I stated in the last part that economics inducted a Presumption of Statism following the reactionary statist writings that arose in reaction to thinkers like Locke and Paine. However, I didn’t want to make it seem that statism only arose as a reaction to these thinkers. In fact, if anything, the statism asserted against these classically liberal thinkers is only a re-hashing of views which had already been stated explicitly. Implicitly, the new statism is only a harkening back to the tribalism that marked prehistory and kept man trapped in short, nasty, and brutish lives. The chief is simply the strongest, and might makes right. As the state is the most powerful entity in a society, it follows that it can do what it wants. There are no limits to the exercising of the state’s power; it is free to disrupt the economy however it wishes and plan/design to whatever end it cares, whether to perform any tradeoffs between unemployment and inflation, to outlaw private currencies, to make certain regulations about spending and saving, and so on.
This is a problem of contemporary economics. There is not enough discussion about what we should consider limits on the government. Rather, it is straightforwardly assumed that the government is free to meddle with the economy however it likes, and it should do so provided some economic theory can be provided that “justifies” the action in favor of society’s good.
Even the tentatively “free-market economists” are open to vast amounts of meddling and are not nearly suspicious enough of states. I believe a telling sign of the Presumption of Statism is the complete void of economists calling for the state to be out of the money business. The classical economists got their start by pointing out how society would be better off if the state were to be rid from the economy in the form of establishing tariffs, guilds, and certain protectionist favors. But we haven’t come full circle in seeing the call for the privatizing of currency; the number of economists who’ve proposed the state being out of the money business is so small that it doesn’t even have a name, technical or derogatory.
Who are they? So far as I know, they would be Hayek, Rothbard, and, more recently Jorg Guido Hülsmann. Heck, Hayek proposed private fiat currencies, and this as a check against the government’s fiat money, so my inclusion of him is tenuous.
Why is this? Is our faith in the market not yet assured, even though we as economists ought to know better? Why isn’t there further exploration into the tenability of currencies that states don’t have their dick in? Even the gold standard isn’t radical enough to be satisfactory, it is just a statist intervention into the economy and is predicated on the assumption that the state is free to prevent anyone competing with it in the money business.
Though I suppose economists do not represent, by necessity, a faith in markets. Keynes supported radical government interventions in the form of fiscal stimulus, and his ideas were used to justify the economic stimulus the Bush administration pushed in the aftermath of the housing bubble collapse. The monetarists prefer intervention in the form of controlling currency supply. The result is generally the same, at least from the viewpoint of justice (the economic merits can be discussed elsewhere). The fiscal stimulus is paid for by a tax on the future generations (which violates, at least in principle, the requirement of representation for taxation), the monetary stimulus is paid for by a tax on savings. They both represent a fundamental decision of the government to appropriate to itself the property of others which, even if we believe there must be a government and its taxes, should still be viewed with suspicion.
Beyond the moral aspect of the Presumption of Statism, there is also the economic aspect of the Presumption of Statism. How many economic theories and models are based on ways that the government might “make things better” in the economy? Keynesianism, monetarism, the Philips curve, the Keynesian multiplier, and on and on (I’d argue that the whole field of macroeconomics begins with the assumption that the government can effect any beneficial change in the economy). You find economists arguing against particular macroeconomic models here and there, but only because they’re proposing their own. In fact, sometimes they agree about the effects, it is only that they prefer different effects because of their own moral judgment of which effects are preferable.
Where are the economists arguing for a pure freedom of markets? Be it fiat money, fiscal or monetary stimulus, they’re all interventions of various kinds, obviating the freedom of markets. Contemporary economics has given up its libertarian heritage, no longer arguing against the state, but embracing it.
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