By Philip Pilkington, a journalist and writer living in Dublin, Ireland
You wanted God’s ideas about what was
best for you to coincide with your ideas, but you also wanted him to be
the almighty Creator of heaven and earth so that he could properly
fulfil your wish. And yet, if he were to share your ideas, he would
cease to be the almighty Father.
– Søren Kierkegaard
Political cults often have the strangest
and most obscure origins. Take Marxism, for example. Today it is
well-known that Marxist doctrine essentially sprang out of the obscure
19th century economic debates over the source of ‘value’. By ‘proving’ –
that is, lifting the assumption from classical political economy – that
all ‘value’ came from labour, Karl Marx went on to show that it was
therefore only logical to assume the existence of something called
‘surplus value’ that was sucked out of labourers by a parasitic
capitalist class. From out of this obscure debate flowed an awesome
political movement – and a tyranny to match.
What is less well-known is that today’s most popular political cult –
that is, libertarianism – was born in very similar circumstances; it
too, arrived into the world out of the obscure 19th century debates over
economic ‘value’. But before we explore this in any detail it might be
appropriate to speculate a little on what characterises a political cult
and why so many of these find their sustenance in economic theories of
value.
What is a Political Cult and Why Do they Often Love Economic Value Theory?
A political cult is characterised by a political or economic doctrine
that answers all the ‘big questions’ about life, the world and
everything else. The doctrine that is handed down is then to be
conceived of as a way to live one’s life – a project, handed down from
Mount Sinai, that one is under the moral obligation to spread far and
wide. This is why we refer to these movements as cults. And it is this
that gives them such an awesome status in the glazed eyes of their
devotees.
Under such circumstances, politics becomes a sort of religious
calling. In these doctrines
there is usually an ‘Evil Being’ who is
opposing the spread of the ‘Good’ on earth and it is these that are to
blame for all the bad things in the world. In Marxism this Evil Being is
the capitalist; in libertarianism it is the figure who is at different
times referred to as the ‘collectivist’, the ‘liberal’ or the
‘socialist’. Needless to say that, since these figures are usually ones
of Extreme Evil they must be ‘liquidated’ or ‘eliminated’ at the first
possible opportunity lest they spread their Demonic Gospel to the
masses.
Political cults thus provide their devotees with a firm identity in
an otherwise changeable and, let us be frank, confusing world. Like all
cults they provide an anchor for their devotees with which they can
fasten themselves to a rigid doctrine. They also typically lend their
devotees a Holier-Than-Thou attitude as they provide them with ‘secrets’
that those outside of the cult cannot grasp. Not only does this allow
the devotees to feel ‘special’, in modern political cults it also gives
them practical, albeit ‘secret’ advice about what they should do in
their day-to-day lives. (Think of the advice to buy gold or foreign
stocks coming out of certain libertarian front men, for example).
Finally, the political cult will usually offer their followers the
possibility of a Heaven on Earth. If the follower behaves well and
spreads their beliefs to others they will eventually arrive at some sort
of Utopia. This is their reward for believing in the doctrines, despite
these doctrines being ridiculed by others.
So, why do these cults spring out of economic doctrines based on
value? Well, this is a very complex question but there is one key aspect
that is absolutely fundamental. In order to understand it a little
better
we must think for a moment about what economic ‘value’ supposedly
is. It is, in fact, when we boil it right down, a moral entity. If we
can tell what people ‘value’ and why, then we can make prognostications
on what is Good for society as a whole.
In times past organised religions handed down fixed value systems to
their adherents. Today people have become disillusioned with religious
systems – ostensibly because they conflict with these peoples’
supposedly ‘scientific’ worldview.
But the impulse among some for the
self-assurance provided by a religion is so strong that they seek out
‘scientific’ systems that operate in an identical manner to religious or
cult systems.
This is why the economic doctrine of ‘value’ is such a good
foundational stone for such a cult. It provides a pseudo-scientific
account about how people attribute value to things and in doing so tells
the cult member a ‘Truth’ that they can use to make turn the world into
a Utopia in which the optimal amount of ‘value’ is realised by the
optimal amount of people.
Karl Marx claimed that ‘value’ was embodied labour and hence his
followers concluded with him that all that was Good sprang from labour
and that society should thus be based on free labour. The libertarians –
together with the neoclassicals that they otherwise scorn – believe
that all ‘value’ springs from utility maximisation. While the
neoclassicals simply tinker with toy-models of ‘value’ to bolster their
pseudo-scientific prestige, the libertarians undertake a leap of faith
into the unknown and claim that in the theory of marginal utility they
have found a ‘Truth’ that must be brought down from Heaven to Earth.
The Birthing of a Cult
Libertarianism was born out of the late 19th century doctrine of
marginalism; a doctrine that went on to
gain popularity with those opposed to Marxism. We will not dwell too much on the doctrine of marginalism when applied to the analysis of ‘value’ –
having done so elsewhere.
Here we will merely note that marginalism provides a moral defence for
the supposedly ‘free market’ system that we live under today.
Marginalism, when applied to ‘value’ analysis, holds that it is in
Man’s nature to follow a certain path in his consumption habits. These
habits are determined by his maximising his utility. Most modern
marginalists claim that they can use this concept to show that a ‘free
market’ system is the fairest social system possible, since it responds
automatically to Man’s marginal utility preference it delivers ‘value’
in a perfect and harmonious manner.
Markets deliver this ‘value’ through the mechanism of price.
Prices,
which reflect peoples’ desires to maximise their marginal utility,
ensure that the most equitable distribution of ‘value-in-the-abstract’
is accommodated for by the ‘free market system’. And this is the point
at which marginal value analysis becomes a value judgment in a very real
sense.
The neoclassicals held, and continue to hold, that their models could
capture this complex dynamic. Such an assertion was and is, of course,
absolute rubbish. But the Austrians took a different tack.
“Yes,” they
said, “marginal utility theory is the correct way to go, but we cannot
formulate models that adequately capture the inner workings of this
great mechanism.”
In their book
Modern Political Economics: Making Sense of the Post-2008 World,
the authors provide a good summary of this approach. In the book they
discuss what effect the discovery of marginalism’s inherent uselessness
had on the Austrians:
Faced with the impossibility of mathematically deriving
prices and quantities on the one hand and a metric of social welfare on
the other, some Marginalists understood the limitations of their utility
calculus. Mainly of an Austrian persuasion (most notably Ludwig von
Mises, Friedrich von Hayek and Joseph Schumpeter), they even gallantly
tried to use this failure to the advantage of their claims on behalf of
untrammelled markets and against the encroachments of collective
agencies, trade unions, governments etc.
This was a clever move. While the neoclassicals tinkered with their
silly toy-models, trying to show how prices are determined through a
sort of grand marginal calculus, the Austrians shrugged their shoulders
as to how such a Divine Event could occur. Instead they began to think
of price as a sort of Miracle that proved the divinity of the Market
mechanism. They then went on deploy this argument to show that anything
that encroached upon this Divine Being’s presence was inherently Evil:
If no degree of mathematical sophistication can pin down
the ‘right’ prices and quantities, how can a government or any other
form of collective agency work them out? How could a socialist economy,
or even a national health service, ever price things? Thus, the market
mechanism is indispensible because of the radical indeterminacy of
prices.
Note what is happening here. The Austrians, like their marginalist
brothers and sisters, thought that in marginal utility theory they had
found the source from which ‘value’ truly flowed. They never for one
moment questioned that.
Even when they came to conclude that marginalist
analysis could never definitively show anything useful about price
determination, they remained confident – indeed, they became even more
confident – that such an analysis was Truth.
In short, they postulated a theory and then when confronted with the
inconsistencies of the theory when it was applied to any practical
ventures they simply threw up their arms and claimed that such
inconsistency showed just how true theory was and how much we should
respect it. The knowledge that the theory imparted then became, in a
very real sense, Divine, in that we meagre humans would never be able to
grasp it and instead should simply bow down in front of the Great Being
that possessed this knowledge – that is: the Market.
This is what gives the libertarians their religious zeal. In their
quest for the Grand Truth they find this Truth to be inaccessible to
Man. But in this inaccessibility they find a Higher Truth again; namely,
that there is some other entity out there – a benevolent entity called
‘the Market’ – that possesses this Truth and all we have to do is follow
the Laws which it has handed down to us and we will eventually reach
Utopia. This is, of course, a leap of faith – a truly
Kierkegaardian Leap of Faith.
From the Leap of Faith to the Knight of Faith
The Austrians were never quite content with the chicanery and
political posturing that they had passed off as scientific debate. As
alluded to above, their theories about market prices were forged in the
debates with those who advocated a socilialistic planned economy. Being
ideological to the core, the Austrians were, for a while at least,
perfectly content with saying that while no economist could say anything
worthwhile about price determination – and thus, any attempt at a
socialist planned economy would be doomed to fail because there could be
no perfectly informed coven of evil socialist economists who could
administer it – they were still happy with the airy theory of market
prices that they had just poked such a large hole in. Yes, they had
undertaken a Leap of Faith by admitting that their logical constructions
would never be whole but, as Kierkegaard well knew,
every Leap of Faith
needs a hero, a Knight of Faith – and the Austrians soon found theirs.
The Austrians had, although one suspects that they never fully
realised this, essentially proved that their theories were inconsistent.
There was always, lurking somewhere, that element that disturbed the
calculation of prices in the market models.
Let us emphasise here that this element of disturbance was found, not in reality, but
only in their models and in their minds.
The fact is that the Austrians, even in out-stepping their neoclassical
brethren, were still only exploring their own fantasies. This fact must
always be kept in the front of one’s mind when considering their
doctrines.
We highlight this because it was precisely at this point that the
Austrians could have conceded that they were building castles in the sky
– ideologically and emotionally motivated castles in the sky, no less –
and that it might be time to grow up and give up on the whole sordid
venture of trying to establish a ‘logical’ ‘economic’ basis for ‘value’
that would temper them with the moral certainty they needed to carry on
their political crusade.
But not so. Instead they found a Kierkegaardian
Knight of Faith to fill the gap in their logic. And that Knight of Faith was the entrepreneur.
The Austrian economist Israel Kirzner put it as such in his fine paper ‘T
he Economic Calculation Debate: Lessons for Austrians’ (which is also an excellent historical overview of much of what we have here been discussing):
[T]he truth is that Hayek opened the door to an entirely
new perspective on the “goodness” of economic policies and institutional
arrangements. Instead of judging policies or institutional arrangements
in terms of the resource-allocation pattern they are expected to
produce (in comparison with the hypothetically optimal allocation
pattern), we can now understand the possibility of judging them in terms
of their ability to promote discovery.
And this ‘discovery’, of course, comes from the entrepreneur who was
hereafter identified by the libertarian as the social hero who broke
through all barriers in the pursuit of the creation of new ‘values’ –
and by that, we mean economic ‘values’ – for the community as a whole.
Kizner again:
For Austrians, prices emerge in an open-ended context in
which entrepreneurs must grapple with true Knightian uncertainty. This
context generates precisely the kind of choice that stimulates the
competitive discovery process. In this context, the entrepreneur does
not treat prices as parameters out of his control but, on the contrary,
represents the very causal force that moves prices in coordinating
directions.
In Kierkegaard’s writings which, like the writings of the Austrians
sought to establish a theological metaphysic from which an individual
could derive principles of moral certitude, it was the Knight of Faith –
the true believer with complete faith and certainty in both himself and
God – that filled in the logical gaps inherent in even the greatest
philosophical systems. For the Austrians the entrepreneur filled the
same role – except that this was a great hero that had both full faith
in the Market and the ability to find opportunities to inject
disequilibrium into the price system through innovation.
By now we are far outside the realm of anything even remotely
resembling a science of ‘value’.
What we have instead is a vast
metaphysical and moral system that is built around a very specific – not
to mention very narrow – conception of value, together with a sort of
existential appendage in the form of the hero-entrepreneur. The hero
veneers over the logical flaws in the metaphysical system, while that
system remains in place as a faith-based explanatory schema which can be
applied to the world around the libertarian.
Note how fantasy blends into reality almost completely at this point.
No longer do we separate our supposedly ‘factual’ ideas about ‘value’
from the mythological figure of the entrepreneur.
Fact and fantasy merge
to form a sort of continuum the purpose of which is to insulate the
devotee from any empirical evidence that might arise to prove them wrong
– or, at least, misled – regarding, for example, more fundamental and
more pressing macroeconomic questions. They simply know what is what
because they have it all worked out – and no silly facts are going to
tell them otherwise.
From the fertile source of marginal utility value calculus the
Austrians thus constructed a pristine moral and metaphysical system. But
in doing so – like all metaphysicians – they allowed their imaginations
to run away with them. They never noticed the point at which they
crossed that fateful line; that line that separates our attempts to
represent the world accurately and dispassionately to ourselves from our
attempts to create a fantasy world in which we can live. The Austrians
had, at first, attempted to use their imaginations to explain the world
around them and, in doing so, had fallen into a dream world of their own
creation.
And so the foundations of the political cult we call libertarianism
were firmly in place. It is an ingenious creation which even came to
include what CG Jung and other mythologists might call a central
‘archetypal’ or mythic figure.
Even more specifically, what the
Austrians have done is insert into their narrative what the great
American mythologist Joseph Campbell called the ‘monomyth’.
The monomyth is a recurrent theme in mythologies from all over the
world. It is essentially a ‘hero myth’ and, as Campbell argues, can be
located in most major religious narratives (Christ, Buddha etc.). In
this the Austrians provided the libertarian religion with their very own
version of the monomyth.
That most libertarians are ignorant of the source of their beliefs –
just as most of them are not very conversant with economic theory
generally, their protestations to the contrary notwithstanding – only
adds a sociological dimension to their cult. Their cult forms a
hierarchy where those who are closer to the Grand Truth are supposed to
know more than those who are less conversant. Those who are less
conversant then scrutinise the Great Texts – which are largely taken to
be Holy Writ – until they can advance up the priestly ranks.
The Malign Consequences of Political Cults
After experiencing what used to be called ‘Bolshevism’ we are well
aware of the dangers of political cults if they should ever ascend to
power. Indeed, we already had forewarnings of this danger in the cult of
Reason that Robespierre erected in revolutionary France upon the
intellectual architecture that Jean-Jacques Rousseau had constructed for
him. All of these cults espouse liberty and freedom and end up creating
regimes of pure tyranny. Why?
Because in their violent desire to turn
reality into a Utopia, they stamp all over reality as it fails to
conform to the images in their minds.
Some have objected to fellow Naked Capitalism writer
Andrew Dittmer’s ‘interview’ series
as an attempt to misrepresent the libertarian movement by espousing the
ideas of an extremist. This is unfair. The views of people like Hoppe
may be fringe among libertarians – then again, they may not be – but the
zealousness is the same across the whole movement.
Libertarians think that they have unearthed a Truth that no one else
can grasp (because, of course, this Truth being so pure, anyone who
could possibly grasp it must then by default recognise it as Truth). And
they think that if they can get adequate social and political power to
enforce this Truth we will all be better off for it. Hoppe’s vision of a
totalitarian, corporatist future is thus realistic in that if
libertarians were ever truly to get into power they would have to enact
an immense violence upon the world to try to get it to conform to their
vision of Utopia. In this, they are like every other political cult that
has ever existed. And they are just as dangerous.
In fact, the libertarians are the direct heirs to the
Marxist-Leninist throne. Even though their motives differ substantially,
their Faith is based on very similar principles – which is not
surprising given that both movements grew out of the same 19th century
debate over economic value. In this regard it is useful to recall John
Maynard Keynes’ characterisation of Marxism-Leninism:
[It] is the combination of two things which Europeans
have kept for some centuries in different compartments of the soul –
religion and business.
Keynes also highlighted an important point about how such cults become influenetial:
[They derive their] power not from the multitude but from
a small minority of enthusiastic converts whose zeal and intolerance
make each one equal in strength to a hundred indifferentists.
The goal may have changed, but the unswerving faith in
pseudo-scientific – or, to be very precise, in the Austrians case,
because they tend to eschew ‘scientificity’: pseudo-rational – economic
doctrines has not. Let us just hope that such a cult does not deliver to
us another era of primitive tyranny and medieval inquisition. It is our
democracies that are at stake.
