Thursday, 12 January 2017

Did Ludwig von Mises create today's cronyism?


Did Ludwig von Mises create today's ‘crony capitalism’? The Guardian’s favourite environmentalist seems to think so. Which is odd, because if anyone argued against cronyism more eloquently than Mises they would be part of a very small group indeed. But perhaps Monbiot just has no idea what he’s talking about, suggest Hunter Lewis in this guest post …


George Monbiot of Britain’s Guardian newspaper seems to think that Mises is indeed the progenitor of today's crony capitalism and more.

It is not Mises alone, however, who by this account is the cause of just about every imaginable contemporary scourge, from the Crash of 2008 to loneliness to obesity. It is all the “neoliberals” who schemed together from the 1930’s on, principally through the Mont Pelerin Society, to take over the world and who, we are told, succeeded beyond their wildest dreams.

Who knew, for example, that Big Money and Big Business got behind the Mont Pelerin program and used it to rationalize their exploitation of the common folk? Apparently they did this without Mises, Hayek, or Rothbard even having a clue it was happening, since the three got by on such very modest means.

This is, to say the least, an interesting fantasy. Apparently Mises, who died a man crying in the wilderness, just did not realise he was not only well funded, but virtually seated on the throne of power, supported by people who would today be described as billionaires, but in those pre-inflation days only qualified as mega-millionaires.

In fairness to Monbiot, he is not a bad person. He is against crony capitalism. He wants to preserve the beauties of nature. No quarrel with any of that. [No quarrel, if he were only to preserve them through means other than government force – Ed.]

Politically he sounds much like Bernie Sanders. Unlike Sanders, he is in search of new ideas. He acknowledges that his side, the political left, has not had a new idea since Keynes’s General Theory. ( Of course, the General Theory did not actually contain any new ideas, but that is another story.)

As a progressive, Monbiot is frustrated. He cannot blame society’s ills on his own creed, so he lashes out at "neoliberalism" as a darkly secret society of human haters who have managed to keep themselves anonymous and who, unbeknownst to everyone, are really running the world.

Monbiot  presumably became a progressive for the right reason: he was idealistic and wanted to help the human race. But like Sanders and Clinton and so many others, he totally  ignores the progressive paradox, which is that as government takes more and more control of the economy, allegedly to provide "expertise" or to right wrongs, it leads private special interests to put more and more effort into taking over government. All too often they succeed, because government does not exactly resist. Indeed, as often as not, it is government that is leading this toxic dance.

In Monbiot’s world, crony capitalism is condemned, but it is absolutely taboo to acknowledge its roots in progressivism. Consequently, he and others just keep on proposing more and more government control,  thereby tying  themselves up in logical as well as real world knots.

As the author of Where Keynes Went Wrong, I myself cannot exactly be described as a fan of Keynes. But Monbiot not only makes a complete hash of Mises and Rothbard, the economists he attacks. He cannot even get Keynes right. He describes Keynes as an apostle of consumerism when Keynes actually loathed consumerism. The last thing Keynes wanted was for the “ lower orders” to buy whatever they wanted or to run the economy.

Well, in some respects all of this represents real progress. A prominent British public intellectual is talking about Mises and Rothbard, if only in a desperate effort to avoid admitting to the failure of his own ideas.

** The gist of Monbiot’s argument is in this column. There are also YouTube videos of Monbiot’s lectures if you want more detail or full flavour.

Hunter Lewis is author of nine books, including including Where Keynes Went Wrong, Free Prices Now! and Crony Capitalism in America: 2008-2012. Lewis is co-founder of Against Crony as well as co-founder and former CEO of Cambridge Associates, a global investment firm. He has served on boards and committees of fifteen not-for-profit organizations, including environmental, teaching, research, and cultural organizations, as well as the World Bank.
His post previously appeared at the Mises Wire.


1 comment:

  1. I'm afraid I really struggle to take people seriously when they use the term "neoliberalism". Whenever I see that word, I know some fundamental misunderstanding of economics can't be far away. Describing rent and interest as unearned income is just one of the many economic misunderstandings on display in that Monbiot article.

    I too am against crony capitalism, but I'm not convinced Monbiot has much idea of the difference between crony capitalism and free markets, or how tax, regulations, and planning are used to cement crony capitalism.


1. Commenters are welcome and invited.
2. All comments are moderated. Off-topic grandstanding, spam, and gibberish will be ignored. Tu quoque will be moderated.
3. Read the post before you comment. Challenge facts, but don't simply ignore them.
4. Use a name. If it's important enough to say, it's important enough to put a name to.
5. Above all: Act with honour. Say what you mean, and mean what you say.