "every departure from (laissez-faire), unless required by some great good, is a certain evil.

Like the monetarist Milton Friedman, Keynes looked to price stability as a way to shore up classical economic thinking. For the most part, he believed, laissez-faire economics worked. Supply and demand did bring society to a prosperous equilibrium. They just needed a few pieces of basic economic architecture to work: property rights, the rule of law, and price stability. But unlike Friedman, Keynes had arrived at monetarism as a creative way to expand the power of the state to fight the uncertainties and anxieties of postwar life.

a sort of Frankenstein creation known as “the economic man,” and a deity known as “laissez faire,” which meant in cruder language “each for himself and the devil take the hindmost.

From Ayn Rand to bushy anarchists there is an occasional agreement on means called libertarianism, which is a faith in laissez-faire politics/economics.... How to hate your government on principle.

But American capitalism was not ideologically rigid. It was never the laissez-faire laboratory of purist, principled imaginations. The strength of the system came through its pragmatism and flexibility, juggling competing and contradictory ideas, just as Carnegie did personally, and eventually finding political solutions to seemingly intractable issues, especially after the scars of the Civil War. Just as successful species adapted to changes in their environment, democracy would shape capitalism to adapt to social conditions, with compromise emerging as the best form of insurance against any risk of revolution. This middle ground, forged by the clashing interactions of capitalism and democracy, a free people acting to check free markets, would give rise to the regulatory framework that would govern its economic system.

Mises and Hayek Beginning with Ludwig von Mises and F.A. Hayek, the links between liberalism and the Austrian School become intense and pervasive, since these two scholars were themselves at once the outstanding Austrian economists and the most distinguished liberal thinkers of the twentieth century. The American academic world, however, deemed none of this sufficient for them to be accorded the kind of positions to which they were clearly entitled.50 They, and in particular Mises, were also responsible to a greater degree than is generally appreciated for the upsurge of the free-market philosophy in the second half of the century.51 But since the views of the two great men are so often amalgamated, it should be emphasized that not only did they differ to an extent on economic theory (Salerno 1993; see also Kirzner 1992c: 119–36), but, more pertinently to the theme of this essay, they exhibited a sharp distinction in the degree of their liberalism. What follows refers to Hayek’s political attitudes, not to his contributions to economic science. These were highly significant and valuable in the earlier part of his career, as he together with Mises built the theoretical foundations of the modern Austrian school.52 While Mises was a staunch advocate of the laissez-faire market economy (Mises 1978a; Rothbard 1988: 40; Hoppe 1993; Klein 1999), Hayek was always more open to what he saw as the useful possibilities of state action. He had been a student of Wieser’s, and, as he conceded, he was “attracted to him . . . because unlike most of the other members of the Austrian School [Wieser] had a good deal of sympathy with [the] mild Fabian Socialism to which I was inclined as a young man. He in fact prided himself that his theory of marginal utility had provided the basis of progressive taxation . . .” (Hayek 1983: 17). Early in his career, Hayek stated that the lessons of economics will create a presumption against state interference, adding: However, this by no means does away with the positive part of the economist’s task, the delimitation of the field within which collective action is not only unobjectionable but actually a useful means of obtaining the desired ends. . .the classical writers very much neglected the positive part of the task and thereby allowed the impression to gain ground that laissez-faire was their ultimate and only conclusion . . . (1933: 133–34) This remained Hayek’s standpoint throughout his long and richly productive scholarly life. It is regrettable, but typical, that a great many confused commentators continue to characterize him as a advocate of laissez-faire.53 In fact, he

The essence of the Industrial Revolution consists in the triumph of this principle over the medieval and mercantilist regulations. Modern economy first begins with the introduction of the principle of laissez-faire, and the idea of individual freedom first succeeds in establishing itself as the ideology of this economic liberalism. These connections do not, of course, prevent both the idea of labour and the idea of freedom from developing into independent ethical forces and from often being interpreted in a really idealistic sense. But to realize how small a part was played by idealism in the rise of economic liberalism, it is only necessary to recall that the demand for freedom of trade was directed, above all, against the skilled master, in order to take away from him the only advantage he had over 55 the mere contractor. Adam Smith himself was still far from claiming such idealistic motives for the justification of free competition; on the contrary, he saw in human selfishness and the pursuit of personal interests the best guarantee for the smooth functioning of the economic organism and the realization of the general weal. The whole optimism of the enlightenment was bound up with this belief in the selfregulating power of economic life and the automatic adjustment of conflicting interests; as soon as this began to disappear, it became more and more difficult to identify economic freedom with the interests of the general weal and to regard free competition as a universal blessing.

Economic man needs some help getting going, and so neoliberalism develops institutions, incentives and methods to support the vision of the completely competition-focused, rational individual. The purpose is to incite market-oriented decision-making on all fronts. People aren’t focused on gain and competition in every aspect of their lives. But it’s the task of neoliberalism to spread and institutionalize this kind of desire. Through privatization and through governing everything from education to environmental politics, nursing and care using the same market principles as for tomatoes, that’s how we’ll create this kind of world – where only one kind of logic is allowed. Using political means, one must create markets where there weren’t markets before and then use all available political means to maintain them. Neoliberalism is not at all the same thing as laissez-faire, the economic school that thinks that if we just let things be the economy will blossom. Contemporary laissez-faire economics is the most extreme embodiment of the idea Adam Smith expressed in the metaphor of the invisible hand. Smith himself didn’t advocate this kind of politics – perhaps better described as the near complete lack thereof – but there are those who interpret his ideas in this way. They should not, however, be confused with neoliberals.

During the FDR administration, economic policy was set from the top; ignoring the injunction by economically laissez-faire thinkers that no set of individuals can know more than the entire market at large, FDR and his cadre of geniuses lengthened the Great Depression by nearly a decade by manipulating the currency, setting wages and prices, and bullying those who objected into silence.

Neoliberalism is essentially an intentionally imprecise stand-in term for free market economics, for economic sciences in general, for conservatism, for libertarians and anarchists, for authoritarianism and militarism, for advocates of the practice of commodification, for center-left or market-oriented progressivism, for globalism and welfare state social democracies, for being in favor of or against increased immigration, for favoring trade and globalization or opposing the same, or for really any set of political beliefs that happen to be disliked by the person(s) using the term.

The billionaire investor George Soros has coined a term to describe this perspective: “free market fundamentalism.” It is the belief not simply that free markets are the best way to run an economic system, but that free markets are the only way that will not ultimately destroy our other freedoms. “The doctrine of laissez-faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest,”36 Soros wrote.

At the level of economic theory, the great fallacy in the logic of David Ricardo, the father of free-trade theory, was to view the gains and losses of trade in a static fashion, as a snapshot at a single point in time. In Ricardo’s theory, whose variants are espoused by free-market economists to this day, if nineteenth-century Britain offered better and cheaper manufactured goods, the US should buy them and export something where it could compete—say, raw cotton and lumber—even if that meant the US never developed an industrial economy. By the same token, if twentieth-century America made the best cars, machine tools, and steel, Japan and Korea should import those, and continue to export cheap toys and rice. And if other nations subsidized US industries, Americans, rather than being fearful of displacement, should accept the “gift.” What Ricardo missed—and what leaders from Alexander Hamilton and Abraham Lincoln to Teddy Roosevelt grasped (likewise statesmen in nations from Japan to Brazil), as well as dissenting economists like the German Friedrich List and the Americans Paul Krugman and Dani Rodrik—was that the dynamic gains of economic development over time far surpass the static gains at a single point in time. Economic advantage is not something bestowed by nature. Advantage can be deliberately created—an insight for which Krugman won a Nobel Prize. Policies of economic development often required an active role for the state, in violation of laissez-faire.

The operetta was the product of a world of ‘laissez faire, laissez passer’, that is, a world of economic, social and moral liberalism, a world in which everyone was able to do what he liked, so long as he abstained from questioning the system itself. This limitation meant, on the one hand, very wide, on the other, very narrow frontiers. The same government that summoned Flaubert and Baudelaire to a court of law tolerated the most insolent social satire, the most disrespectful ridiculing of the authoritarian régime, the court, the army and the bureaucracy, in the works of Offenbach. But it tolerated his frolics only because they were not or did not seem to be dangerous, because he confined himself to a public whose loyalty was beyond doubt and needed no other safety-valve, in order to be quite happy, than this apparently harmless banter. The joke seems mischievous only to us; the contemporary public missed the sinister undertone which we can hear in the frantic rhythm of Offenbach’s galops and cancans. The entertainment was, however, not quite so harmless. The operetta demoralized people, not because it scoffed at everything ‘venerable’, not because its deriding of antiquity, of classical tragedy, of romantic opera was only criticism of society in disguise, but because it shattered the belief in authority without denying it in principle. The immorality of the operetta consisted in the thoughtless tolerance with which it conducted its criticism of the corrupt system of government and the depraved society of the time, in the appearance of harmlessness which it gave to the frivolity of the little prostitutes, the extravagant gallants and the lovable old ‘viveurs’. Its lukewarm, hesitant criticism merely encouraged corruption. One could, however, expect nothing else but an ambiguous attitude from artists who were successful, who loved success more than anything and whose success was bound up with the continuance of this indolent and pleasure-seeking society.

It’s a vocational shift that has been a long time coming: back in the 1970s, Friedrich Hayek himself suggested that economists should aim to be less like craftsmen shaping their handiwork and more like gardeners tending their plants. Yes, the metaphor may have come from a thinker with extreme laissez-faire leanings but, if anything, it suggests that Hayek never did a hard day’s work in the garden: as any true plantsman knows, gardening is far from laissez-faire. In their book The Gardens of Democracy, Eric Liu and Nick Hanauer argue that moving from ‘machinebrain’ to ‘gardenbrain’ thinking calls for a simultaneous shift away from believing that things will self-regulate to realising that things need stewarding. ‘To be a gardener is not to let nature take its course; it is to tend,’ they write, ‘Gardeners don’t make plants grow but they do create conditions where plants can thrive and they do make judgments about what should and shouldn’t be in the garden.’46 That is why economic gardeners must get stuck in, nurturing, selecting, repotting, grafting, pruning and weeding the plants as they grow and mature.

If there is much to be said for the virtues of the free market, for its role in encouraging hard work, innovation, and economic growth--and argument that seems nearly beyond dispute at this point--then it must also be acknowledged as equally indisputable that organizing an economic system around self-interest and competition tends to produce a multitude of so-called neighborhood effects. No one has yet to solve the conundrum of the ecological costs associated with economic growth without conceiving of some role of state intervention. Thus far, the notion that unrestrained capitalism can make the United States fabulously wealthy and save the planet too remains little more than a pipe dream.

A fascinating recent study by Stephan Hebloch, Yanos Zylberberg, and Alex Trew tracks how coal use changed neighbourhoods and generated income segregation. It begins by noting that throughout England, as well as in other industrial areas in the northern hemisphere, the east side of of cities are often poorer than the west. The contrast between the posh western neighbourhoods of London, such as Kensington, Chelsea, and Notting Hill, and the city's East End is well known. It turns out that similar east-west patterns appear across many cities. The reason for this is that, in the temperate latitudes of the northern hemisphere, the typical wind direction is from west to east (at lower latitudes, the trade winds blow the opposite direction). [...] Even today, when air pollution is only a fraction of what it was in the 1880s and the vast majority of factories have long since been shuttered, patterns of pollution in the nineteenth century can still explain one fifth of the variation in poverty across neighbourhoods within British cities.

In London, efforts to improve drainage received a new impetus in 1858 by what came to be called the Great Stink of London. The long hot summer of that year lowered the flow of the Thames, while every day tons of raw sewage continued to flow into the river. As the sewage stewed, foul smells engulfed the neighbourhoods along the banks, including the Houses of Parliament, which was 'all but compelled to legislate upon the great London nuisance by the force of sheer stench.' (The Times, 18 June 1858). The result was the Metropolis Local Management Amendment Act of 1858, which became law just 18 days after it was introduced: clear proof of how efficient Parliament could be when properly motivated.

It should come as no surprise, then, that we have a tendency to take our free-market system as a given, to assume that it flows naturally from the laws of supply and demand and Adam Smith’s invisible hand. And from this assumption, it’s not much of a leap to assume that any government intrusion into the magical workings of the market—whether through taxation, regulation, lawsuits, tariffs, labor protections, or spending on entitlements—necessarily undermines private enterprise and inhibits economic growth. The bankruptcy of communism and socialism as alternative means of economic organization has only reinforced this assumption. In our standard economics textbooks and in our modern political debates, laissez-faire is the default rule; anyone who would challenge it swims against the prevailing tide.

Smith's conception the “wider interest” does not stop at the boundary of the national state. His was a real universalism in intent. Laissez faire was intended to establish a world community as well as a natural harmony of interests within each nation. Smith clearly belongs to the children of light. But the children of darkness were able to make good use of his creed. A dogma which was intended to guarantee the economic freedom of the individual became the “ideology” of vast corporate structures of a later period of capitalism, used by them, and still used, to prevent a proper political control of their power.

Material Poverty provides the incentive to change... where there is very little margin for experiments. Material Prosperity removes the incentive just when it might be safe to take a chance.

Radicals want to advance from the jungle of laissez-faire capitalism to a world worthy of the name of human civilization. They hope for a future where the means of economic production will be owned by all of the people instead of just a comparative handful. They feel that this minority control of production facilities is injurious to the large masses of people not only because of economic monopolies but because the political power inherent in this form of centralized economy does not augur well for an ever expanding democratic way of life. Radicals want to see the established political rights or political freedom of the common man augmented by economic freedom. They believe that Lincoln’s statement that a nation cannot exist half-free and half-slave is applicable to the entire world and includes economic as well as political freedom. In short, radicals are convinced that the marriage of political rights to economic rights will produce a social morality in which the Golden Rule will replace the gold standard. Possessed of this sketch of a world to be, radicals find themselves adrift in the stormy sea of capitalism.