Submitted by Pater Tenebrarum of Acting-Man blog,

The Problem of Economic Ignorance

The fact that economic ignorance is widespread is really a big problem in our view. Unfortunately even what is broadly considered the economic mainstream thought is riddled with stuff that we think just doesn't represent good economics. This is not meant to say that there is absolutely nothing worthwhile offered by the so-called mainstream. Often one comes across valuable insights and stimulating ideas. Still, there are a number of very fundamental issues on which various schools of economic thought don't agree – beginning with basic questions of methodology.

Regarding the place economics should have in our lives, Ludwig von Mises once wrote:

“Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man's human existence.”

We agree wholeheartedly with this sentiment. There is little harm in leaving astronomy to astronomers and quantum physics to experts in theoretical physics. With economics it is different, because even though it is supposed to be wertfrei (value-free) as a science, economics necessarily has a political dimension, since politics is all about the acquisition and distribution of property by political (as opposed to economic) means. In other words, economic policy is the main topic around which politics revolves.

When Mises wrote the above words, he thought of economics as a more or less unified science, in broad agreement on basic concepts. In a way that is still true, but it is less true than it once was. For instance, to briefly come back to the point about methodology, Mises spent a lot of effort on systematizing the economic method and discussing the epistemological problems of economics. However, while doing so, he never doubted for a moment that it was quite clear to all economists that the science had to proceed by means of deductive reasoning and logic. He probably didn't expect that positivism would eventually conquer economics. As an aside, if one looks closely, one soon realizes that even the most committed positivists and econometricians secretly agree that there actually is such a thing as the laws of economics, and that these laws are not necessarily all derived from empirical observation.

Be that as it may, there is definitely a great deal of economic ignorance out there. Partly it is actually furthered by statist propaganda and obfuscation. For instance, the average citizen is not supposed to question the centrally planned monetary system, and neither is he supposed to actually understand how it works (hence what is actually a pretty straightforward operation has become a fairly complex variation of the Three Card Monte, designed to obfuscate the system's inherently fraudulent nature).

How much ignorance there is regularly becomes evident by things such as e.g. the enduring popularity of protectionism (it is almost as though consumers enjoy harming themselves).

Another glaring example is the still widespread idea that socialism – or rather, communism (i.e., full-scale socialism as opposed to its milder 'democratic' version) – would be 'the best possible system of social and economic organization if only it were implemented correctly', or the variant ' … if only human nature were different and we were morally more advanced than we actually are'.

The main problem with this train of thought is that it is actually completely wrong. When confronting supporters of socialism with the total failure and murderous nature of the communist system in the real world, a common retort is that 'this wasn't real socialism'. In other words, if Lenin, Stalin, Mao and their followers had only implemented everything according to the precepts of Karl Marx, then things would have been perfectly fine, and the communists would have erected a king of land of Cockaigne.

However, not only did they in fact follow the precepts laid down by Marx and Engels, but even if e.g. Stalin had been a veritable angel, the system would still have failed. Socialism is literally impossible as Mises has already proved in 1920. In brief: it is a system in which rational economic calculation becomes impossible, because there are no longer prices for capital goods once private property in the means of production is abolished. A system bereft of economic calculation can no longer allocate scarce resources efficiently. It cannot really be called an economy anymore. It a system that is doomed to break down in short order, and the only reason why it survived as long as it did in the former Eastern Bloc was that the COMECON planners were able to observe the price system in the capitalist countries and so could engage in a rudimentary form of economic calculation. Had the whole world become socialistic, the economy and division of labor would have completely collapsed within a few years and people would have been forced to return to a hand-to-mouth existence, barely able to subsist. Life would once again have become 'nasty, brutish and short'.

No, It Was Not Meant to Be a Satire …

In other words, it seems quite important that people really understand why socialism cannot work. After all, bad ideas have a habit of coming back after a while and an example for this has just been delivered via an editorial in the 'Rolling Stone', penned by one Jesse A. Myerson, a former 'Occupy' movement organizer.

At first many people mistakenly thought it was meant to be a satire, but it soon turned out it actually wasn't. On Twitter, Myerson runs the hashtag #FULLCOMMUNISM (anything less than the 'full' version apparently won't do), so there can be no doubt as to his ideological proclivities.

Anyway, in his article, couched in 'hip' language (the word 'blow' or 'blows' is used frequently, as in e.g. 'work blows'), he argues that millennials should make five economic demands, namely:

1. Guaranteed work for everybody, 2. a basic income for everybody (he calls that 'social security', but he actually means that everybody should get a government salary in exchange for – nothing. Being able to fog a mirror is sufficient reason), 3. the expropriation of landowners (it is not 100% clear if he merely argues for a Georgist land tax or full-scale expropriation), 4. the abolition of private property and nationalization of the means of production, and 5. a 'public bank in every state'.

The last demand sounds like he has picked up the ideas of the Greenbackers and associated monetary cranks, who hold that the monetary system could be improved if money printing were left to politicians directly rather than a central bank (for a trenchant critique of Greenbackism, read Gary North, who correctly notes that the ideology is at the root indistinguishable from Hitler's economic program).

So essentially, this leader/hero of the 'Occupy' movement proposes an economic program that is a jumbled mixture of Marxism/Stalinism, Georgism and National Socialism. Whoa!

Luckily not even the readers of Rolling Stone are falling for this stuff, judging from the comments section below the editorial. However, we have once again come across many comments that show that the problem discussed further above continues to persist – i.e., many people still seem convinced that communism would actually work if only it were 'done right'. That this is a fundamental error needs to be pointed out at every opportunity.

Not surprisingly, Myerson has become a target of ridicule all over the media landscape by now. Especially conservative columnists had a field day. However, Myerson of course stands by his nonsense, and attempted to defend it on Twitter and elsewhere. One of the more interesting conversations revolved around the accusation that what he proposed amounted to a defense of the system practiced by the Soviet Union. Since it has clearly failed there, there was really nothing left to discuss. As one might expect, Myerson retorted that of course, the Soviets never implemented his demands. In other words, the leftist trope that the 'communists never really tried communism' was predictably dug up by him. If only they had done so, they would of course have succeeded, so the story goes.

Unfortunately for him, there are a great many fact checkers out and about these days. One of them proved that not only had every single one of his demands been implemented by the Soviets, but they were actually without exception part of the Soviet constitution. On the Drew Musings blog an article entitled “Advocate For #FULLCOMMUNISM Says Soviet Union Did Not Try #FULLCOMMUNISM” has all the details and quotes from the Soviet Union's constitution. As Drew concludes, the only thing that still needs to be mentioned regarding the communists is that

“They did succeed at one thing…killing million upon millions of people in their efforts to remake society and maintain their control. #FULLCOMMUNISM = #MILLIONSDEAD. Always has, always will.”

That is not exactly an unimportant detail. Since the expropriation of private property necessarily involves force, it cannot be implemented without killing and imprisoning people. Once the system is established, it must continue to use force to ensure that the new ruling class won't be challenged and that the system remains in place.

Conclusion:

It is heartening that so many people, including the readership of the generally leftist Rolling Stone magazine, have vehemently disagreed with Myerson and heaped ridicule on his vile editorial. However, keep in mind that as time passes, the ignominious collapse of the communist system will become an ever more distant memory. In fact, that such an article is published at all is already a sign that this is happening. It is also concerning that the idea that communism would be just fine if only implemented correctly continues to be held by so many people. This is a result of widespread economic ignorance. It is more important to challenge the ideas propagated by Myerson on theoretical grounds than by merely citing historical events. Only if it is widely understood by people that socialism is indeed impossible will the danger posed by the Marxist ideology truly be banned.

The fathers of the Marxist ideology, Marx and Engels and two important leaders of the Marxist reality, Lenin and Stalin – briefly resurrected by the 'Rolling Stone'. Let us make sure they are interred again.