Freedom works.

Via The great liquidity crisis – 94 years ago, Niall Ferguson provides an instructive review of Lords of Finance: 1929, The Great Depression, and the Bankers who Broke the World:

By the summer of 1931, however, it was dawning even on Norman that the world economy was falling off a cliff. With massive bank failures on both sides of the Atlantic, it became clear that the Lords of Finance had bungled things. “Unless drastic measures are taken to save it,” he wrote to Moreau’s successor at the Banque de France, “the capitalist system throughout the civilised world will be wrecked within a year.” (With a characteristic flourish, he went on: “I should like this prediction to be filed for future reference.”)

Such apocalyptic fears were not new. As early as November 1918 Strong had warned Norman of a coming “period of economic barbarism which will menace our prosperity”. The irony was that their favoured prophylactics had, in combination, made the apocalypse more likely. By 1931 the capitalist system was on its knees, and democracy with it. Schacht was soon flirting with the rising star of the German right, Adolf Hitler; he later served as his economics minister.

I would be delighted to be wrong, but it seems to me that the Lords of Finance have bungled things spectacularly once again. When it comes to the management of the currency, I am ever more inclined to agree with Richard Cobden:

I hold all idea of regulating the currency to be an absurdity; the very terms of regulating the currency and managing the currency I look upon to be an absurdity; the currency should regulate itself; it must be regulated by the trade and commerce of the world; I would neither allow the Bank of England nor any private banks to have what is called the management of the currency…

I should never contemplate any remedial measure, which left to the discretion of individuals to regulate the amount of currency by any principle or standard whatever… I should be sorry to trust the Bank of England again, having violated their principle [the Palmer rule]; for I never trust the same parties twice on an affair of such magnitude

I too should be sorry to trust the Bank of England again, particularly as they seem to have catastrophically misled entrepreneurs into making investment decisions which were justified only by artificially low interest rates. Central bankers’ actions have had calamitous results. The sooner money escapes their grasp, the better.

Brought forward. I just had cause to share this with a constituent in relation to the Kafkaesque nightmare they face.

David Cameron has said that the era of big government has run its course. The foreword to our manifesto sets out the rotten state of Britain (see also Butler) and the change we offer: from big government to big society.

What then is the history of big government? How did it come about? Has it run its course? Why has big government failed? All this prompted me to read again, but carefully this time, Martin Van Creveld’s The Rise and Decline of the State.

Van Creveld argues that government and state are emphatically not the same. He explains that the government “is a person or group which makes peace, wages war, enacts laws, exercises justice, raises revenue, determines the currency and looks after internal security on behalf of society as a whole, all the while attempting to provide a focus for people’s loyalty and, perhaps, a modicum of welfare as well”. On the other hand, he writes, the state is merely one form of government which may be considered neither eternal nor self evident.

The book’s range is astonishing. Van Creveld begins with prehistoric forms of society before charting the rise of the state, the state as an instrument, the state as an ideal, the spread of the state and, more recently, the decline of the state. Tribes without rulers, chiefdoms, city-states and empires all reached their limits. The monarchs triumphed against church, empire, nobility and towns. Bureaucracies were created which provided infrastructure, monopolised violence and, in short, delivered Leviathan. The state was idealised and used to discipline the people. Money was conquered and total war discovered. The state spread across the world. Major war waned, partly due to the impossibility of total war in the nuclear age. State welfare went into retreat. Technology spread internationally. Finally, the people withdrew their faith in the state.
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Well, here’s food for thought: When Money Dies: The Nightmare of the Weimar Hyper-Inflation.

I think it is clear that we are not yet in that territory, but this chart is worth bearing in mind:

More anon…

N.B. The author is Tim Hewish - my Parliamentary Researcher.

As a Historian, I welcome the Education Secretary’s announcement at conference today that History, as a discipline, will be at the core of the curriculum. For too long, Labour had been allowed to reduce the significance of our history, preferring to re-write it or worse simply ignoring it.

That is why I fear for the current crop of young people who have been taught under New Labour. To have a world without historical insight makes for a short-sighted people; since they will often view the world in the here and now, as opposed to critically exploring why certain events in the world are why they are.

A spot check approach to history has led to a misinformed nation. From the Israeli-Palestinian conflict to ideas on Capitalism and Communism, this generation often takes what they hear from one unverified source and apply this as truth. The rigor of History as a discipline needs to brought back and I am glad Mr. Gove is signalling in the right direction:

One of the under-appreciated tragedies of our time has been the sundering of our society from its past.
 
Children are growing up ignorant of one of the most inspiring stories I know – the history of our United Kingdom.

Our history has moments of pride, and shame, but unless we fully understand the struggles of the past we will not properly value the liberties of the present.

He is also correct in identifying that the current approach we have to history denies children the opportunity to hear Britain’s narrative in a connected way. One only comes to understand history when context is provided, as the world’s events do not occur in isolation.

History is a constantly lived experience; each and every one of us has the opportunity to leave their mark upon history. It doesn’t just occur on the world’s greatest battlefields or from the pens of key treaties. Children need to grasp the fact that something as simple as their own family tree can have a complex and historical significance, which has its own personal story to tell.

As Conservatives, we cannot just merely reclaim education as our own, we have to transform it and that means capturing pupil’s minds. Not through indoctrination like the previous socialist Government, but by opening up the vast and often untapped resource that is our national history.

This past weekend, we visited the American Museum in Britain. It was thought-provoking: America was of course conceived in liberty but American history, like every nation’s, is filled with examples of man’s inhumanity to man.

The exhibition began with a wall of quotations from significant figures. These particularly stood out:

William Penn (1644-1718):

Those people who will not be governed by God will be ruled by tyrants.

Albert Einstein¹:

Never do anything against conscience even if the state demands it.

Apache Chief Geronimo (1829-1909):

Once I moved about like the wind. Now I surrender to you and that is all.

Thus, beside the lives of pioneers, the museum introduced the history of native Americans and of African-American slaves, terrible experiences which no person should ever know. I was reminded of Karl Popper’s lines in The Open Society and its Enemies:

There is no history of mankind, there is only an indefinite number of histories of all kinds of aspects of human life. And one of these is the history of political power. This is elevated into the history of the world. But this, I hold, is an offence against every decent conception of mankind. It is hardly better than to treat the history of embezzlement or of robbery or of poisoning as the history of mankind. For the history of power politics is nothing but the history of international crime and mass murder (including it is true, some of the attempts to suppress them). This history is taught in schools, and some of the greatest criminals are extolled as heroes.

Coincidentally, I am just finishing John O’Farrell’s An Utterly Impartial History of Britain: (or 2000 Years of Upper Class Idiots in Charge). Perhaps spotting the gathering dust on my scholarly history books, Beth gave me this book as a starting point. It is at least an entertaining read, but the author’s endless cynicism, though supported by events, combined with his wearisome ignorance of sound economics, produces a tiresome read. Compare O’Farrell’s history with that of, say, This Little Britain: How One Small Country Changed the Modern World or The Welfare State We’re in and we quickly find that history, as the record of acting people, deserves to be understood through sound theories of human action.

Enter one of my preferred writers — Ludwig von Mises — with Theory and History (online). From the back cover:

Theory and History deals with the theory of economics, i.e., the study of purposive human action, and with history, the record of the past actions of individuals. All actions are determined by ideas. Thoughts and ideas are “real things,” Mises writes. “Although intangible and immaterial, they are factors in bringing about changes in the realm of tangible and material things.” Rather than rejecting the study of historical change as a “useless pastime,” Mises considers it of the utmost practical importance. “History looks backward into the past, but the lesson it teaches concerns things to come.” History opens the mind to an understanding of human nature, increases wisdom, and distinguishes civilized man from the barbarian. Moreover, historical knowledge is of the utmost importance in helping to anticipate and plan for the future.

A major part of this book is a critique of Karl Marx and his fallacious view of theory and history. Marx attributes the creation of tools and machines, as well as the economic structure of society, to undefined “material productive forces”; Mises rejects this materialistic view and points out that tools and machines are actually created by individuals acting on the basis of non-materialistic ideas. Marx predicts that society is moving towards socialism “with the inexorability of a law of nature.” Mises responds: “The outstanding fact about history is that it is a succession of events that nobody anticipated before they ocurred.”

The book is a tour de force of the ideas that have shaped human history and their refutations. In particular, bearing in mind O’Farrell’s sneering treatment of the free market:

The history of the nineteenth and twentieth centuries has discredited the hopes and the prognostications of the philosophers of the Enlightenment. The peoples did not proceed on the road toward freedom, constitutional government, civil rights, free trade, peace, and good will among nations. Instead the trend is toward totalitarianism, toward socialism. And once more there are people who assert that this trend is the ultimate phase of history and that it will never give way to another trend.

And, closing the book, on attempts at predicting the future:

The fallacy inherent in predicting the course of history is that the prophets assume no ideas will ever possess the minds of men but those they themselves already know of. Hegel, Comte, and Marx, to name only the most popular of these soothsayers, never doubted their own omniscience. Each was fully convinced that he was the man whom the mysterious powers providently directing all human affairs had elected to consummate the evolution of historical change. Henceforth nothing of importance could ever happen. There was no longer any need for people to think. Only one task was left to coming generations-to arrange all things according to the precepts devised by the messenger of Providence. In this regard there was no difference between Mohammed and Marx, between the inquisitors and Auguste Comte.

Up to now in the West none of the apostles of stabilization and petrification has succeeded in wiping out the individual’s innate disposition to think and to apply to all problems the yardstick of reason. This alone, and no more, history and philosophy can assert in dealing with doctrines that claim to know exactly what the future has in store for mankind.

Museums and historians must remind us of the wrongs of the past, and do so through the histories of many aspects of human life, even political power. Let us be guided by them to a better and more open future in which people can be free of all kinds of oppression.

Above all, let us use our reason to reflect on our present circumstances and conclude with Karl Popper that,

even our greatest troubles spring from something that is as admirable and sound as it is dangerous — from our impatience to better the lot of our fellows.

The idea whose time has come, the idea which can carry us forward — from difficulties created by people who wished to better the lot of their fellows, by people who wish to better the lot of future generations — is liberty under the rule of law.

1. Also, “If one purges the Judaism of the Prophets and Christianity as Jesus Christ taught it of all subsequent additions, especially those of the priests, one is left with a teaching which is capable of curing all the social ills of humanity. It is the duty of every man of good will to strive steadfastly in his own little world to make this teaching of pure humanity a living force, so far as he can. If he makes an honest attempt in this direction without being crushed and trampled under foot by his contemporaries, he may consider himself and the community to which he belongs lucky.” [↩]