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Sunday, March 21, 2004

Bollettino
Our far flung correspondents

The following is from Paul Craddick, who runs a weblog that we strongly recommend, Fragmenta Philosophica. We want to thank him for letting us publish this letter.

Roger,

You're beginning to strike me a bit like Hegel - the architectonic is in need of serious repair, but that doesn't prevent you from unearthing shining gems of insight.

I thoroughly enjoyed your latest "Bollettino" - it had real historical sweep, was superbly written, and provocatively argued.

I think you're definitely on to something with your notion that the "bourgeoisification" or the "proletariat" has been helped along rather well by the easy availability of consumer credit, and I can't recall any other writer coming at it from quite the same angle as you. There's definitely food for thought there.

But - surprise! - I do think you omitted something essential in your analysis.

The fountainhead of (economic) social mobility is none other than the market's wealth-creating dynamo: investment for profit. Thereby the productive process is "refined" such that now the same product can be offered at a lower price than before, or a "better" (= more variegated, complex, featureful, etc.) product can now be offered at the same price as was an inferior one previously. Hence even if nominal wages remain static, over the longer term those wages "appreciate" and thus go further and further: purchasing power is extended. My own favored definition of "economize" - informed by the "praxeological" postulates of the Austrians - is "choice reducing its own costs." The market, as the most economical of economies, inherently reduces costs, the corollary of which is that it enriches (economic) choice. Ergo the lot of the worker will tend to improve of the longer haul. (Please don't misunderstand me as an unabashed "supply-sider," but the role of entrepreneurial investment is fundamental no matter what stand one takes on that question).

Though I won't be holding my breath, one could imagine a state of affairs in which instead of issuing ever larger standard notes ($20's, $50's, $100's) a central bank actually divided the smaller units - imagine "deci-pennies."

This puts an interesting gloss on "soak the rich" schemes - and, generally, those interventions into the market order which encourage aversion to risk: the shorter term is purchased at the cost of the longer term. That's my take on the dialectical interplay between socialism and capitalism - infusions of the former's ethos cause the latter to feed off of its own reserves, vitiating self-sufficiency in numerous respects.

The remarkable thing - detailed, for example, in one of my favorite books, Joseph Schumpeter's Capitalism, Socialism, and Democracy - is the resilience of the "capitalist" engine in the face of punitive taxation, wage and price controls, and other interventions that are difficult to metabolize (one of my heroes, Wilhelm Roepke, distinguishes between "assimilable" and "unassimilable" interventions, but that's another matter). The price we've paid for the "mixed economy" is the further encouragement or "evocation" of Big Business - the large-scale concerns can better weather the storms/tolerate the most parasites - and further ourselves down the lamentable road of the "cult of the colossal"; not to mention further disturb economic equilibrium, and risk exemplifying Mises' dictum ("Middle of the road policy leads [logically, though not necessarily existentially] to socialism"). Our impending health care crisis is surely an illustration of the latter.

So there!

On another note, a while back I posted about the political designations "Left" and "Right" in a rather halting and "dialectical" - vs. didactic - manner. I'm sure you'd have some very valuable things to say about this, so if the spirit moves you please have a look and comment (I'd be glad to know your thoughts).

Best,

Paul


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