140th Birthday Tribute to Ludwig von Mises

September 29, 2021 is the 140^th Birthday of Ludwig von Mises, the greatest economic defender of capitalism in the 20^th Century. Here is Reisman's Tribute to him written in 1981, on the occasion of Mises's 100th birthday.

Ludwig von Mises: Defender of Capitalism*   By George Reisman**

September 29, 1981, is the one-hundredth anniversary of the birth of Ludwig von Mises, economist and social philosopher, who passed away in 1973. Von Mises was my teacher and mentor and the source or inspiration for most of what I know and consider to be important and worthwhile in these fields—of what enables me to understand the events shaping the world in which we live. I want to take this opportunity to pay tribute to him, because I believe that he deserves to occupy a major place in the intellectual history of the twentieth century. Von Mises is important because his teachings are necessary to the preservation of material civilization. As he showed, the base of material civilization is the division of labor. Without the higher productivity of labor made possible by the division of labor, the great majority of mankind would simply die of starvation. The existence and successful functioning of the division of labor, however, vitally depends on the institutions of a capitalist society—that is, on limited government and economic freedom, private ownership of land and all other property, exchange and money, saving and investment, economic inequality and economic competition, and the profit motive—institutions everywhere under attack for several generations. When von Mises appeared on the scene, Marxism and the other socialist sects enjoyed a virtual intellectual monopoly. Major flaws and inconsistencies in the writings of Smith and Ricardo and their followers enabled the socialists to claim classical economics as their actual ally. The writings of Jevons and the earlier “Austrian” economists—Menger and Böhm-Bawerk—were insufficiently comprehensive to provide an effective counter to the socialists. Bastiat had tried to provide one, but died too soon, and probably lacked the necessary theoretical depth in any case. Thus, when von Mises appeared, there was virtually no systematic intellectual opposition to socialism or defense of capitalism. Quite literally, the intellectual ramparts of civilization were undefended. What von Mises undertook, and which summarizes the essence of his greatness, was to build an intellectual defense of capitalism and thus of civilization. The leading argument of the socialists was that the institutions of capitalism served the interests merely of a handful of rugged “exploiters” and “monopolists” and operated against the interests of the great majority of mankind, which socialism would serve. While the only answer others could give was to devise plans to take away somewhat less of the capitalists' wealth than the socialists were demanding, or to urge that property rights nevertheless be respected despite their incompatibility with most people's well-being, von Mises challenged everyone's basic assumption. He showed that capitalism operates to the material self-interests of all, including the non-capitalists—the so-called proletarians. In a capitalist society, von Mises showed, privately owned means of production serve the market. The physical beneficiaries of the factories and mills are all who buy their products. And, together with the incentive of profit and loss and the freedom of competition that it implies, the existence of private ownership ensures an ever-growing supply of products for all. Thus, von Mises showed to be absolute nonsense such clichés as “poverty causes communism.” Not poverty, but poverty plus the mistaken belief that communism is the cure for poverty, causes communism. If the misguided revolutionaries of the backward countries and of impoverished slums understood economics, any desire they might have to fight poverty would make them advocates of capitalism. Socialism, von Mises showed, in his greatest original contribution to economic thought, not only abolishes the incentive of profit and loss and the freedom of competition along with private ownership of the means of production, but makes economic calculation, economic coordination, and economic planning impossible, and therefore results in chaos. For socialism means the abolition of the price system and the intellectual division of labor; it means the concentration and centralization of all decision-making in the hands of one agency: the Central Planning Board or the Supreme Dictator. Yet the planning of an economic system is beyond the power of any one consciousness: the number, variety and locations of the different factors of production, the various technological possibilities that are open to them, and the different possible permutations and combinations of what might be produced from them, are far beyond the power even of the greatest genius to keep in mind. Economic planning, von Mises showed, requires the cooperation of all who participate in the economic system. It can exist only under capitalism, where, every day, businessmen plan on the basis of calculations of profit and loss; workers, on the basis of wages; and consumers, on the basis of the prices of consumers' goods. Von Mises's contributions to the debate between capitalism and socialism—the leading issue of modern times—are overwhelming. Before he wrote, people did not realize that capitalism has economic planning. They uncritically accepted the Marxian dogma that capitalism is an anarchy of production and that socialism represents rational economic planning. People were (and most still are) in the position of Moliere's M. Jourdan, who never realized that what he was speaking all his life was prose. For, living in a capitalist society, people are literally surrounded by economic planning, and yet do not realize that it exists. Every day, there are countless businessmen who are planning to expand or contract their firms, who are planning to introduce new products or discontinue old ones, planning to open new branches or close down existing ones, planning to change their methods of production or continue with their present methods, planning to hire additional workers or let some of their present ones go. And every day, there are countless workers planning to improve their skills, change their occupations or places of work, or to continue with things as they are; and consumers, planning to buy homes, cars, stereos, steak or hamburger, and how to use the goods they already have—for example, to drive to work or to take the train, instead. Yet people deny the name planning to all this activity and reserve it for the feeble efforts of a handful of government officials, who, having prohibited the planning of everyone else, presume to substitute their knowledge and intelligence for the knowledge and intelligence of tens of millions. Von Mises identified the existence of planning under capitalism, the fact that it is based on prices (“economic calculations”), and the fact that the prices serve to coordinate and harmonize the activities of all the millions of separate, independent planners. He showed that each individual, in being concerned with earning a revenue or income and with limiting his expenses, is led to adjust his particular plans to the plans of all others. For example, the worker who decides to become an accountant rather than an artist, because he values the higher income to be made as an accountant, changes his career plan in response to the plans of others to purchase accounting services rather than paintings. The individual who decides that a house in a particular neighborhood is too expensive and who therefore gives up his plan to live in that neighborhood, is similarly engaged in a process of adjusting his plans to the plans of others; because what makes the house too expensive is the plans of others to buy it who are able and willing to pay more. And, above all, von Mises showed, every business, in seeking to make profits and avoid losses, is led to plan its activities in a way that not only serves the plans of its own customers, but takes into account the plans of all other users of the same factors of production throughout the economic system. Thus, von Mises demonstrated that capitalism is an economic system rationally planned by the combined, self-interested efforts of all who participate in it. The failure of socialism, he showed, results from the fact that it represents not economic planning, but the destruction of economic planning, which exists only under capitalism and the price system. Von Mises was not primarily anti-socialist. He was pro-capitalist. His opposition to socialism, and to all forms of government intervention, stemmed from his support for capitalism and from his underlying love of individual freedom and conviction that the self-interests of free men are harmonious—indeed, that one man's gain under capitalism is not only not another's loss, but is actually others' gain. Von Mises was a consistent champion of the self-made man, of the intellectual and business pioneer, whose activities are the source of progress for all mankind and who, he showed, can flourish only under capitalism. Von Mises demonstrated that competition under capitalism is of an entirely different character than competition in the animal kingdom. It is not a competition for scarce, nature-given means of subsistence, but a competition in the positive creation of new and additional wealth, from which all gain. For example, the effect of the competition between farmers using horses and those using tractors was not that the former group died of starvation, but that everyone had more food and the income available to purchase additional quantities of other goods as well. This was true even of the farmers who “lost” the competition, as soon as they relocated in other areas of the economic system, which were enabled to expand precisely by virtue of the improvements in agriculture. Similarly, the effect of the automobile's supplanting the horse and buggy was to benefit even the former horse breeders and blacksmiths, once they made the necessary relocations. In a major elaboration of Ricardo's Law of Comparative Advantage, von Mises showed that there is room for all in the competition of capitalism, even those of the most modest abilities. Such people need only concentrate on the areas in which their relative productive inferiority is least. For example, an individual capable of being no more than a janitor does not have to fear the competition of the rest of society, almost all of whose members could be better janitors than he, if that is what they chose to be. Because however much better janitors other people might make, their advantage in other lines is even greater. And so long as the person of limited ability is willing to work for less as a janitor than other people can earn in other lines, he has nothing to worry about from their competition. He, in fact, outcompetes them for the job of janitor by being willing to accept a lower income than they. Von Mises showed that a harmony of interests prevails in this case, too. For the existence of the janitor enables more talented people to devote their time to more demanding tasks, while their existence enables him to obtain goods and services that would otherwise be altogether impossible for him to obtain. On the basis of such facts, von Mises argued against the possibility of inherent conflicts of interest among races and nations, as well as among individuals. For even if some races or nations were superior (or inferior) to others in every aspect of productive ability, mutual cooperation in the division of labor would still be advantageous to all. Thus, he showed that all doctrines alleging inherent conflicts rest on an ignorance of economics. He argued with unanswerable logic that the economic causes of war are the result of government interference, in the form of trade and migration barriers, and that such interference restricting foreign economic relations is the product of other government interference, restricting domestic economic activity. For example, tariffs become necessary as a means of preventing unemployment only because of the existence of minimum wage laws and pro-union legislation, which prevent the domestic labor force from meeting foreign competition by means of the acceptance of lower wages when necessary. He showed that the foundation of world peace is a policy of laissez-faire both domestically and internationally. In answer to the vicious and widely believed accusation of the Marxists that Nazism was an expression of capitalism, he showed, in addition to all the above, that Nazism was actually a form of socialism. Any system characterized by price and wage controls, and thus by shortages and government controls over production and distribution, as was Nazism, is a system in which the government is the de facto owner of the means of production. Because, in such circumstances, the government decides not only the prices and wages charged and paid, but also what is to be produced, in what quantities, by what methods, and where it is to be sent. These are all the fundamental prerogatives of ownership. This identification of “socialism on the German pattern,” as he called it, is of immense value in understanding the nature of present demands for price controls. Von Mises showed that all of the accusations made against capitalism were either altogether unfounded or should be directed against government intervention, which destroys the workings of capitalism. He was among the first to point out that the poverty of the early years of the Industrial Revolution was the heritage of all previous history—that it existed because the productivity of labor was still pitifully low; because scientists, inventors, businessmen, savers and investors could only step by step create the advances and accumulate the capital necessary to raise it. He showed that all the policies of so-called labor and social legislation were actually contrary to the interests of the masses of workers they were designed to help—that their effect was to cause unemployment, retard capital accumulation, and thus hold down the productivity of labor and the standard of living of all. In a major original contribution to economic thought, he showed that depressions were the result of government-sponsored policies of credit expansion designed to lower the market rate of interest. Such policies, he showed, created large-scale malinvestments, which deprived the economic system of liquid capital and brought on credit contractions and thus depressions. Von Mises was a leading supporter of the gold standard and of laissez-faire in banking, which, he believed, would virtually achieve a 100% reserve gold standard and thus make impossible both inflation and deflation. What I have written of von Mises provides only the barest indication of the intellectual content that is to be found in his writings. He authored over a dozen volumes. And I venture to say that I cannot recall reading a single paragraph in any of them that did not contain one or more profound thoughts or observations. Even on the occasions when I found it necessary to disagree with him (for example, on his view that monopoly can exist under capitalism, his advocacy of the military draft, and certain aspects of his views on epistemology, the nature of value judgments, and the proper starting point for economics), I always found what he had to say to be extremely valuable and a powerful stimulus to my own thinking. I do not believe that anyone can claim to be really educated who has not absorbed a substantial measure of the immense wisdom present in his works. Von Mises's two most important books are Human Action and Socialism, which best represents the breadth and depth of his thought. These are not for beginners, however. They should be preceded by some of von Mises's popular writings, such as Bureaucracy and Planning For Freedom. The Theory of Money and Credit, Theory and History, Epistemological Problems of Economics, and The Ultimate Foundations of Economic Science are more specialized works that should probably be read only after Human Action. Von Mises's other popular writings in English include Omnipotent Government, The Anti-Capitalistic Mentality, Liberalism, Critique of Interventionism, Economic Policy, and The Historical Setting of the Austrian School of Economics. For anyone seriously interested in economics, social philosophy, or modern history, the entire list should be considered required reading. [All titles of von Mises currently in print can be ordered on this web site.] Von Mises must be judged not only as a remarkably brilliant thinker but also as a remarkably courageous human being. He held the truth of his convictions above all else and was prepared to stand alone in their defense. He cared nothing for personal fame, position, or financial gain, if it meant having to purchase them at he sacrifice of principle. In his lifetime, he was shunned and ignored by the intellectual establishment, because the truth of his views and the sincerity and power with which he advanced them shattered the tissues of fallacies and lies on which most intellectuals then built, and even now continue to build, their professional careers. It was my great privilege to have known von Mises personally over a period of twenty years. I met him for the first time when I was sixteen years old. Because he recognized the seriousness of my interest in economics, he invited me to attend his graduate seminar at New York University, which I did almost every week thereafter for the next seven years, stopping only when the start of my own teaching career made it no longer possible for me to continue in regular attendance. His seminar, like his writings, was characterized by the highest level of scholarship and erudition, and always by the most profound respect for ideas. Von Mises was never concerned with the personal motivation or character of an author, but only with the question of whether the man's ideas were true or false. In the same way, his personal manner was at all times highly respectful, reserved, and a source of friendly encouragement. He constantly strove to bring out the best in his students. This, combined with his stress on the importance of knowing foreign languages, led in my own case to using some of my time in college to learn German and then to undertaking the translation of his Epistemological Problems of Economics—something that has always been one of my proudest accomplishments. Today, von Mises's ideas at long last appear to be gaining in influence. His teachings about the nature of socialism have been confirmed in the first-hand observations of honest news reporters with extensive experience in Soviet Russia, such as Robert Kaiser, Hedrick Smith, John Dornberg, and Henry Kamm. They are being confirmed at this very moment by the actions of millions of angry workers in Poland. Some of von Mises's ideas are being propounded by the Nobel prizewinners F.A. Hayek (himself a former student of von Mises) and Milton Friedman. They exert a major influence on the writings of Henry Hazlitt and the staff of the Foundation for Economic Education, as well as such prominent former students as Hans Sennholz. Von Mises's monetary theories permeate the pages of recent best-selling books on personal investments, such as those by Harry Browne and Jerome Smith. And last, but certainly not least, they appear to be exerting an important influence on the present President of the United States, who has acknowledged reading Human Action and has expressed his admiration for it. Von Mises's books deserve to be required reading in every college and university curriculum—not just in departments of economics, but also in departments of philosophy, history, government, sociology, law, business, journalism, education, and the humanities. He himself should be awarded an immediate posthumous Nobel Prize—indeed, more than one. He deserves to receive every token of recognition and memorial that our society can bestow. For as much as anyone in history, he labored to preserve it. If he is widely enough read, his labors may actually succeed in helping to save it. *Copyright © 1981, 2021 by George Reisman. All rights reserved. **George Reisman, Ph.D., is professor of Economics at Pepperdine University’s Graziadio School of Business and Management and is the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996).

Columbus Day 2020 II

Columbus Day, which this year marks the 528^th anniversary of Columbus’s discovery of America, is tomorrow.

Everyone who identifies himself as a member of Western Civilization should acknowledge the greatness of Columbus. He brought the Western Hemisphere into the orbit of Western Civilization and thereby correspondingly increased the civilized area of the earth’s surface.

Columbus is one of the greatest men in the history of our planet.

He played an essential role in the development of capitalism, with its science, technology, and industry that eliminate perpetual tribal conflict over scarce land and natural resources by making it possible for the earth to support everyone, ever more abundantly.

He helped make it possible for the average person in every First-World country to live at a level surpassing that of kings and emperors in the past. The same would be true for the average person everywhere if Western Civilization and capitalism existed everywhere.

My and Your Individual Preferences Matter

Here’s my preference: I prefer global warming and rising sea levels to socialism and a life of deprivation and poverty.

I prefer my car, my A/C, refrigerator, and all the other goods that fossil fuels make possible to holding down the global mean temperature a few degrees over the course of centuries. I have the same preference vis-a-vis a 50-100 foot rise in sea levels over 500-1000 years.

Capitalism can handle such problems, with minimal loss of human life. Against a backdrop of continuing economic progress, history will barely notice them.

The Left’s response to the Coronavirus should be taken as a mild foretaste of what life will be like when it is ruled by an obsessive focus on global warming/sea-level rise and the Left’s willingness to sacrifice modern material civilization in order to stop it. 

Self-Interest and Social Benefit

Capitalism is a system of voluntary social cooperation in which each benefits himself to the extent that he benefits others. He benefits himself by earning money which he receives from others who value his goods or services more than the money they spend in buying them.

Under capitalism, these others, in turn, have obtained their money by benefitting more than equivalently those who have paid them, and so on back to the first day of the chain of voluntary exchanges.

Capitalism actually gives the benefit of one’s work to others that altruism claims to seek, but propelled by the force of one’s self-interest rather than painfully extracted by self-sacrifice and physical force.

To learn virtually everything significant about capitalism, read my Capitalism: A Treatise on Economics, available in Kindle, hardcover, and paperback editions at https://amzn.to/2ZMZOK8.

  

Washington and Jefferson, Slavery and Marxism

Do not believe the claim made by the media morons that statues of Washington and Jefferson have been toppled because these Presidents owned slaves. Their statues have been toppled because they advocated freedom and created a country based on freedom.

In contrast, the Marxists/Socialists engaged in this desecration are advocates of slavery, out to create a totalitarian dictatorship. At the same time, as part of the same phenomenon, they claim that slavery exists all around us, in the very nature of capitalism.

They claim that the employees of capitalists are slaves: “wage slaves,” they call them. They do this on the basis of their lunatic belief that capitalists gain from the employment of wage earners in the same way that a slave owner gains from the ownership of a slave.

Namely, from the fact that a slave or wage earner is able to produce in a day more than is required to keep him alive and able to work the next day. The existence of this excess or “surplus,” they believe is the explanation of profit.

Thus, capitalists allegedly exploit wage earners in exactly the same way that slave owners exploit slaves.

This may no doubt come as a shock to many multi-millionaires and billionaires busy contributing to Marxist/Socialist terrorist organizations in the belief that doing so buys them protection. There is no protection except to expose these vermin.

And one simple and effective way to do that is to read and publicize this book, which is available in both Kindle and paperback versions at https://amzn.to/2N44uTu.

Among other major subjects, it explains the productive role of businessmen and capitalists and the actual foundations of profit.

Freedom of Economic Inequality Is Not Only Not a Problem But the Solution to Economic Problems

On July 1, the NY Times ran an article titled “Is Economic Inequality Really a Problem?” (https://www.nytimes.com/2020/07/01/opinion/economic-inequality-moral-philosophy.html?searchResultPosition=1)

The author was unable to provide an intelligent answer to his question because, like virtually all “liberals,” he doesn’t realize that under capitalism and its saving and investment, one man’s wealth is the source of other men’s wealth.

For example, one man’s billions invested in auto plants are the source of tens of millions of average people having automobiles. And similarly for all other products.

The liberal ignoramuses think products come from nowhere and that the capital wealth that makes them possible resides in a heap of consumers’ goods that serves no purpose except to make capitalists immensely fat while everyone else starves.

These ignoramuses have created generations of other ignoramuses, who are now getting ready to destroy the capital wealth that sustains them. Whoever wants to know better can do so by reading my Capitalism: A Treatise on Economics. Available at amzn.to/2PM19ut

What the Protests Are Protesting

The “protests” are not against the death of George Floyd. His connection is no greater than the length of the fuse needed to set off a vast accumulation of explosive hatred for the United States, the capitalist economic system, and rationality itself.

If the protests were about Mr. Floyd, they would have stopped with the filing of murder charges against the officer directly responsible for his death, and with the filing of charges against the three other officers present.

Despite the filing of charges, the protests went on, virtually without skipping a beat. Perhaps if the officers had been dragged from custody and been hung or beaten to death, the protests might have stopped, simply out of shock at what had been done. But not necessarily.

The protests have the flavor of a pogrom incited by a single incident and taken as symbolic of something vastly larger. They have the same character as the vast destruction of Jewish businesses in Germany in Nov. 1938, in response to the killing of a German diplomat by a Jew.

Generations of miseducation, akin more to a process of protracted lobotomization than to education, especially in the so-called social sciences and the humanities, has produced millions of graduates who are profoundly ignorant and barely capable of thinking.

To protect themselves from ever learning anything by listening to ideas that conflict with their dogmas, they shout down speakers. When the opportunity arises, they seek to get professors with alternative views fired, if they’ve managed to be employed in the first place.

The educational system’s graduates are so ignorant that despite the scores of millions of deaths it has caused, they do not know that socialism is a system of slavery, terror, and mass murder, and want to impose it on the United States.

At the same time, they regard the United States, the first country in the history of the world created on the principle that individuals possess unalienable rights that governments are instituted to protect, as though it were a tyranny ruled by evil “capitalists.”

They ignore the fact that to rid the country of slavery and make it true to its founding principle of individual rights, more than 300 thousand Union soldiers died in the Civil War, out of a population 20 million, which toll is comparable to almost 5 million today.

They are so pathetically ignorant that they do not even know what biologically distinguishes men and women and believe that by wishing, they can override these biological differences.

They do not know that freedom is the absence of the initiation of physical force, and that it is secured by the ability and willingness to counter the initiation of force with greater, defensive and retaliatory force, thereby creating personal safety.

They do not know that a police force and army are essentially the one proper function of government, and that in preventing, or, if necessary, overcoming the initiation of force, it secures the freedom of the individual and respect for his rights.

They do not know that the essential problem in securing individual rights and freedom is keeping the government in check. It must be prevented from itself initiating force, which it does any time it makes illegal something that is not the initiation of force.

In an upside down, inside out, total reversal of rationality, today’s protesters in seeking to achieve socialism seek the use of government force in every area of life. Their newly discovered exception is prevention of common crime. They want to abolish local police departments.

Perhaps there is a logic in all this. Namely, today’s looters and fire bombers might serve as “post-police,” enforcing endless regulations, working as spies, and guarding inmates in the socialist state’s concentration camps. There will certainly be no shortage of such monsters.  

There is practically no hope of any serious news analysis from today’s mainstream media. The New York Times, for example, has sunk to the level of urging people to eat insects (https://nyti.ms/2O0ivSS) and to avoid the use of toilet paper (https://nyti.ms/3aPuZs0). Loathsome.

Readers who want serious discussions of leading current issues can start by consulting my Amazon author’s page at https://amzn.to/2NLvVVZ. The works found there, especially my Capitalism: A Treatise on Economics, provide references to all the important relevant literature.

How Far Left the Democrats Actually Are

It’s clear that today’s Democratic Party is very far left. But it may come as a surprise to learn that it’s further to the left than the Chinese Communist Party! Much further. For example, China has the world’s second largest number of private billionaires and is proud of that fact!

It's still strongly influenced by the legacy of Deng Xiaoping, who reportedly said, “To get rich is glorious” and “Let some people get rich first.” If these words were said in America, the Democrats would denounce them as the “trickle down” theory.

To learn what's right with capitalism and wrong with socialism, and implicitly what's right and wrong with China, first read the book at https://amzn.to/2N44uTu and then, for deeper, more comprehensive knowledge, the book at amzn.to/2PM19ut. Especially Democrats and all other leftists should do this.

 

Capital Must Not Be Meat for Socialism’s Ravenous Wild Dogs

Under capitalism, one man may own a string of automobile factories, and one man may own a string of oil fields, pipelines, and refineries. From their wealth comes tens of millions of automobiles and the fuel to power them and to heat the houses of the millions.

Socialists—as immense in their ignorance as they are small in their minds—resent the wealth of those who sustain them and provide them with a civilized existence. They want that wealth for themselves, in the delusion that their consuming it would make their lives easier.

Intellectually, socialists are still in the Dark Ages, when the only use of wealth was in the frame of one’s own consumption. They have never learned that under capitalism, wealth is used in the production of goods for the market and in the purchase of others’ labor to help.

Socialists do not know that the wealth so used, i.e., capital, is the foundation of the supply of products and the demand for labor and thus of the standard of living of everyone, and that the greater the capital, the greater is the wealth and well-being of all.

Socialists, in their small-minded ignorance and envy, call this fact “the trickle-down theory.” Their theory, in contrast, is the loot-and-plunder theory, a theory fit for ravenous wild dogs.  

As I wrote yesterday, socialism is not an economic system. It is merely the negation of capitalism, leaving in its wake chaos, famine, and death.

For more, read the writings of Mises, Rand, and Reisman.

ADVICE FOR “WOKES”

If you’re “woke,” you'd better get some sleep, because everything you say is so stupid that you sound only half conscious. Your essential complaint about “social injustice” is that capitalists steal their profits from wages.

In fact, the saving and productive expenditure of the capitalists show up as wages and expenditure for capital goods, which in turn show up as costs of production and thus a deduction from sales revenues. This means a reduction in the amount of profit relative to sales revenues.

For elaboration, see my Kindle essay “Rectifying the Greatest Error in the History of Economic Thought: ‘Demand for Commodities Is Not Demand for Labor’ Versus the Marxian Exploitation Theory.” 99¢ at https://amzn.to/2mN0GOb.

My essay shows that the original income of labor was profit not wages, and that capitalists create wages, costs, and capital and thereby reduce profits relative to sales revenues and capital, while raising wages relative both to sales revenues and to prices.

Thus, “wokes”—Marxism-inspired morons—denounce capitalists for creating and enlarging what they in fact reduce, i.e., relative profits, and for reducing what they in fact enlarge, i.e., relative wages and their buying power.

Capitalists enrich everyone through the rise in the productivity of labor they bring about, and which progressively reduces prices relative to wages, thereby raising real wages, and making possible shorter hours, better working conditions, and the abolition of child labor.

On these points, see my Kindle essay “Marxism/Socialism, a Sociopathic Philosophy Conceived in Gross Error and Ignorance, Culminating in Economic Chaos, Enslavement, Terror, and Mass Murder: A Contribution to Its Death.” It’s available at https://amzn.to/2N44uTu. Price: 99¢.

And see also, my essay “How the 1% Provides the Standard of Living of the 99%.” It’s available at http://amzn.to/1Dj8x86 also for 99¢.

As for the issue of racism, that “woke” people are allegedly so concerned about, what profit-seeking capitalists discriminate in favor of is that which is the color of money, such as, gold, silver, and greenbacks.

So, for example, if blacks are getting paid less than whites for the same work, profit-seeking capitalists will employ equally good but lower-paid blacks at every opportunity, provided there are no laws or regulations that threaten them for doing so. Cutting costs raises profits.

The result is a rise in the wages of blacks and a fall in the wages of whites. The further result is equal pay for equal work. (The same applies to the wages of women relative to those of men.)

For elaboration on the true relationship between capitalism and racism, read my essay “Capitalism: The Cure for Racism.” 99¢ at https://amzn.to/2Hcquv9.

Just think, for a mere $3.96, you can transform yourself, at least on the major subjects of capitalism, profits, wages, and racism, from being an ignorant victim of contemporary “education,” into someone with actual knowledge of these subjects.

STEP BY STEP THERAPY FOR MSTD (MARXISM/SOCIALISM THOUGHT DISORDER). POINT BY POINT CHALENGES

The beliefs about the alleged horrors of capitalism are disastrous errors. They confuse the terrible conditions inherited by capitalism from feudalism, and which capitalism overcame, with capitalism itself, leading people to believe capitalism created the conditions it overcame.

Capitalism represents the release of unfettered individual human intelligence into the process of production and exchange, which intelligence is propelled by self-interest and the profit motive.

Under capitalism, these driving forces operate within a framework of individual freedom.

Freedom means the absence of the initiation of physical force. It requires that you deal with others to their advantage as well as your own, because that’s the only way to get them to buy from you or sell to you, since you are prohibited from using force against them.

To gain workers, a capitalist employer must offer them better terms than they could obtain working on their own or from any other employer. Similarly, to gain customers, he must offer them the best use available to them for the money he asks from them.

In this way, even today’s billionaires work for the average person. If they want a sum of money he possesses, they have to offer him goods or services that represent a better use for that money than any of the alternatives on which he might spend it.

If you want to make money under capitalism, the way to do it is not like a gangster robbing gas stations, but to ask yourself what can you do, or what could you learn to do, that other people want and are willing to pay for, and then do it. You gain, and your customers gain.

Exceptionally intelligent and hard-working individuals come up with ideas, and arrange to put them into practice, that make possible important improvements in products or more efficient ways of producing existing products. In doing so they raise the productivity of labor.

These individuals are businessmen and capitalists.

A rising productivity of labor, brought about by these businessmen and capitalists, serves steadily to increase the supply of products relative to the supply of labor and thus to reduce prices relative to wages, which means a growing buying power of wages—higher “real wages.”

As this process continues, and the real earnings of people rise, they can afford to accept the comparatively lower wages of jobs with shorter hours.

For example, if in 1775, people were working 80 hours a week just to survive, and 50-75 years later, they can make 3-4 times subsistence in 80 hours, many of them will choose to work 60 hours, say, and still earn vastly more than they did initially.

In just the same way, as the productivity of labor and real wages rise, thanks to the efforts of the businessmen and capitalists, workers can afford to accept the lower take-home wages that accompany jobs with improved working conditions that don’t pay for themselves.

This same process of rising real wages enables parents to afford to keep their children home longer, with the result that child labor begins at a later and later age and finally disappears.

The process of businessmen and capitalists achieving a rising productivity of labor and real wages has by now increased real wages to the point that the average worker in an industrial country enjoys a higher standard of living than kings and emperors of the past.

In addition, the work week is now 35-40 hours, working conditions have enormously improved, and child labor has been reduced to the point where it now often begins only in the mid-twenties of the children.

The socialist Bernie Sanders keeps saying that he wants a system that “works for all of us.” Capitalism is that system. The capital of the capitalists is accumulated out of profits earned by the introduction of new and improved products and more efficient methods of production.

Those profits are then typically saved and reinvested in the production of those very same products, to the point of providing them for virtually all.

The capital of the capitalists not only produces the cornucopia of products that everyone is able to buy but also pays the wages that enable them to buy it.

The fact that Sen. Sanders has shoes, indoor plumbing, a car, a TV, a house or apartment, and much, much more, is how capitalism works for him and for everyone else.

The greater wealth of a rich capitalist compared with that of the average person, does not mean that the capitalist’s consumption is anywhere near to being correspondingly higher. The manufacturer of a million TV sets, for example, does not have a million TV sets in his home.

He may have 5 or 6. His greater wealth is in the capital—the factories, machinery, materials and components, and the funds required to pay wages—required to produce a million TV sets, 6 of which go to him and 999, 994 to other people, the great majority of whom are wage earners.

For more, buy and read CAPITALISM: A TREATISE ON ECONOMICS. Available at http://amzn.to/2PM19ut  in hardcover and Kindle formats.

On the American Economic Association’s proposed Code of Professional Conduct

Prologue

On February 6 of this year, the Secretary-Treasurer of the American Economic Association (AEA) sent the following email to the members of the Association:

In October 2017 Alvin E. Roth formed an Ad Hoc Committee to Consider a Code of Professional Conduct for Economists, and charged it with evaluating various aspects of professional conduct, including those which stifle diversity in Economics. The ad hoc committee, composed of John Campbell (chair), Marianne Bertrand, Pascaline  Dupas, Benjamin Edelman, and Matthew D. Shapiro discussed an interim report and  draft code with the AEA Executive Committee at its meeting on January 4, 2018, and provided an update to the AEA membership at the Annual Business Meeting on January 5 in Philadelphia. The interim report and draft code are now ready and available for viewing and comment by the AEA membership at large, and the Executive Committee encourages your participation and assistance in bringing these items ahead to final versions.

The ad hoc committee's interim report is available here:

https://www.aeaweb.org/resources/member-docs/code-of-conduct-interim-report

The draft Code of Professional Conduct is available here:

https://www.aeaweb.org/resources/member-docs/draft-code-of-conduct

To offer comments on either or both items, please use the link below before March 15, 2018:
https://www.aeaweb.org/comments/code-of-conduct/?token=faSyK6QDtnirZ6faYFs7Y33R3d9H5QEE

My Comment 

When I began the study of economics, almost seventy years ago, as a young adolescent, almost everyone seemed to take it for granted that full respect for individual rights, including property rights, as called for by the American Constitution and Bill of Rights, would inevitably result in a society in which greedy capitalists drove the wages of the great mass of people down to or below minimum subsistence, while lengthening the hours of work to the maximum possible, and imposing nightmarish working conditions.

Even today such are the beliefs of the great majority of people. This becomes clear simply by asking what most people believe would happen if there were no pro-union or minimum wage laws, and no maximum hours or child labor laws.

Now, today, we can observe both in the “Interim Report” on considering a code of professional conduct and in the “Draft AEA Code of Conduct” how much the intellectual horizon of the economics profession, at least as represented by the AEA, has shriveled. It has gone from concern with world-shaking, life-and-death issues to concern with insignificant trivia.

Such questions and concerns as whether or not capitalism exploits the average worker have been replaced with such questions and concerns as “Ending harassment”—sexual harassment (p. 5 of the “Interim Report”). Not even rape, mind you, (which is against the law and severely punished, and is attended to by the police and prosecutors, not economists)—but sexual harassment, which can mean something as small as a man repeatedly asking a woman to go out with him despite her repeated refusals. This is what economists are now to be concerned with.

This is not to be the only concern of economists. They are also to be concerned with “creating a professional environment with equal opportunity and equal treatment for all economists, regardless of age, gender, race, …” and so on and on ad nauseam. (The only thing missing is an enumeration of the alleged 63 genders.)

Such lists are intended to prove one’s acceptance of “diversity.” Yes, there is diversity—in utterly irrelevant respects. There is virtually no diversity in ideas and theories. True diversity would mean such things as making the ideas and theories of Ludwig von Mises a standard part of the discussion instead of ignoring them.

The “Interim Report” urges what is implicitly a program of spying, which it calls “Monitoring and reporting on climate.” For example, observing and quantifying “the extent to which there is unproductive aggressiveness in economics or its subfields.” (p. 4.)

Enough of the “Interim Report.”

The “Draft AEA Code of Conduct” calls for, among other things, “the disclosure of conflicts of interest.” This language leaves the door wide open for any Marxist to claim that if his opponent advocates a policy of any kind that protects the property rights of the rich, and at the same time is himself “rich” or in the employ of the “rich,” he is dishonest, guided by his alleged “class interest” rather than considerations of truth or falsehood.

The “Draft” repeats verbatim the language it believes establishes “diversity” credentials.

A paragraph earlier, it writes of “the “perfect freedom of economic discussion.” This “freedom” is apparently to be established by an environment of spying and fear, as called for in the “Interim Report.” In addition, the document totally ignores the violations of the freedom of discussion that go on, on college and university campuses across the country, in which student thugs forcibly prevent speakers from speaking.

The motive of the “Interim Report” and the “Code” is not any legitimate concern with advancing the state of economics, but rather it is the very illegitimate and downright evil motive of gaining power over the economics profession, by imposing a reign of fear on economists, who will have to be concerned with whether or not they are violating the code, which they might do simply by offending someone.

If this code, or anything remotely like it, is adopted, I for one will resign from the American Economic Association, which I will then regard as just one more group dedicated to political “correctness” rather than to knowledge and truth. Indeed, I would then think of the AEA as an organization of such small mindedness and so laughable as to deserve a membership comprised of nothing but clones of Saturday Night Live’s “Church Lady,” indeed, of Church Lady’s maiden aunt.

In any event, I will never allow any “Big Sister” to watch me.

                                                                                                                      

Why Columbus Is In Fact the Discoverer of America

Today marks the celebration of Columbus Day, in honor of the man who discovered the Western Hemisphere. (October 12 is the actual date of his discovery.)

 

In view of the fact that there are growing numbers of barbarians living in the midst of modern Western Civilization, who have no understanding or appreciation of its value, I find it necessary to quote from my pamphlet Education and the Racist Road to Barbarism to explain why it is that “… I regard the discoverer of the Western hemisphere to be Columbus, rather than the very first human beings to arrive on the North American continent (probably across a landbridge from Asia), and rather than the Norwegian Leif Ericson. I consider Columbus to be the discoverer not because of any such absurd reason as a preference for Europeans over Asiatics (Leif Ericson was as much a European as Columbus), but because it was Columbus who opened the Western hemisphere to the civilization I have made my own. Columbus was the man who made it possible to bring to these shores my ideas and values. It is not from the perspective of the residence of my ancestors, who were certainly not Italian or Spanish or even West European, that I regard Columbus as the discoverer of America, but from the perspective of the residence of my ideas and values. Just as at an earlier time, they resided in Greece and Rome rather than in the Russia of my ancestors, so in the 15th and 16^th centuries, the home of my ideas and values was in Western Europe. I hold Columbus to have been the discoverer of America from that perspective. This is the perspective that any educated person would hold.” (p.6)

 

Those who deny the fact that Columbus was the discoverer of America demonstrate that they have not made the knowledge and values that constitute Western Civilization their own. They are self-confessed and self-made aliens living in the midst of Western Civilization yet preferring to all of the knowledge and values that constitute it, the meagre, primitive state of knowledge and values constituting the culture of “indigenous peoples,” who are at a level comparable to that of people who lived many thousands of years ago, with no knowledge of reading or writing, and hardly any knowledge of science, mathematics, philosophy, music, or art.

Whoever, in the words of Ludwig von Mises, prefers life to death, health to disease, and wealth to poverty, is logically obliged to prefer Western Civilization and its offshoots of individual freedom and capitalism to all other civilizations and cultures that have ever existed.

 

Dr. Reisman’s pamphlet Education and the Racist Road to Barbarism can be ordered in Kindle format from Amazon.com for 99¢ at http://www.amazon.com/-/e/B001KCWY0Q.