The Luddites Among Us … Certain economic ideas that are both logically wrong and unsupported by historical facts, and which have been known to be wrong for 250 years, are still widely held. This annoys economists. There is something that seems inherent in men's approach to thinking about their own wealth that persuades them that what they have seen, over and over, in nation after nation, either did not happen, or, if it clearly did happen, will not continue. – Economist Gary North
Dominant Social Theme: Modern capitalism is a blessing. Central banks make it work.
Free-Market Analysis: In a recent article, Dr. Gary North launched a wide-ranging defense of capitalism entitled "The Luddites Among Us." In it, he ticked areas that we have wondered about for years. His article gives us a launching pad to discuss them.
But THIS article should not be construed as an attack on Gary North or his almost-always impeccable reasoning. He seems to us to remain the single brightest light for a literate, hard-money view of the world – albeit one married to profound spiritual principles.
He has brought to mind some issues we regularly struggle with – and have written about in the past. But more on his argument, first. His article is mostly an attack on a Luddite mentality … one that is married, in his view, to a pro-tariff mentality. This mentality holds that tariffs are good and that the state can guarantee prosperity by making importation difficult.
The Luddite/anti-tariff mentality – an anti-modernity approach – is alive and well in the world. The great conservative sage Patrick Buchanan is anti-tariff. And we get a dose of Luddite thinking here from feedbackers who claim robots are going steal the jobs of average working men.
That's not the way the world should work, however. In a real free-market environment, progress merely provides additional leisure time – for everyone. If technology does away with the necessity for workers to work, then they would not starve in a free-market world; they would merely partake of the benefits that technology bestowed.
Gary North is, in fact, arguing just this point. Technology enriches us, he points out, just as free trade does. There is no point, of course, in restricting free trade. It merely denies people the best products and services available. If market competition offers something overseas that is better than a domestic offering, why shouldn't people be able to take advantage of it?
Logically, these are simple points, eloquently presented by Dr. North – if we understand him correctly. He rightly, from our perspective, concludes that most of the anti-trade, pro-Luddite arguments are coming from politicians who are looking for issues that help them raise money. He puts it this way:
There are always politicians ready to raise money from a PAC that is funded by some guild of about-to-be-displaced businessmen. These businessmen want their lock on a market, and they are ready to call on the government to send out people with badges and guns to stop efficient producers from making offers to customers.
Dr. North goes on to explain that this sort of fear-mongering is destructive to hope. "The most serious threat, however, is intellectual. This line of reasoning undermines people's hope in the future. If the free market is self-destructive, because the pursuit of individual self-interest is destructive of our real income, then we cannot trust liberty. We also cannot have legitimate hope in the future."
So far, so good. But then we get to this, a blanket assertion about the wealth that has been created in the past centuries thanks to the Industrial Revolution:
Two centuries of economic liberty have made us wealthy beyond anything conceivable in 1800. But this cannot last, we are told. We are coming to the Great Reversal. Economic liberty will no longer produce a cornucopia. Why not? Because the pursuit of individual self-interest without coercion really is what collectivists have always said: a snare and a delusion.
This is where the argument falls apart for us a little. It is fine to proclaim the benefits of market capitalism. But pro-market arguments don't necessarily acknowledge that modern markets are anything but free and that the past 100 years of "market capitalism" may have been nothing but a prelude to a Great Reversal.
Our argument would be that what seems to be market capitalism these days is nothing of the sort. We've often advanced this line of reasoning.
There were a handful of central banks at the beginning of the 20th century. Today there are 150. It seems to us that the world is suffering from a surfeit of central banking and that absent central banking, and Money Power itself, the world and the West would look like much different places.
How much of Western "wealth" is merely the unbridled stimulative effect of money printing? And has the imposition of worldwide central banking given Money Power the ability to destroy what it has created? Was that, in fact, the plan?
We think perhaps it was. Was the past century nothing but a kind of "dreamtime" in which the power elite conducted a vast monetary experiment designed to turn agrarian economies into urban ones in order to control them better?
Was the motivating force of the past century merely the strategy of a handful of impossibly wealthy individuals and their enablers and associates to create global governance?
People got into debt buying big houses and fast cars. They made career decisions based on ephemeral industries that were only viable because of monetary stimulation.
It seems to us one could make the argument (and we have) that the entire 20th century and now the 21st has been the product of this sort of monetary stimulation – one applied maliciously with the idea of reducing people's independence and ability to control their own destiny.
We are not sure that the past 100 years has endowed people with the wealth that only free-market capitalism can provide. We think Western societies might look a lot different without out-of-control monetary stimulation that is made possible only by fiat-money printing.
Whether or not we have fully understood Dr. North's thinking, we think it is important to emphasize that what we have now is nothing like a real free-market economy – and that we need to move further in the direction of the Invisible Hand, not away from it.
Make the argument that the past century has reaped the full benefits of market capitalism and you run the risk of confusing people. Worst case, you make them more apt to give credence to the arguments of a power elite that has cleverly set just set a trap.
It is easy to fall into it. We should take care we don't.