Via Learn Liberty, the price system + profit and loss

Part I, the price system:

Part II, profit and loss:


See also, Kirzner, How Markets Work: Disequilibrium, Entrepreneurship and Discovery (PDF), which is a wonderful rebellion against the over-simplification of neo-classical economics. For example:

Austrian theory, as presented here, places great weight on ‘entrepreneurial discovery’ which enables decentralised decision-makers to recognise when present decisions can be improved upon, and to anticipate future changes in the decisions being made by others. Movements in prices, production methods, choices of outputs, and resource owner incomes generated by entrepreneurial discovery tend to reveal where current allocation patterns are faulty, and to stimulate changes in the corrective direction.

In other words, don’t tinker with the complex, dynamic, creative process that is life in society: it’s not helpful. And if contemporary mainstream theorists had understood the application of this idea to interest rates, we might not be in this mess.

Via LearnLiberty.org: Liberty and Community

Via LearnLiberty.org, another superb video, this time on liberty and community, which reinforces Mises’ argument that “Society is cooperation; it is community in action”:

LearnLiberty.org – Learn about the ideas of a free society

Via LearnLiberty.org, a great project from the Institute for Humane Studies, Dr Nigel Ashford explains classical liberalism, the doctrine of freedom:

The ten principles from the video are:

  1. Liberty as the primary political value
  2. Individualism
  3. Skepticism about power
  4. Rule of Law
  5. Civil Society
  6. Spontaneous Order
  7. Free Markets
  8. Toleration
  9. Peace
  10. Limited Government

Dr Ashford’s short book Principles for a Free Society is highly recommended too.

Remember, remember, the 5th of November

Occupy London 6 by Nathan Meijer (click for source)

As CNN reports, the V for Vendetta-style Guy Fawkes mask has inspired Occupy protesters around the world. CNN points out:

Ironically Fawkes, far from being the anti-establishment hero he has come to be seen as in the years since his death, was a monarchist who merely wanted to replace the Anglican king with a Catholic queen.

A transcript of his trial with co-conspirators is available here. It’s hard reading for one not accustomed to 17th century English but, in relation to the matter of the conspiracy:

As concerning the second, which is the Matter conspired; it was,

First, To deprive the King of his Crown.
Secondly, To murder the King, the Queen, and the Prince.
Thirdly, To stir Rebellion and Sedition in the Kingdom.
Fourthly, To bring a miserable Destruction amongst the Subjects.
Fifthly, To change, alter, and subvert the Religion here established.
Sixthly, To ruinate the State of the Commonwealth, and to bring in Strangers to invade it.

It’s all far from an answer to the contemporary corporatism which oppresses and impoverishes the majority of us and yet Fawkes inspires those who protest the obvious failures in our present system. Having visited the protest, I believe most protesters are peaceful.  I shouldn’t think they are volunteering for the punishment decreed for Fawkes and his conspirators: it included, amongst other things, having their genitals cut off and burnt before them.

The protesters’ use of Fawkes masks is surely far less to do with Fawkes himself and far more to do with the fantasy of revolution against state tyranny that is V for Vendetta.  The film, like the protestors, errs in eulogising Fawkes, a traitor and terrorist, but it is not without wisdom.

In particular, in his broadcast speech, V says of the dystopian state of Britain:

How did this happen? Who is to blame? Well certainly there are those who are more responsible than others, and they will be held accountable, but again, truth be told, if you are looking for the guilty, you need only look into a mirror.

And so we should. Each of us, over several generations and with the best of intentions, has voted for parties which offered doctrines of state power, not freedom.

If the banks and other large corporations oppress us and manufacture injustice (and they do), it is because they enjoy privileges granted by the state, privileges which – like deposit insurance and bank bailouts – were meant to protect us. Corporations do not have coercive power: states are territorial monopolies on the use of force. The privileges granted to corporations and the consequent injustices are the tragic result of attempts by democracies to provide what people want: security and prosperity.

In the mid-nineteenth century, Alexis de Tocqueville set out the kind of despotism democratic nations have to fear:

Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?

And so the Government worries about wellbeing in a thoroughly technocratic way and brings you Mindspace: Influencing behaviour through public policy. The state today spends over half of GDP: can anyone seriously believe that this is limited government and a free society? Communist China spends less: 2010 GDP was $5.93 trillion and state spending $1.33 trillion – 22% of GDP .

In The Road to Serfdom, Hayek explained that technocratic government would crush Parliamentary democracy, just as it has done, and lead to tyranny through its own failure. In Capitalism, Socialism and Democracy, Schumpeter made the case that the success of capitalism, in the context of democracy, would lead to corporatism and the fostering of values hostile to entrepreneurship. Capitalism would be replaced by some form of socialism through a tendency, which we have seen, of electorates to return parties of social democracy. Schumpeter believed the intellectual trends of society would destroy the capitalist structure.

And so it has come to pass. In Living with Leviathan, David B Smith writes (as I have blogged before):

New Labour’s so-called ‘third way’, and the prevalent economic paradigm in much of ‘Old Europe’, appears to correspond to none of these categories [free market, socialist and 'Butskellite' mixed]. Instead, it appears to be a system under which the private sector maintains a nominal legal control over its capital and labour, but the returns on these factors of production are so heavily influenced by tax and regulation that the public sector ends up effectively controlling such returns. This sham form of mixed economy, which needs to be distinguished from the British mixed economy of the 1950s, has traditionally been associated with fascist regimes – for example, the gelenkte Wirtschaft (supple or ‘joined-up’ economy) that Goering implemented in Nazi Germany in 1936.

The awful truth for many who protest our present social system, calling for greater democratic control over more extensive state power in the general interest, is that we already live in the system which is the inevitable, predictable consequence of their demands. It is that statist system which is manufacturing injustice, eroding freedom and impoverishing us today.

In the film, V says,

People should not be afraid of their governments. Governments should be afraid of their people.

Indeed, and when people demand liberty over licentiousness and security, their freedom from state power and the dignity to determine their own destiny within a fixed moral framework, no doubt politicians will arise who will give it to them.

I look forward to the day.

Further reading

Protection of Freedoms Bill at Report Stage today

As you can see via the Order of Business for Monday 10 October 2011, today and tomorrow will see the Protection of Freedoms Bill in Report Stage in the Commons. I served on the Bill committee which examined the Bill clause-by-clause. You can find the record here.

I found the Bill to be “radical only in its moderation and extreme only in its conservatism”. I was particularly struck by how hard it is to protect freedoms in an atmosphere of fear and utilitarianism over courage and principle.  The result is a very modest Bill whose crowning achievement is the prohibition of a mechanism for the protection of property rights (wheel clamping) coupled with the use of government data for private enforcement…

Still, I look forward to the debate later.

Pro-bike, anti-EU. What’s not to like?

Via Action Now! EU Hands Off Biking:

There’s a raft of issues emanating from Europe that will have a profound effect on riders and the motorcycle industry generally and we must stand up. Some of them are driven by the EU Commission, like the new Type Approval and Market Surveillance Regulation that will see the introduction of compulsory ABS, the sealing of powertrains from airbox to the diameter and aspect ratio of the rear tyre, restrictions on the aftermarket industry, possible roadside checks by police or other Gov agencies to inspect emissions or for owner ‘tuning’ and more.

Reminds me of C S Lewis:

Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.

It’s time for a short ride.

The last word of wisdom?

No man deserves his freedom or his life
Who does not daily win them anew.

From Goethe’s Faust, quoted in Mises’ Liberalism – The Classical Tradition as “the last word of wisdom”. It appears in the discussion of anti-liberalism’s roots in resentment and neurosis.

The riots in England

Over the past few days, many constituents have written to me expressing anger and dismay about the riots, policing and justice. I share this anger and dismay.  As I said in my article on Wednesday, we must establish that the state’s duty is to protect the law-abiding and their property first and foremost and that the police do not require the consent of rioters before acting with reasonable force.

The Prime Minister has said that we will do whatever it takes to restore law and order and to rebuild our communities. His statement yesterday may be found here.

As the Prime Minister has said, too few police were deployed and their tactics did not work. They faced widespread, simultaneous looting, not concentrated public disorder.

More police have now been put on the streets, more people have been arrested and more criminals are being prosecuted.  No phoney concerns will get in the way of publicising the faces of those wanted for crimes.  The police are already authorised to use baton rounds (“rubber bullets”) and there are contingency plans in place to make water cannon available at 24 hours notice.  The Government will give the police the power to remove face coverings under any circumstances where there is reasonable suspicion that they are related to criminal activity.

The Prime Minister also announced measures to support victims and to tackle the culture of criminality which has grown up in our country. There is a difference between right and wrong: a culture which glorifies violence, disrespect and irresponsibility is unacceptable. The Government is setting out to do those things which will change our broken society.

I was glad that the Prime Minister yesterday reasserted the old principle that the public are the police and the police are the public. Given that people are entitled under law to use reasonable force in defence of their lives, their property and their communities, it is important that the public are given appropriate guidance. I will be writing to the Home Secretary seeking that guidance.

Similarly, the police should be guided by the principle of reasonable force. Occasionally, an individual police officer has used excessive force in a difficult atmosphere but, over the past few days, the police have not used that force which it appears the majority of the population would have endorsed. I personally do not approve of ‘kettling’ peaceful demonstrators. We have to recognise that the police are in an extremely difficult position in this area. However, Parliament and the Government must ensure that the police are able to use that force which is reasonable in the circumstances, even if that includes the use of baton rounds, water cannons, tear gas or other tactics which may cause serious injury or even death.

We now face the problem of inadequate sentencing. I will be writing to the Justice Secretary on that subject.

All in all, I believe we now see clearly the legacy of a century of misguided statism and surrender of basic human values. The police have not drawn the correct distinction between policing legitimate demonstrations and intervening in criminal riots: unreasonable force has sometimes been used where none was appropriate and reasonable force has not been used where it was required. That must be resolved.

How so many people have come to be so reckless, irresponsible, immoral and downright criminal will be a subject for discussion over many years. I am reminded of the warnings issued by C S Lewis in The Abolition of Man and by Alexis de Tocqueville, who wrote in the 19th century of the dangers of the nanny state:

Subjection in minor affairs breaks out every day and is felt by the whole community indiscriminately. It does not drive men to resistance, but it crosses them at every turn, till they are led to surrender the exercise of their own will. Thus their spirit is gradually broken and their character enervated [...]. It is in vain to summon a people who have been rendered so dependent on the central power to choose from time to time the representatives of that power; this rare and brief exercise of their free choice, however important it may be, will not prevent them from gradually losing the faculties of thinking, feeling, and acting for themselves, and thus gradually falling below the level of humanity.

It is my view that many in our society have sunk to the present level because, for generations, we have progressively surrendered ourselves to the embrace of the state. It is past time that we rediscovered the classical English values of liberty under the law, which means responsibility. That would include building a straightforward system of justice based, not on the state’s attempt to shape the individual’s character, but on the protection of life, liberty and property.

However, on the positive side, I have been deeply heartened by the way communities have come together to defend themselves and to clear up the mess created by those who have betrayed their fellow man. Moreover, the young people I meet in Wycombe schools and during their work experience unfailingly lift my spirits with their sincerity, good intent and earnestness. Our young people are, on the whole, a cause not for despair but for hope.

The disgraceful events of the past days contain many lessons for us all. We should now strive to build a better society based on personal and social responsibility and those values which have sustained every civilisation, foremost of which is this: do as you would have others do unto you.

How to Advance Liberty – Leonard Read – Mises Daily

From a transcript of a lecture given in 1965 by the founder of the Foundation for Economic EducationHow to Advance Liberty – Leonard Read .

There would be no need to work for liberty were liberties not being lost. Most Americans are unaware of a decline in individual liberty, and the reason is obvious: the decline rarely takes the form of sudden personal deprivations but, instead, takes the form of unnoticed erosion, and thus we come, as do the Russians, to regard whatever state we are in as a normal condition.

No one can possibly be expected to give a top priority to the advancement of liberty unless he is keenly aware that liberty is important, and that it is in jeopardy. Each individual must make his own assessment but here is my appraisal of how precarious our situation is: While the returns of our own socialistic revolution — devolution is a more accurate word — toward political omnipotence are incomplete and the full extent of the blight far from evident, the devolution itself is a fait accompli, water over the dam. It is no longer an event of the future to be feared; it is a catastrophe of the past to be remedied — and remembered.

In short, the devolution was; that is, the socialistic objective has been achieved. Few people seem to appreciate the terrible fact that, already, we are subject to a centralized government of unlimited power. There now hangs over our economy a political apparatus with the authority to exercise control over the life and livelihood of every citizen; it can confiscate every dollar of our income. The principle of statism is accepted national policy; short of a successful intellectual and moral counterrevolution, all that remains is to await the filling in of the authoritarian details and to suffer the consequences.

The author goes on to develop a quite surprising approach to advancing liberty and I recommend reading the article in full.

ConservativeHome’s Platform: Steve Baker MP: Egypt teeters, exposing lessons for the UK

On ConservativeHome’s Platform: Steve Baker MP: Egypt teeters, exposing lessons for the UK:

Under the auspices of the Iman Foundation, Syed Kamall MEP and I travelled this week to Cairo to promote pluralism and the principles of a free society. We delivered two successful seminars on democracy, freedom and tolerance – one for senior political and academic figures and one for young activists – in addition to meeting members of Egypt’s political class. These seminars followed Syed’s previous work in Cote d’Ivoire based on Principles for a Free Society, a short book written by British academic Dr Nigel Ashford.

You can read the rest of the article on ConservativeHome but I would particularly recommend Ashford’s book.

At only 96 pages, the book (PDF) is fabulously concise and insightful. Those who think freedom is opposed to society ought to note that the first chapter is “Civil Society” and it begins by quoting Alexis de Tocqueville:

Among the laws that rule human societies there is one which seems to be more precise and clear than all others. If men are to remain civilised or to become so, the art of associating together must grow and improve in the same ratio in which the equality of conditions is increased.

In reading the book, I found I stepped back from the drama of present events and the specialisms I have adopted to reflect again that the UK is not a shining example of a free and open society. One need only read the section on toleration to realise what we have yet to regain.