Thursday, April 23, 2015

"Do not worry about conspiracies that are confined to the free market. Worry about conspiracies that rely on government coercion to achieve their agendas."

Conspiracy Theories and Keynesian Economies
Gary North

Remnant Review

One of the distinguishing marks of a formally trained historian is his rejection of what is known as the conspiracy view of history. Academia generally discourages such views.

There is a reason for this: the Progressive movement. The early "scientific" historians were Progressives. Progressivism rested on four key assumptions regarding institutions. First, the messianic redemptive power of tax-funded education. This was said to be neutral education intellectually, yet also moral. Second, universal suffrage. The democracy was seen as redemptive. Third, the need for political legislation to redistribute concentrated wealth. Fourth, the need for professional bureaucrats to administer the various political programs of wealth redistribution -- no political patronage, no political spoils. This was to be enforced by Civil Service laws.

A conspiracy view of history denies the authority of all four. Public education does not stop rich men from manipulating the masses. Second, universal suffrage is helpless to root out the powers behind the thrones. Third, the super-rich manipulate the politicians, who in turn create tax code loopholes. Fourth, bureaucrats are impotent. This means that the pillars of Progressivism have failed to root out the power of wealth. It means that Progressivism's program of social redemption has failed. Worse, it has served as a convenient cover for ever-greater concentrations of wealth and power. It means that Progressivism is a false religion. Academic historians fight conspiracy views of history. They understand that conspiracy views of history, if widely accepted, would lead to the political rejection of the Progressives' agenda. It would undermine the legitimacy of Progressivism.

The most dangerous version of the conspiracy view of history is Murray Rothbard's. He argued that the Progressives were dupes from day one. They were pawns in the chessboard of the power-seekers who sought state power in the name of democracy, only to use this power to keep rivals out of their markets. The far Left argues this way, too. So, Rothbard used New Left historian Gabriel Kolko's book, The Triumph of Conservatism (1963), to support his case against the Progressives' push to establish federal regulation of big business. The result of this political agenda was the opposite of the rhetoric: the entrenchment of big business. Kolko and Rothbard showed that the Progressives' agenda was funded from the beginning by big business.


Historians who are not simply antiquarians tend to favor a view of history that is collectivist. They are themselves the products of collectivism. Most of them were trained in tax-funded universities. A handful of others were trained in expensive accredited universities -- accredited by the existing cartel of university scholars. This system of screening works well. So, they prefer to explain historical causation in terms of impersonal social forces that are independent of the decisions of key individuals. There is a general hostility to studying history as if it were the result of great leaders. This was not true in 1850. It is today.

This is the traditional problem known as the one and the many. There are individuals; there are also collectives.

Consider the Protestant Reformation. How should we explain it? There was a leader, Martin Luther. There was a pocketbook issue: the sale of indulgences. There was a media system: profit-seeking printers. There was a political structure: independent German principalities. Soon, there was a separate ecclesiastical structure: Protestant churches. Martin Luther would not have been successful if there had not been printing presses and political protection. He would have wound up as John Hus did a century earlier. He had leverage through independent, profit-seeking printers and an independent local political leader. But without Luther, there would not have been a Reformation in northern Europe in his era. Historians who favor collectivism would argue that some other Luther-like figure would have shown up. He would have launched the Reformation. There is no way to prove this.

I think we need to study great men and great social forces. So, I recommend this investigative approach:

1. Follow the organization.
2. Follow the leaders.
3. Follow the confession.
4. Follow the money.
5. Follow the media.

Great leaders would not be great leaders if they did not get leverage through ideas, organizations, money, and communications systems. In other words, great leaders need leverage, and there are numerous institutional ways to gain leverage. A leader is like a lever. He needs a fulcrum to move anything.

At the same time, we do not find great social movements that are not represented and motivated by great leaders. A movement has to have some kind of visible representation. Somebody has to embody the principles of the movement. People give allegiance to individuals, not to invisible social forces. Movements that do not have people who give allegiance to particular leaders will not have visible impact.

History would be different if key people had not become influential. If you took George Washington out of the history of North America, North America would look very different from what it looks like today. The same is true of key American Presidents, such as Lincoln, Wilson, and Roosevelt. Take away the leverage of warfare, and most Presidents would be forgotten. In fact, most Presidents are forgotten. It is the wartime Presidents who get most of the footnotes and the best-selling biographies. The Presidents who have been the great defenders of freedom in the history of this country have been Presidents who avoided war. But who wants to read a biography of Martin Van Buren or John Tyler or Grover Cleveland? Not many people.

Historians look at the past, and they look for turning points. They have a phrase to describe these: watersheds. Watershed Presidents are war Presidents. These are Presidents who changed the direction in which the country was moving.


Now we get to the issue of conspiracies. The most influential conspirator of modern times was Vladimir Lenin. Take Lenin out of the 20th century, and the 20th century would have been significantly different. There would have been no Hitler, no Stalin, and no Mao. There is no question that Lenin was a conspirator. He was a master of conspiracy. He built the Bolshevik movement on conspiracy. He was public in terms of what he wrote, but he was a master conspirator.

Conspiracy theories argue that key men, who operated behind the scenes for at least most of their careers, have changed the direction of history. Conspiracy history is opposed by most academically trained historians. Conspiracy historians find their careers blocked very early. This is especially true of people who associate major political leaders with conspiratorial activities behind the scenes. The most obvious case in American history is Franklin Roosevelt's maneuverings to get the Japanese to attack the United States fleet in 1941. Anybody who argues that Roosevelt knew that the Japanese were going to attack United States naval forces in late November or early December 1941 is regarded as a revisionist historian, and he will never gain significant influence within the history profession.

The conservative movement has always had a kind of subterranean literary tradition tied to conspiracy theories. There are various forms of these. They may identify secret societies. They may identify clandestine groups that have put up the money. But whatever the nature of the chain of command, it was concealed from the public, and it often operated in terms very different from the public rhetoric of specific political leaders who were in fact part of the conspiracy.

Conservatives pick different leaders as the representatives of conspiracy movements, but there is a tendency to accept conspiracy theories inside the non-political side of the conservative movement. The John Birch Society is the obvious case. You can even date when it switched. Robert Welch switched after the 1964 presidential election. He turned the Birch Society into a very different organization. Prior to 1964, it had been explicitly anti-Communist. After 1964, it became specifically anti-Federal Reserve, anti-banker, and anti-Council on Foreign Relations. It was for this reason that Hans Sennholz resigned as a regular writer for American Opinion. He was clearly an opponent of central banking. He was not an opponent of bankers in general; he was an opponent of fractional reserve banking. But the anti-conspirators tend to be anti-bankers in general, not distinguishing between commercial banking at a local level in central banking at a national level. A classic example of this is Ellen Brown. The Greenback movement has always been anti-banking in general.

Murray Rothbard was certainly a great proponent of the conspiracy view of history. But Rothbard understood a fundamental point: conspiracies gain their leverage through political power. They have almost no leverage in a competitive economy. This was also the view of R. J. Rushdoony. When we talk about conspiracy views of history, we are always talking about clandestine organizations that seek control through political power. Conspiracies that do not seek control through political power are simply special interest groups. There is a big difference between conspiracies and special interest groups. This has to do with the means of gaining of power, and then the maintenance of power over the long run. The representatives of a conspiracy have a hidden agenda. There is a public defense of a program to gain power, but the public defense is a sham. That is the essence of conspiracy. There is a separation between public rhetoric and clandestine plans to achieve power for very different purposes than those expressed in public rhetoric.

When a businessman says he is only trying to make money, we usually believe him. When he says he is attempting to make money in order to benefit the public, we should ask this question: "Is he asking the government to intervene on his behalf?" If he is not, then he may be telling the truth. He may think that there is a connection between serving the public and profit. Certainly, that was the view of Ludwig von Mises. It was also the view of the founders of Austrian School economics. There is consistency between seeking your own good and seeking the public good in a free market society. That was the position that Adam Smith articulated in 1776. But Smith did not trust businessmen who get together as part of some incipient cartel. He did not trust businessmen who want to gain any kind of support for the civil government. That was also the view of Mises, Rothbard, and Austrian economists generally.

If we take seriously Mises' 1920 essay on economic calculation and socialism, and if we take seriously Hayek's 1945 article on the use of knowledge in society, then we must conclude that there are two kinds of economic knowledge. One form is the knowledge that committees possess. The other is the kind of knowledge that individuals possess in the general marketplace. The second kind of knowledge is the socially crucial form of knowledge, according to Mises and Hayek. It is decentralized knowledge. It is knowledge of specific conditions in specific locations in specific periods of time. The free market enables decision-makers to take advantage of this decentralized knowledge. Knowledge is coordinated through the price system. Government intervention into the operation of the price system blocks accurate knowledge from being put into effect for the purpose of serving consumers. Both Mises and Hayek believed that centralized knowledge possessed by committees is inferior to decentralized knowledge organized by way of the free market. Both of them believed that ultimately, decentralized knowledge that is coordinated by the profit and loss system is the significant form of knowledge in society. This knowledge is what makes social cooperation possible.

Mises did not write about conspiracies. He did write about special interest groups trying to gain power through government action. Rothbard was a conspiracy theorist, but he always looked for conspiracies behind special interests that were seeking government support of some kind. He did not trust any of the rhetoric of public service with respect to civil government. But he did trust it with respect to the competitive marketplace. He did not discuss conspiracies within the setting of free market competition. That was because he believed, following Mises and Hayek, that decentralized knowledge through the free market must serve the public. If it does not, it will produce losses. In other words, the competitive processes associated with the profit-and-loss system are sufficient to keep conspiracies in check. They can gain power only through serving the demands of customers. There is no threat from conspiracies within the framework of the competitive market order.

Conservatives who get involved in conspiracy theories of history tend not to understand this distinction in two types of knowledge. That is one of the great problems of the conservative movement. Some people see conspiracies all around them. With respect to the quest for political power, this suspicion is often warranted. But when it is applied to the market process, it completely misses the point. The process of decentralization that is coordinated through the profit-and-loss system favors economic progress and economic liberty.

There are conservatives who see conspiracies under every bed. They think that by exposing some nefarious person who is trying to make money for himself is sufficient to justify some kind of operational boycott of that individual and whatever he has created. They do not look to see whether that individual is pursuing his nefarious schemes by way of market competition or by political competition. If he is seeking to extend his agenda by means of market competition, and he gets rich doing this, why should any conservative care? As long as the schemer is not calling for people with badges and guns to defend his market share, then critics should focus on the actual operations of whatever institution the individual has created. In short, follow the money. If the money goes back to support from the civil government, then you have a good reason for looking for the kinds of facts that would point to a conspiracy. But if the money goes back to a profit-seeking company or corporation, and the government has not been called in to defend this institutional arrangement, then the proof of the pudding is in the eating. Does the individual exercise private power over an organization that is providing public benefits? If so, so what?


Mankind has advanced to the degree that the social division of labor is advanced. The free market is the great institutional arrangement for the extension of the social division of labor. It does this by voluntary actions. There is no compulsion involved.

The greater the degree of the social division of labor, the more accurate is the knowledge available to participants. Knowledge is decentralized. This was Mises' point, and this was Hayek's point.

Do not worry about conspiracies that are confined to the free market. Worry about conspiracies that rely on government coercion to achieve their agendas.


No comments:

Post a Comment