Wednesday, December 17, 2014

The Search for Economic and Monetary Theories

Many church leaders and theological educators give public declaration concerning economics and finance, which Austrian economists considered fallacious. This unfortunate phenomenon is due to ignorance of vast literature on economic and monetary theories from this school and the widespread influence of socialist literature in the academe. 

Our goal therefore is to correct this anomaly by retrieving the works of economic and monetary theorists. We believe that economic theories related to praxeology, Keynesianism, and entrepreneurship will help us illumine this chaotic intellectual atmosphere. Moreover, the vast literature on monetary theory, which includes currency, business cycle, credit, inflation, banking, and the gold standard will provide us an analytical framework to critique the existing monetary system and to lead us to sound monetary policy. Furthermore, as theological educator, it is part of our goal to search the literature on Christian economics to know the answers to the following questions:

1. What does the Bible say about economics and business?

2. What does the Bible say about money and credit?

3. What does the Bible say about banking and business cycle?

4. What does the Bible say about inflation?

Austrian Books on Entrepreneurship

There are seven books in my folder related to entrepreneurship written from the perspective of Austrian economic theory. These books are as follows:

1. Against Intellectual Property by Stephan N. Kinsella

2. Capitalist and the Entrepreneur by Peter G. Klein

3. The Driver by Garet Garett

4. God's Gold: The Story of Rockefeller and His Times by John T. Flynn

5. Men of Wealth by John T. Flynn

6. Profit and Loss by Ludwig von Mises

7. Wild Wheel by Garet Garett

As I checked the price of the hard copies of these books, their total cost is $ 102.00. It's good that I was able to download them prior to the reconstruction of mises.org. 

Meanwhile, I feel myself too scattered. I lacked focus and that's why I accomplished too little this 2014. I am praying for strength so I can focus my reading on entrepreneurship. After this, I am thinking to read next about Austrian monetary theory: currency, gold standard, banking, booms and busts, credit, and inflation. 

For now, my task is to start with Men of Wealth. 

Revisiting Feudalism and Jacob Fugger

Reading Men of Wealth, an idea came to me. I dream to see both Catholics and Protestants in the country working together for the realization of economic freedom in the Philippines by spreading the ideas of economists from the Austrian School. Once increasing number of Filipinos are economically free or once the Philippine government abolished its anti-free market policies or while all these things are happening, members of faith-based organizations that personally believe that their primary duty is to spread the gospel, let them do so; it's for the betterment of the country.

Photo Credit
Meanwhile, here is an excerpt from the book pages 4 to 24:

A different way to see the age of feudalism:

"Perhaps European society could have done nothing better for itself than feudalism in all the circumstances of the time. But essentially feudalism did not represent an effort at growth. It might be described as a vast shelter, a refugee haven into which the harried and starving and disordered masses of the first centuries following the destruction of the Roman Empire fled for safety. It was an escape from violence and want."


"The terror of Europe in those early years was famine. Hallam records that in the seventy-three years in the reign of Hugh Capet and his two successors, forty-eight were years of famine and that from 1015 to 1020 the whole western world was almost destitute of bread—a frightful interregnum of barbarism when, as Hallam records, mothers ate their children and children their parents and human flesh was sold "with some pretense of concealment" in the market place. People sold themselves into slavery to escape hunger. In the presence of persistent hunger the outer crust of civilized morals crumbles and falls away, leaving only the unclothed savage man, pining for food. To him a precarious liberty seems a small price to pay for safety and meat."


"Meantime, many of the stronger chieftains took to brigandage. Not yet emancipated from the ethical concepts of their northern paganism and the worship of gods who were little more than divine gangsters and celestial thugs, they broke upon the weak with that strange outpouring of cruelty that has marked man's journey from the beginning. The only refuge for the weaker peasant was to sell himself into the servitude of a stronger feudal baron."


"In time, of course, this system became organized, strengthened, crystallized. And it was this system which was now dying. A new system that would symbolize not escape and flight but growth and development was to take its place."

p. 4
Jacob Fugger, the son of Hans Fugger, and the advent of capitalism and the banking industry: 
"It was about this time, in 1380, that a simple Swabian weaver named Hans Fugger left his small village of Graben to try his fortune in one of these growing towns—the free city of Augsburg. At the end of his life he was still a weaver, but he was more merchant than weaver, buying raw cotton for himself and his neighbors from Venice and selling his fustian and theirs to other cities" (p. 8).

"In his lifetime he was assailed with varying degrees of fury as a monopolist, an enemy of German interests, a selfish and greedy hunter after profits, a foe to the established morals of the church and the state. Luther denounced him upon numerous occasions. And it was, indeed, Fugger's fate to find himself mixed up in that fatal adventure in papal finances that precipitated Luther's revolt. But through all this he preserved the perfect composure of the man who believes himself to be the special child and instrument of the deity. Just as a laterday industrial saint, John D. Rockefeller, said, 'God gave me my money,' the pious and acquisitive Fugger said: 'Many in the world are hostile to me. They say I am rich. I am rich by God's grace without injury to any man.'"


"Beginning as a theologian and then as a merchant, he became in turn a banker, a promoter, an industrialist, a commercial statesman. He was a dynast. But he had no ambition to found a family of noble and unproductive rentiers. He looked with unmixed satisfaction upon the function of the entrepreneur and the profit by which he lives. He put aside the suggestion of retirement into tranquillity and ease with the observation that he "wished to make a profit as long as he could." His ambition was to create a rich and powerful dynasty of bankers and industrialists. He consorted with princes, emperors, and popes, but he never fawned upon them. He could write to an emperor who owed him money—the most powerful potentate in Europe—to remind him that he owed his crown to Fugger's financial backing, that his majesty owed him money, and he begged that he would "order that the money which I have paid out, together with the interest upon it, shall be reckoned up and paid, without further delay." He lived amid magnificence, surrounded by priceless objects of art and the greatest library in Europe and with a collection of estates which he deemed becoming to a great prince of trade."

"After his death the capital of the Fugger company, according to an inventory made in 1527, was 2,021,202 golden gulden. And twenty years later (1547) the firm, under the leadership of his nephew Anton, a man of ordinary abilities, had a capital of five million gulden" (pp. 9-10).

"Two great streams began to flow around Europe: one a stream of goods made up of every sort of product of every clime; the other a stream of money coined in the little mints of hundreds of petty princes. These fustian makers and wool weavers and tool mongers began to have a wider market for their wares and they began to produce more. Men flocked to the towns. The capitalist system, with its money and its freedoms, was becoming the reigning ism, even, though that word was unknown and the only isms men heard of were those which described the bloody and warring armies of religion" (p. 11).

"In the infant capitalist world of the fourteenth century the closest approach to big-business technique was the spice trade. Spice played the role that copper was to play in the fifteenth century and oil in the twentieth. There was not much variety in the foods of the time and the means of preserving them were even less developed. The palate took refuge from the monotony of a limited diet in a jolt of pepper or some other spice. Spices came into widespread demand and merchant captains roved the seas looking for spice supplies with something of the adventurousness of the modern wildcatter hunting for petroleum" (p. 13).
"The long struggle to break up the old feudal system and the primitive guild ethics of the towns and set in motion the capitalist society lengthened out into a series of steps. First there was the slow infiltration of money. Next came the shattering of public acceptance of the scholastic ethics. Then came the rise of free competition and the long retreat of the old guild trade monopolies. Next was the development of modern banking. Then came the rise of the large-scale industrial operator. It is because Fugger played a leading role in all these stages that he stands as the most important figure at the dawn of the capitalist era" (p. 21).

"In time the bankers became more than mere lenders of their own funds. They accepted the deposit of others' funds. These they were at liberty to lend out. Such deposits were treated as demand loans to the bankers. There were times, however, when the depositor came for some of his money only to find the banker did not have it available. Under these circumstances the banker would take his client to another banker with whom he had a deposit or enjoyed credit and thus honor the client's demand. After a while it became unnecessary for the banker to go in person to another banker to arrange this withdrawal. He would give his client a written order upon a neighboring banker for the funds he lacked. Thus checks came into use. And the next phase was for the client himself to give to another a written order upon his banker for funds. Thus the general use of checks came into vogue."

"All the time, the banker served to accommodate the kings and the petty princes and lords who needed money. When the king required funds on loan he might get them from a single usurer at first. But later he would be aided by a consortium of merchants who would subscribe to the loan, usually under the leadership of one of large means and influence among their number. Such a one was Fugger. And thus, we see the rise of the international banker" (p. 23).

"Double-entry bookkeeping was perfected at Venice, where Fugger served his apprenticeship. The Italians, chiefly the Florentine bankers, were inventing names for various instruments and transactions . . . which were to become the daily countinghousehold words the world over. Thus men were slowly forging the instruments, weapons, and the jargon of the modern capitalist state that would become in time the mold of society. These old bankers were leaving their names upon the institutions and streets of the cities of Europe. In Florence you will still find in the street names, the memory of the Bardi, Peruzzi, Albruzzi, Grecci, and others—bankers all."

"The Fugger family had followed this evolution—first weavers, then lenders of money around the fairs and market places, then international bankers—the greatest of their time. Jacob Fugger's firm had a web of branches and factories extending from Naples in the south and the Spanish peninsula to Hungary and Poland in the east and Scandinavia and England in the west" (pp. 23-24). 

Source: Flynn, J. T. (1941). Men of Wealth: The Story of Twelve Significant Fortunes from the Renaissance to the Present Day. Simon and Schuster, Inc.: New York, New York.

Monday, December 15, 2014

The Capitalists, the State, and Justice

Hans-Hermann Hoppe clarifies in the The Ethics of Entrepreneurship and Property the role of both the capitalists and the State in relation to justice. In Hoppe's article, we can see four basic facts:



Fact # 1 - A capitalist's profit and loss are indication of the extent of his contribution to social welfare. 


Notice how Hoppe describes the capitalist's contribution to society: 
"What can be unambiguously stated about a capitalist’s profit or loss is this: His profit or loss are the quantitative expression of the size of his contribution to the well-being of his fellow men, . . . . The capitalist’s profit indicates that he has successfully transformed socially less highly valued and appraised means of action into socially more highly valued and appraised ones and thus increased and enhanced social welfare. Mutatis mutandis, the capitalist’s loss indicates that he has used some more valuable inputs for the production of a less valuable output and so wasted scarce physical means and impoverished society."

"Money profits are not just good for the capitalist, then, they are also good for his fellow men. The higher a capitalist’s profit, the greater has been his contribution to social welfare. Likewise, money losses are bad not only for the capitalist, but they are bad also for his fellow men, whose welfare has been impaired by his error."

Fact # 2 - A capitalist's actions and profits are considered just if there is "mutual beneficial exchange," "mutually agreeable terms," and respect for the property of others. Violating these conditions would make the actions and profits of a capitalist unjust. 

Again, observe how Hoppe explains this situation:

'The capitalist’s actions and profits are just, if he has originally appropriated or produced his production factors or has acquired them – either bought or rented them – in a mutually beneficial exchange from a previous owner, if all his employees are hired freely at mutually agreeable terms, and if he does not physically damage the property of others in the production process. Otherwise, if some or all of the capitalist’s production factors are neither appropriated or produced by him, nor bought or rented by him from a previous owner (but derived instead from the expropriation of another person’s previous property), if he employs non-consensual, “forced” labor in his production, or if he causes physical damage to others’ property during production, his actions and resulting profits are unjust."

Fact # 3 - The State makes the social justice question elusive and complicated. 

At this point, Hoppe identifies two implications from the very nature of the State itself. 

"Complications in this fundamentally clear ethical landscape arise only from the presence of a State. . . . Logically, the institution of a state has a twofold implication. First, with a state in existence all private property becomes essentially fiat property, i.e., property granted by the state and, by the same token, also property to be taken away by it via legislation or taxation. Ultimately, all private property becomes state property. Second, none of the state’s “own” land and property – misleadingly called public property – and none of its money income is derived from original appropriation, production, or voluntary exchange. Rather, all of the state’s property and income is the result of prior expropriations of owners of private property."
"The state, then, contrary to its own self-serving pronouncements, is not the originator or guarantor of private property. Rather, it is the conqueror of private property. Nor is the state the originator or guarantor of justice. To the contrary, it is the destroyer of justice and the embodiment of injustice."

Fact # 4 - The capitalist's response to an unjust and Statist society can be considered just or unjust depending on his participation in the expropriatory acts of the State, in the regulation and redistribution of private property of other capitalists. 


Under a Statist environment, a capitalist is torn between two responses, to be "a champion of justice" by legitimately depending his property against the State's expropriation or to be "a promoter of injustice" by participating in the expropriation of the property of those he considers as competitors. 


See how Hoppe elaborates these two responses:


1. A capitalist as "a champion of justice" by defending his property:

"The capitalist is ethically entitled to use all means at his disposal to defend himself against any attack on and expropriation of his property by the state, exactly as he is entitled to do against any common criminal."
"More specifically: For the capitalist (or anyone) in the defense and for the sake of his property, it may not be prudent or even dangerous to do so, but it is certainly just for him to avoid or evade any and all restrictions imposed on his property by the state as best he can. Thus, it is just for the capitalist to deceive and lie to state agents about his properties and income. It is just for him, to evade tax-payments on his property and income, and to ignore or circumvent all legislative or regulatory restrictions imposed on the uses he may make of his factors of production (land, labor, and capital). Correspondingly, a capitalist also acts justly, if he bribes or otherwise lobbies state agents to help him ignore, remove or evade the taxes and regulations imposed on him. He acts justly and above that becomes a promoter of justice, if he uses his means to lobby or bribe state agents to reduce taxes and property regulations generally, not only for him. And he acts justly and becomes indeed a champion of justice, if he actively lobbies to outlaw, as unjust, any and all expropriation, and hence all property and income taxes and all legislative restrictions on the use of property (beyond the requirement of not causing physical damage to others’ property during production)."
2. A capitalist as promoter of injustice:
"On the other hand, and again exactly as in the case of any common criminal, the capitalist’s defensive actions are unjust, if they involve an attack on the property of any third party, i.e., as soon as the capitalist uses his means to play a participatory role in the state’s expropriations."
". . . . a capitalist acts unjustly and becomes a promoter of injustice, if and to the extent he employs his means for the purpose of maintaining or further increasing any current level of confiscation or legislative expropriation of others’ property or income by the state."
"Thus, for instance, the purchase of state-government bonds and the monetary profit derived from it is unjust, because such purchase represents a lobbying effort on behalf of the continuation of the state and of on-going injustice, as interest payments and final repayment of the bond require future taxes. Likewise and more importantly, any means expended by a capitalist on lobbying efforts to maintain or increase the current level of taxes – and hence of state-income and spending – or of regulatory property restrictions, are unjust, and any profits derived from such efforts are corrupted."
"Confronted with an unjust institution, the temptation for a capitalist to act unjustly as well is systematically increased. If he becomes an accomplice in the state’s business of taxing, redistributing and legislating, new profit opportunities open up. Corruption becomes attractive, because it can offer great financial rewards."
"By expending money and other means on political parties, politicians, or other state agents, a capitalist may lobby the state to subsidize his losing enterprise, or to rescue it from insolvency or bankruptcy – and so enrich or save himself at the expense of others. Through lobbying activities and expenses, a capitalist may be granted a legal privilege or monopoly concerning the production, the sale, or the purchase of certain products or services – and so gain monopoly profits at the expense of other money-profit seeking capitalists. Or he may get the state to pass legislation that raises his competitors’ production costs relative to his own – and so grants him a competitive advantage at others’ expense."
"Yet however tempting, all such lobbying activities and resulting profits are unjust. They all involve that a capitalist pays state agents for the expropriation of other, third parties, in the expectation of higher personal profit. The capitalist does not employ his means of production exclusively for the production of goods, to be sold to voluntarily paying consumers. Rather, the capitalist employs a portion of his means for the production of bads: the involuntary expropriation of others. And accordingly, the profit earned from his enterprise, whatever it may be, is no longer a correct measure of the size of his contribution to social welfare. His profits are corrupted and morally tainted. Some third parties would have a just claim against his enterprise and his profit – a claim that may not be enforceable against the state, but that would be a just claim nonetheless."

Note: 


To distinguish between the justice and injustice of the acts of capitalists, it's good to read this transcript, while listening to this audio. By doing this, comprehension and memory retention are higher I think.


Source: The Ethics of Entrepreneurship and Property by Hans-Hermann Hoppe

Saturday, December 13, 2014

The Church and the Market: Summary of Chapter 1

Thomas E Woods Jr. presents his defense of the free market in chapter 1 of his book, The Church and the Market against three objections:

Objection # 1 - The emphasis of Austrian School on efficiency is morally questionable. 

Objection # 2 - The Austrian concept of economic law is incompatible with Catholicism. 

Objection # 3 - The autonomous nature of economics is contrary to Catholicism. 

Before refuting all these objections, Woods introduces first two subjects: the biblical and historical support for the rationality of the economic methodology of the Austrian School and praxeology. 

Concerning historical support for the Austrian methodology, Woods mentions the Church Fathers, Isaac Newton, Ludwig von Mises, Frederic Bastiat, and Carl Menger.

Regarding praxeology, Woods defines it as the "science of human action" (p. 16) where economics falls under this category. Moreover, praxeology is also the central methodology of the Austrian School. From this axiom of human action, Austrian economists "deduce an entire edifice of economic truth" (ibid.), which includes the goal of human action; the use of time, resources, and the human body; the concept of "ordinal ranking of ends" (p. 17); "the concepts of subjective value and the subjective nature of costs" (ibid.); "the law of diminishing marginal utility" (ibid.), and; the law of supply and demand.

The Efficiency Argument

For Woods, the efficiency argument is a baseless objection. This is because both Ludwig von Mises and Murray Rothbard do not see efficiency as central to the economic conception of the Austrian School. For Mises, central to his ideas is the insoluble problem of socialism due to the impossibility of economic calculation without the market price. Consequently, central planners are running blind in managing the socialist economy that will inevitably result to economic waste, poverty, and chaos. 

Furthermore, another essential element in Mises' thought is the desctructive consequence of socialism beyond economic failure into "the social and moral foundations of society" (p. 24). 

In the case of Murray Rothbard, the ethical question is central in his thought. In fact, he actually criticized efficiency as a myth.

The Economic Law Argument

The second objection is about the incompatibility of economic law with the Catholic faith. For Woods, the perceived incompatibility is non-existent for Aquinas himself teaches this concept of economic law. And besides, none of the laws of economics contradict Catholicism. Instead of criticizing the Austrian concept of economic law, Woods suggests that Catholics should learn from this school to have better and "informed economic decisions" (p. 29).

The Autonomy Argument

The third objection has something to do with the autonomy of economics from any academic disciplines particularly from natural science and theology. I find Woods' refutation of the third objection consistent with Catholicism's assumption. However, from the perspective of Classical Protestantism as seen in the writings of Herman Bavinck, Cornelius van Til, and Gary North, we can see several inconsistencies concerning the autonomous character of economics. These inconsistencies are related to the limitation of academic discipline, the descriptive character of economic analysis, the negation of the existence of Christian science of economics, and the relationship of faith and reason. 

For a detailed refutation of all these objections, you can read the following articles:



Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books. 

The Church and the Market: A Value-Free Economics?

This is the 6th and the last section of chapter 1. It's about Economics: A Value-Free Science?

Chapter 1 deals with three types of objections:

Objection # 1 - The emphasis of Austrian School on efficiency is morally questionable. We answer this objection here.

Objection # 2 - The Austrian concept of economic law is incompatible with Catholicism. The response to this objection is found in this article

Objection # 3 - The autonomous nature of economics is contrary to Catholicism. This is the focus of the present article.

The third objection is about the relationship of economics to religion, Christianity, theology, and ethics. At the outset, we can see that the center of contention is between the autonomy of economics as a science and its subordination to religion. 

For Woods, the third objection is an outcome of a misconception about the nature of economics as a science. And so he responds to the objection by explaining first the nature of economics. 

Scarcity and the satisfaction of an end are two basic facts in economics. Its task is to describe these facts not to "prescribe" what our ends should be. However, by saying this, it doesn't mean that ethics is not important. Economics is simply describing the boundary of its subject matter and uses "reason to discover how man's ends can be reached" (ibid.). It accepts its limitation by acknowledging that the determination of end is not part of its task, but the territory of theology and moral philosophy. 

At this point, I notice that Woods is cautious about the danger of "intelletual imperialism" (p. 31) coming from both natural science and theology. He issues a warning:

"Every academic discipline, while making its own contribution to knowledge, is necessarily limited in the amount of truth with which it can enlighten us" (ibid.). 

That is why Woods likes Rothbard's idea that the recognition of this limitation is actually "good for our souls" (ibid.). 

Furthermore, by asserting the autonomy of economics, Woods also acknowledges the fact that economists as humans "should take moral positions" (ibid.) and these positions affect their attitude towards their subject. 

Closely related criticism to economics' autonomy includes the charge of "compartmentalization," which is a common mistake in modernity. Woods denies this charge. Since the task of economics is purely descriptive, he does not see the need for an ethical connection. And then he provides examples of such desciptive technical analyses: "analysis of supply and demand curves," analysis "of the complementarity of capital structure," and "analysis of the economic effects of inflation." 

For Woods, relying on Shawn Ritenour, the axiom of human action, which is the scope of economics does not belong to moral philosophy; it is simply a statement of the fact of human nature. As such the analysis of human action can rightly be perceived as "either correct or incorrect," but not necessarily "moral or immoral" (p. 32).

And so for Woods, there is nothing wrong to keep the autonomy of economics. He agrees with Benjamin Rogge that the Bible, the Papal encyclicals, Christian doctrine, and Christianity have nothing to do whatsoever with pure science like economics. Woods affirms Rogge's conclusion: "There can no more be a Christian science of economics than there can be a Christian science of mathematics" (p. 33). 

We notice here that Woods is emphatic about the disconnection of economics from ethics. However, he is cautious to repeat that this disconnection only concerns economic analysis and not about the use of economic resources. 

To strengthen his case, Woods brought us to the Medieval Period. During that time, the distinction between natural philosophy and theology was maintained. None would dare to import theology into natural philosophy for these two academic disciplines were accepted as separate. The issue of "compartmentalization" was not raised. Again, Woods finds justification for this position in Thomas Aquinas. He concludes that the same principle must be maintained to keep the autonomy of economics from theology. And finally, Woods relates his conclusion to Aquinas' three types of knowledge:

"St. Thomas made a famous distinction between knowledge attainable by reason alone, konwledge attainable by reason and also known by faith, and knowledge attainable only through faith. . . . Economics and its laws belong to the category of knowledge that is attainable by reason alone" (p. 34). 

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In summarizing the last section of chapter 1, I want to raise few points concerning Woods' position on the autonomous character of economics. I acknowledge that since the book is a Catholic defense of the free market, I think Woods' position is consistent as far as the Catholic presupposition is concerned particularly as found in the writings of Thomas Aquinas. 

However, Catholicism does not have the monopoly of the intellectual defense of the free market. From the perspective of Classical Protestantism as seen in the writings of Herman Bavinck, Cornelius van Til, and Gary North, we can see this issue of economics' autonomy from a different point of view.

One particular concern is about the limitation of academic discipline. I encounter this idea of "intellectual imperialism" first in Herman Bavinck's book, The Philosophy of Revelation. The concern of Woods concerning the dominance of natural science was already raised by Bavinck in his Stone Lectures at Princeton Theological Seminary for the academic year of 1908 and 1909. In chapter 4, Revelation and Nature, he affirms that natural science is “perfectly free in its own sphere” (p. 86) and it has to acknowledge its limitations, a principle, which Woods observes has been neglected by natural science for so long (p. 31). 

On the other hand, contrary to the conclusion of Woods, natural science (and I think Bavinck woul also include other sciences including economics) cannot be completely disconnected from theology and ethics. Bavinck warns:

Natural science "shall not form a conception, out of the narrow sphere in which it works, in which no room is left for the soul and immortality, for intelligence and design in the world, for the existence and providence of God, for religion and Christianity” (p. 86). In fact, Bavinck even argues that natural science has been using terms and ideas borrowed from metaphysics "like ‘thing’ and ‘property,’ ‘matter’ and ‘force,’ ‘aether’ and ‘movement,’ ‘space’ and ‘time,’ ’cause’ and ‘design,’ . . . . ” (p. 88). 

Moreover, the science of nature has a duty to “maintain its ethical character, and shall not put itself at the service of the evil inclination of the human heart in its endeavor to explain the world without God and to erect itself into a self-supporting and self-sufficient divinity” (ibid.). 

I think similar principle can be applied to other sciences. Maintaining the ethical character of the sciences is not a violation of their autonomy or a replacement of intellectual imperialism of natural science with another kind, theological imperialism. This is unavoidable on two grounds:

First, the world is either supranatural in its origin or has come from an eternal matter of some kind. Second, if the former is true, the fact of revelation is also inescapable. Christian Theism teaches that both nature and the Bible are parts of divine revelation. The study of economics is part of nature. 

Another concern is related to the descriptive character of economic analysis. It is something that all human can share regardless of religious standing, Christians or not. If this is the meaning of "ethical disconnection," I think the classical Reformed theology will have no quarrel with it. Moreover, Cornelius van Til has a particular concept that I think helpful to this discussion. He distinguished the difference between proximate or immediate matters from ultimate matters. When it comes to proximate matters, these are things that all human share by virtue of common grace. Theological formulation is unavoidable even in these areas of human concern.

My third concern is about the negation of the existence of Christian science of economics. I am not sure if I accurately understood Woods in this regard. If the "Christian science of economics" is similar to "biblical or Christian economics," I am now thinking about the 39 years spent by Gary North in finishing his 31 volume economic commentary on the Bible, which primary thesis is to prove the relationship between the Bible and the free market. Of course, to disprove North, one has to exert a certain amount of time and energy studying his books. As for me, that is a task that is next to impossible for none in our generation would dare do it, not only because it is perceived as a waste of time, but also the fact that the intellectual consensus has decided that the case is already closed. 

My fourth and last concern is about the three types of knowledge. This issue is connected to the relationship between reason and faith. I want to repeat here a portion of my comment on the first article: 

". . . . the author assumes that reason is the same in all human. In this, he fails to take sin into account. Though he admits in the concluding section of the chapter that morality is inescapable due to the fact that economists are still human, but he implicitly denies the impact of sin on human reason. To this blogger, basing on Van Tilian assumptions, sin affects the entirety of man including his reason, and that would mean even his study of economics."

For an overview of the relationship between faith and reason:




Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books. 


Thursday, December 11, 2014

The Church and the Market: Economic Law

After responding to the efficiency argument, Thomas E Woods Jr. mentions another argument that the same person raised. This time it is about the incompatibility of economic law with the Catholic faith. 

Photo Credit
The problem, says Woods, is that Sharpe presumes to know about the Austrian concept of economic law, but in fact, knows nothing at all about it. Though Woods concludes in this way, still he tried to understand what Sharpe meant when he said that "the 'laws' which the Austrians maintained have nothing whatsoever to do with the Natural Law of philosophical realism and the Catholic Faith" (p. 28). If by this, Sharpe meant "that the law of diminishing marginal utility" "has nothing directly to do with the Catholic faith", Woods grants that this is true. However, Woods sees no problem with this for a lot of temporal matters has also no direct connection to Catholicism. And besides, as already mentioned in the previous article, the Austrians' concept of economic law finds justification in the teaching of Aquinas. 

The Austrian concept of economic law and its methodology are not inimical to Catholicism, but to logical positivism. Woods identifies that most critics of praxeology came from this camp. They malign Austrian method as scholastic, old-fashioned, and unscientific. By the last word, they mean the natural science, as if, it is the only valid kind of science, and failure to follow after its footstep is considered unacceptable. 

Woods advances his response by referring to Richard Weaver who considers libertarians as "conservartors of the real world" (p. 29) for praxeology is simply an extension of the recognition about "the existence of natural constraints" (p. 28). If this is the case, it implies that the critics of praxeology are actually promoters of a fantasy world. 

Due to this recognition of natural limitation, heads of the state dislike Austrian economists and view them as "mischief makers" (p. 29). Consequently, the study of real economics was replaced with "'historical economics'" (ibid.). Woods quotes Mises describing the unfortunate state of "economic history" as "a long period of government policies that failed because they were designed with a bold disregard for the laws of economics" (ibid.).

In Bureaucracy, Ludwig von Mises also mentioned this deplorable situation about the expulsion of economic education from mainstream universities (1944, p. 83). The advocates of totalitarianism were only able to advance as far as they were successful in preventing the youth from learning economics and indoctrinating them instead with their tenets (p. 81). 

Returning to Sharpe's criticism, Woods enumerates examples of economic laws: the law of supply and demand, the law of diminishing marginal utility, division of labor and specialization, the connection of demand and supply with the price of goods, and the relationship between the growth of money supply with price increase. None of these laws are contrary to Catholicism. Woods suggests that instead of being critical about something that you don't know, Catholics should learn economic law to come up with better and "informed economic decisions" (p. 29).


Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books. 

Remedy to Social Cancer

What is your idea to cure our society's social cancer?



We first heard this concept of "social cancer" from our national hero. After more than a century, the cancer remains and it's getting worse.

Misdiagnosis is the biggest obstacle among numerous proposals to cure our society's problem. The popular understanding about this idea of social cancer is its association with corrupt politicians. We think that by removing them from office and replacing them with "good" politicians will cure our land; only to be surprised after the honeymoon period that those who would-be reformers will find themselves trapped, and we're back again to the same old situation.

Though I have no in-depth information about the fight against political dynasty and freedom of information bill, at face value, I see them as good, if ever they will pass as laws. In the case of the removal of the pork barrel, I share the anxiety of many that it might re-appear under a different name and in a more subtle form. Do you think that all of these "reforms" will cure our society's problem?

There is no easy fix to Philippine problem. To believe that electing the "right" leader among existing conventional politicians will solve our problem is to believe in false hope. The key is to focus on liberty, and there you will find that you are closer to the truth. This cancer has been with us even earlier than Rizal's time. It would take a long period of unlearning the State's propaganda and learning liberty before we will be able to at least minimize the country's problem. A political utopia based on human effort does not exist. And so it is unrealistic to expect that we can completely uproot the society's cancer.

The medium for change is education, real education, an education that will free your mind from the matrix of political slavery. And then after gaining a basic understanding of liberty, look again into the political process, bureaucratic management, taxation, and existing laws, and see if your outlook has already changed. Without changing the mind of the people, there will be no social change. We are simply expecting too much from our social reformers. This cannot be done. 

After the mind of the public captured the case for liberty, I think that is the proper time to look into our monetary policy. That will take several years, decades perhaps, depending on our degree of enlightenment as a people. Or perhaps, it will take a grand scale economic crisis that will lead us to ask tough questions that will force us in return to look for answers. This is so important for in monetary policy, you will find the source of all our economic ills, not only here in the Philippines, but in global financial system as well. You can begin educating yourself what is this "End the Fed" movement all about that is now happening in the US. 

This article is induced by an Inquirer.net article, "The few who control our country." The writer identifies the concept of social cancer with corrupt politicians. I worry that by solving it either through government action or violent revolution will make that cancer even more dangerous and deadly. As already mentioned, better to see this cancer from the vantage point of liberty. There you will see that the expanding size of the government as the cancer itself through its wealth-destroying political process and increasing number of bureaucrats who suck the public fund. The immediate remedy therefore is to minimize the size of the government by cutting down its expenses through tax reduction. By doing this, we are cutting the source that feeds those cancer cells. 

Wednesday, December 10, 2014

A Synopsis of Augustine's Socio-economic and Political View



Augustine's economic views were scattered throughout The City of God and his other highly influential writings. But he definitely, and presumably independently of Aristotle, arrived at the view that people's payments for goods, the valuation they placed on them, was determined by their own needs rather than by any more objective criterion or by their rank in the order of nature. This was at least the basis of the later Austrian theory of subjective value. He also pointed out that it was the common desire of all men to buy cheap and to sell dear.

Furthermore, Augustine was the first Church Father to have a positive attitude towards the role of the merchant. Rebutting the common patristic charges against the merchants, Augustine pointed out that they perform a beneficial service by transporting goods over great distances and selling them to the consumer. Since, according to Christian principle, 'the labourer is worthy of his hire', then the merchant too deserved compensation for his activities and labour.

To the common charge of endemic deceit and fraud in the mercantile trades, Augustine cogently replied that any such lies and perjuries were the fault not of the trade but of the trader himself. Such sins originated in the iniquity of the person, not in his occupation. After all, Augustine pointed out, shoemakers and farmers are also capable of lies and perjuries, and yet the Church Fathers had not condemned their occupations as being per se evil.

Clearing the merchants of the stain of inherent evil proved enormously influential in the following centuries, and was quoted time and again in the flowering of Christian thought in the twelfth and thirteenth centuries.

A less tangible but still important contribution to social thought was St. Augustine's recasting of the ancient world's view of the human personality. To the Greek philosophers, the individual personality was to be moulded to conform to the needs and desires of the polis. Dictation by the polis necessarily meant a static society, with discouragement directed towards any innovating entrepreneurs trying to break out of the contemporary mould. But St. Augustine's stress was on the individual's personality unfolding itself and therefore progressing over time. Hence Augustine's profound emphasis on the individual at least set the stage indirectly for an attitude favourable to innovation, economic growth and development. That aspect of Augustine's thought, however, was not really stressed by the thirteenth century Christian theologians and philosophers who built on Augustine's thought. It is ironic that the man who set the stage for optimism and a theory of human progress should, on his death-bed, find the barbarian hordes besieging his beloved city of Hippo.

If St Augustine looked benignly on the role of the merchant, he was also favorable, though not as warmly, towards the social role of rulers of state. On the one hand, Augustine took up and expanded Cicero's parable demonstrating that Alexander the Great was simply a pirate writ large, and that the state is nothing but a large-scale and settled robber band. In his famous City of God, Augustine asks:

"And so if justice is left out, what are kingdoms except great robber bands? For what are robber bands except little kingdoms? The band also is a group of men governed by the orders of a leader, bound by a social compact, and its booty is divided according to a law agreed upon. If by repeatedly adding desperate men this plague grows to the point where it holds territory and establishes a fixed seat, seizes cities and subdues people, then it more conspicuously assumes the name of kingdom, and this name is now openly granted to it, not for any subtraction of cupidity, but by addition of impunity. For it was an elegant and true reply that was made to Alexander the Great by a certain pirate whom he had captured. When the king asked him what he was thinking of, that he should molest the sea, he said with defiant independence: 'The same as you when you molest the world! Since I do this with a little ship I am called a pirate. You do it with a great fleet and are called emperor'. 

Yet Augustine ends by approving the role of the state, even though it is a robber band on a large scale. For while he stressed the individual rather than the polis, in pre-Calvinist fashion Augustine emphasized the wickedness and depravity of man. In this fallen, wicked and sinful world, state rule, though unpleasant and coercive, becomes necessary. Hence, Augustine supported the forcible crushing by the Christian Church in North Africa of the Donatist heresy, which indeed believed, in contrast to Augustine, that all kings were necessarily evil.


Note: This excerpt is taken from Murray N. Rothbard's Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought Volume I, 1995, pp. 34-35.

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If someone steals small, he is called a thief and a robber. But if you plunder a nation's wealth or steal the property of others through legal means, you are either called a Congressman or a Senator. You may even receive a Nobel Prize! 

Tuesday, December 9, 2014

The Church and the Market: The Efficiency Argument

The previous article is about praxeology, while the present article covers the next three sections of chapter 1, The Church and the Market: In Defense of Economics. These sections deal with Catholics and Austrian Economics, The Socialist Calculation Problem, and Austria vs. Chicago. The third and fourth sections are actually an elaboration of the efficiency argument started in the second section.

Thomas E. Woods Jr. argues that the Austrian School advocates tenets that are consistent with Catholicism. It emphasizes "a methodology that respects the uniqueness of man as a creature with free will" (p. 19). It also accepts design in nature discoverable through reason. However, it denies "scientism" and the argument that legitimate knowledge can only be obtained through inductive approach. Considering these tenets, Woods thinks that there is nothing in the Austrian School that Catholics would find disagreeable. Therefore, Woods finds it unfortunate to read the works of publishers that claim that the Austrian School teaches economics that is contrary to Catholicism.

Woods picks up John Sharpe as a concrete example of such kind of publishers. In the latter's defense of socialism as consistent to Catholic social teaching, he dismissed the economists of the Austrian school due to their liberal origin and associating "efficiency" with moral perversity. Woods thinks that Sharpe's assessment of the Austrian School has no basis. The man knows nothing, but a superficial knowledge of the Austrian School. As a fellow Catholic, he indirectly advises Sharpe to follow the example of Thomas Aquinas who tried first to understand his critics' arguments before attempting to refute them.

Though Ludwig von Mises charged socialism with inefficiency, this is not the central argument of the Austrian School against socialism. And besides, the quest for efficiency, says Woods is not a mark of moral perversity, but a value. It is simply an expression of faithful stewardship.

For Ludwig von Mises, the insoluble problem of socialism is the impossibility of economic calculation due to the absence of market price. Without the market price, the central planners are running blind in managing the socialist economy that will inevitably result to economic waste, poverty, and chaos. I like to copy here Ludwig von Mises' sharp and ugly description of socialism taken by Woods from Human Action: 

"Socialism cannot be realized because it is beyond human power to establish it as a social system. The choice is between capitalism and chaos. A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that choose between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings. To stress this point is the task of economics as it is the task of biology and chemistry to teach that potassium cyanide is not a nutriment but a deadly poison" (p. 24). 

Mises' critique of socialism, says Woods, goes beyond economic failure; it includes the threat to "the social and moral foundations of society" (p. 24). In Socialism: An Economic and Sociological Analysis, Mises warns that the socialist project does not stop with the abolition of private property; it also aims to alter the relation between genders. As a result, together with the abolition of private property, marriage too will disappear.

After witnessing the inaccuracy of the efficiency argument John Sharpe raised based on the writings of Ludwig von Mises, we now turn to Murray Rothbard. (I intentionally skip the Coase case for I find the explanation difficult to follow). 

Murray Rothbard questioned the concept of efficiency itself in his paper, The Myth of Efficiency. For Woods, the main point of the section, Austria vs. Chicago is that the efficiency question does not characterize the Austrian School, but the Chicago School. Sharpe therefore was mistaken to use it against the Austrians. Woods' perceives that to simply associate Rothbard's view with the efficiency question "is not even close enough . . . . to qualify as a caricature" (p. 27). In fact, for Rothbard, ethics plays a big role in his economic concept. Here's a quote from Rothbard taken by Woods from The Myth of Efficiency:

"I conclude that we cannot decide on public policy, tort law, rights, or liabilities on the basis of efficiencies or minimizing of costs. But if not costs or efficiency, then what? The answer is that only ethical principles can serve as criteria for our decisions. Efficinecy can never serve as the basis for ethics; on the contrary, ethics must be the guide and touchstone for any consideration of efficiency. Ethics is the primary . . . ." (ibid.).

Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books.

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This video confirms Ludwig von Mises' analysis of the destructive consequence of socialism beyond private property



The Church and the Market: Praxeology

This article is the continuation of The Church and the Market: In Defense of Economics. Elaborating the meaning of praxeology is the subject in this article. This is the first section found in the first chapter of the book.



Praxeology is the "science of human action" (p. 16). Economics falls under this category. At the same time, for the Austrian School, praxeology is its central methodology. From the fact of human action, economists in this school employ reason "to deduce an entire edifice of economic truth" (ibid.). 

Though the Austrian economists agree in their central methodology, two of their great leaders, Ludwig von Mises and Murray Rothbard differ in their basic presuppositions. Ludwig von Mises started from a Kantian basis while Murray Rothbard proceeded from an Aristotelian-Thomasian grounds. 

After mentioning the difference in the basic assumptions between Mises and Rothbard, Woods demonstrates several Misesian economic postulates derived from praxeology. By doing this, Woods wants to show how praxeology works in concrete situation. 

Woods presents the goal in human action as the first postulate. The reason why human acts is to achieve an end better than his present situation. It is the satisfaction of this end that motivates man to act. We can find this concept in the writings of both Aquinas and Mises. 

Other components in human action include the use of time, resources, and the human body. When man acts , he employs these components. Inherent in such an action is choice, and this in return implies a cost. By this, Woods means that in deciding for one thing, other alternatives are left out. To do this, it requires an "ordinal ranking of ends" (p. 17) depending on the value that one places on these ends. At this point, "the concepts of subjective value and the subjective nature of costs" (ibid.) enter into the scene.

A related concept is implied in the above explanation. This time, it is "the law of diminishing marginal utility" (ibid.). In simple terms, this means that any good that you have more supply, the lesser you need it. 

The foregoing consideration leads to another postulate, the law of supply and demand. Since the law of diminishing marginal utility has something to do with the person's decreasing demand of a particular good as its supply increases, it follows that anyone will only be willing to increase the quantity of the same good provided that its price declines. Similar principle can be applied to labor and employment. Due to the influence of interventionism in imposing higher salary without considering the increased demand for labor, this action will logically results to fewer jobs. 

In concluding this section on praxeology, Woods mentions Mises' concept about the two branches of the sciences of human action: praxeology and history. For Mises, the theory derived from praxeology is necessary to interpret history. This is because the concepts derived from praxeology are not taken from experience itself, but through logical deduction. With this principle, praxeology negates logical positivism. 

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Personal Comment:

I decided to suspend my assessment concerning the source of presupposition of both Ludwig von Mises and Murray Rothbard. I need to review first the Van Tilian presupposition before I will attempt to give my own assessment. 


Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books. 



Related Links:



Monday, December 8, 2014

The Church and the Market: In Defense of Economics

Chapter 1, In Defense of Economics in Thomas E Woods Jr.'s The Church and the Market has six sections: praxeology, Catholics and Austrian economics, the socialist calculation problem, Austria vs. Chicago, economic law, and economics: a value-free science.

In introducing this chapter, Woods highlights the rationality of the economic methodology of the Austrian School. He narrates that such an approach has both biblical and historical basis. The Bible and the Church Fathers attest to the beauty of God's design manifested in nature. There is regularity, order, lawfulness, and purpose. Such design is accessible through the employment of human reason. 

Not only the Bible, but great historical figures confirm Wood's thesis. He claims that both Isaac Newton and Ludwig von Mises share this concept of design. In the case of Isaac Newton, he saw similar operation both in the physical world and the society. Mises found the same order in economics and was happy to see that human actions can be studied not only from ethical perspective, but also from economic point of view.

Another historical evidence is the systematization of economic activity accomplished in the 18th and 19th centuries. The intellectuals during this period observed organic harmonies in human action. Woods refers to Mises to prove this point:
"As Mises points out, many of these thinkers found the hand of divine providence in the beautiful order and harmony created by the free market and the division of labor - a supplement to the order in the physical realm that St. Paul and Catholic theology as a whole had always pointed to as evidence of God's existence and goodness" (p. 140). 
Another authority in economics is the 19th century classical liberal, Frederic Bastiat. Here I want to copy the full quote from Bastiat taken by Woods from Economic Harmonies:
"For if there are general laws that act independently of written laws, and whose action needs merely to be regularized by the latter, we must study these general laws; they can be the object of scientific investigation, and therefore there is such a thing as the science of political economy. If, on the contrary, society is a human invention, if men are only inert matter to which a great genius, as Rousseau says, must impart feeling and will, movement and life, then there is no such science as political economy: there is only an indefinite number of possible and contingent arrangements, and the fate of nations depends on the founding father to whom chance has entrusted their destiny" (pp. 14-15).
After showing the biblical and historical precedents of the methodology of the Austrian School, Woods mentions the antagonism between the Austrian School and the German Historical School. And then he emphasizes again the importance of Austrian methodology based on the testimonies of both Carl Menger and Ludwig von Mises.

Carl Menger, contrary to the German Historical School, advocated the existence of economic law. He thinks this law is "universal and accessible to human reason" (p. 15). 

Returning to Mises, Woods emphasizes the distinction between the natural science and the social science, the so-called "hard" and "soft" sciences. In physics, it is just normal to use equation, chart, and graph for the objects of study are inanimate. This cannot be done in economics for the objects of study are human beings. The constant you find in physics is inapplicable in the study of human action. Based on this distinction, Woods asserts that for Mises, "the predictive power of economics was comparative rather than absolute" (ibid.). 

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I am happy to read that Woods starts his defense of economics with teleology. Reformed theology confirms such concept. However, the author assumes that reason is the same in all human. In this, he fails to take sin into account. Though he admits in the concluding section of the chapter that morality is inescapable due to the fact that economists are still human, but he implicitly denies the impact of sin on human reason. To this blogger, basing on Van Tilian assumptions, sin affects the entirety of man including his reason, and that would mean even his study of economics. And that is why I find this portion of Bastiat quote in pages 14 and 15 interesting:
"For if there are general laws that act independently of written laws, and whose action needs merely to be regularized by the latter, we must study these general laws. . . ."
Woods has a different goal in mind when he quoted Bastiat. I think he wants to emphasize the existence of economic law discoverable by human reason. As for me, I see another way to take a look at that quote. I think Bastiat's concept of the written laws regulating the general laws opens a different interpretation. If he was referring to the laws found in the Bible as the "written laws," then that would mean that even the study of the law of nature, which includes economic law, is not outside the regulation of biblical law. 

Besides that idea about the biblical law regulating economic law, this quote shows mankind two options as far as the study of economics is concerned. The first choice is to study the science of political economy that acts independently, but regularized by written laws. The second option is to depend on the wills of "great men." 


Source: Woods, T. E. Jr. (2005). The Church and the Market: A Catholic Defense of the Free Economy. Lanham/Boulder/New York/Toronto/Oxford: Lexington Books. 

Friday, December 5, 2014

Christianity and Liberalism

John Gresham Machen's "Christianity and Liberalism," I remember browsing this book when I was in the seminary, but I never realized the significance of its message not until now. Though the case presented in the book was considered close, I want to revisit it to remind myself of my theological roots. 



In revisiting it with my basic knowledge of classical liberalism, I sense in Gresham Machen the spirit of a libertarian. Simply reading the 1st chapter, I encounter a long material to prove this. At least 6 pages were spent to expose the danger of tyranny posed by socialism and statism. Machen's message remains relevant. 

Machen combats liberalism in his book. Not a few theologians and pastors I know are capable to distinguish between these two kinds of liberalism, the classical and the American brand. Classical liberalism upholds sound money, private property, free market and personal freedom. American liberalism holds the exact opposite of these. It is related to all the plagues that afflict contemporary society: progressivism, socialism, protectionism, statism and interventionism. It is not unfair to say that it is the mother of fiat currency, progressive taxation, welfarism, the abolition of private property, the conversion of free market into cronyism, corporatism or state capitalism. Its final destiny is tyranny.



So much for the rant. It is time for me now to share what Gresham Machen has to say about personal liberty, welfare, education, classical liberalism, and the need to distinguish historic Christianity from liberal Christianity. Here is an excerpt taken from the Introduction that demonstrates the libertarian spirit of John Gresham Machen: 

On Personal Liberty and Welfare

"The whole development of modern society has tended mightily toward the limitation of the realm of freedom for the individual man. The tendency is most clearly seen in socialism; a socialistic state would mean the reduction to a minimum of the sphere of individual choice. Labor and recreation, under a socialistic government, would both be prescribed, and individual liberty would be gone. But the same tendency exhibits itself today even in those communities where the name of socialism is most abhorred. When once the majority has determined that a certain regime is beneficial, that regime without further hesitation is forced ruthlessly upon the individual man. It never seems to occur to modern legislatures that although “welfare” is good, forced welfare may be bad. In other words, utilitarianism is being carried out to its logical conclusions; in the interests of physical well-being the great principles of liberty are being thrown ruthlessly to the winds." (pp. 9-10)
About Education

"The result is an unparalleled impoverishment of human life. Personality can only be developed in the realm of individual choice. And that realm, in the modern state, is being slowly but steadily contracted. The tendency is making itself felt especially in the sphere of education. The object of education, it is now assumed, is the production of the greatest happiness for the greatest number. But the greatest happiness for the greatest number, it is assumed further, can be defined only by the will of the majority. Idiosyncrasies in education, therefore, it is said, must be avoided, and the choice of schools must be taken away from the individual parent and placed in the hands of the state. The state then exercises its authority through the instruments that are ready to hand, and at once, therefore, the child is placed under the control of psychological experts, . . . ." 
"Christian schools and private schools, at least in the all-important lower grades, are thus wiped out of existence. Such laws, which if the present temper of the people prevails will probably soon be extended far beyond the bounds of one state, . . . . I mean of course the ultimate destruction of all real education. When one considers what the public schools of America in many places already are − their materialism, their discouragement of any sustained intellectual effort, their encouragement of the dangerous pseudo-scientific fads of experimental psychology − one can only be appalled by the thought of a commonwealth in which there is no escape from such a soul-killing system. But the principle of such laws and their ultimate tendency are far worse than the immediate results. A public-school system, in itself, is indeed of enormous benefit to the race. But it is of benefit only if it is kept healthy at every moment by the absolutely free possibility of the competition of private schools. A public school system, if it means the providing of free education for those who desire it, is a noteworthy and beneficent achievement of modern times; but when once it becomes monopolistic it is the most perfect instrument of tyranny which has yet been devised. Freedom of thought in the middle ages was combated by the Inquisition, but the modern method is far more effective. Place the lives of children in their formative years, despite the convictions of their parents, under the intimate control of experts appointed by the state, force them then to attend schools where the higher aspirations of humanity are crushed out, and where the mind is filled with the materialism of the day, and it is difficult to see how even the remnants of liberty can subsist. Such a tyranny, supported as it is by a perverse technique used as the instrument in destroying human souls, is certainly far more dangerous than the crude tyrannies of the past, which despite their weapons of fire and sword permitted thought at least to be free." (pp.10-13)

On Gresham Machen's Prayer for the Rediscovery of Classical Liberalism

"God grant that there may come a reaction, and that the great principles of Anglo-Saxon liberty may be rediscovered before it is too late!" (p. 13)

About the Need to Distinguish Historic Christianity from Liberal Christianity

". . . . the Christian religion which is meant is certainly not the religion of the modern liberal Church, but a message of divine grace, almost forgotten now, as it was in the middle ages, but destined to burst forth once more in God's good time, in a new Reformation, and bring light and freedom to mankind. What that message is can be made clear, as is the case with all definition, only by way of exclusion, by way of contrast." (p. 14)

Source: Machen, G. J. 1923. Christianity and Liberalism.

Monday, December 1, 2014

Legal Plunder and Its Numerous Names

Legal plunder is the use of the law to take the property of others and give it to another. Legal plunder is the political climate of the day. This is done in the name of egalitarian justice. Progressive taxation is its favorite strategy. Special interest groups are happy with such a system for they take advantage of taxes at the expense of other classes. For Frederic Bastiat, this system of legal plunder "is not merely an iniquity it is a fertile source of iniquities", and if it is not abolished, it "will extend, multiply, and become systematic" (The Law, p. 14). 

Legal plunder has been going on for so long. Bastiat saw it done in France in 1850. His message remains relevant in the 21st century. Bastiat identifies the numerous names of legal plunder: 
". . . . tariffs, protection, perquisites, gratuities, encouragements, progressive taxation, free public education, right to work, right to profit, right to wages, right to assistance, right to instruments of labor, gratuity of credit, etc., etc."

Taking all these these names as a whole and you will see that it is socialism that is at work. The essence of socialism is legal plunder.