It is particularly true of socialist-democratic India that “practical men of the world” – the practicing lawyer, professional investment advisor, corporate executive, politician, bureaucrat-administrator, and even those responsible for the “maintenance of law and order” – are “overvalued” in public opinion and discourse. It is, of course, impossible for those who “know the ropes” and have “climbed the greasy pole” to be possessed of even the foggiest idea of the “whole picture” – that is, the root causes of the mess – and it simply cannot be denied by any of these practical men of affairs that The System does not work, that the entire subcontinent is in “the highest degree of disorder,” and it is precisely what they "practice" that is "impractical":
WHAT YOU "PRACTICE"
DOES NOT WORK
For example: the electricity failure of a few long hours that interrupted my work. This is New Delhi - and since this happens all over this vast sub-continent, millions of workers could not work either. And, the State is spending billions and billions of "borrowed" cash, or using hurriedly printed fresh currency notes - which is "inflationary finance" - to pay people to work!
Yet, for so many decades now, in my own interactions with many such people, I have inevitably found my views dismissed on such diverse grounds as, for example, what I suggest is "impractical," or I am “too theoretical,” or – and this is the worst insult they can throw – I am an “idealist.” (As though socialists, communists, and democrats do not have ideals!)
In previous posts I have contrasted Ludwig von Mises with Joseph Schumpeter: how the former, an “armchair theoretical economist,” refused to accept a high position in an Austrian bank, anticipating the worldwide “Crash of 1929,” flatly stating he preferred to “write and teach,” and was “not interested in earning money”; while the latter was Austrian finance minister during the worst inflation that nation ever faced – an inflation he could not control – was chairman of a bank that subsequently collapsed, and then went on to become a very well-paid Professor of Economics at Harvard, whose “social theories” are still admired and taught worldwide, while Mises’ are not.
And I drew particular attention to Mises’ Theory of Money and Credit, published in 1912, exactly a century ago – that is, a little before the US Federal Reserve was established; seventeen years before the worldwide Great Depression began (with the collapse of the New York Stock Exchange); and some twenty-five years or so before Keynes’ General Theory.
What exactly is an “economist” vis-à-vis a “practical man of the world”?
An excellent answer to this question was delivered by Carl Menger, the acknowledged founder of the Austrian School of Economics; and that too, of that “tradition” to which Mises himself, and all those who consider themselves Misesians today, belong.
[The other branch of the Austrian School is that of the Nobel laureate FA Hayek, and all Hayekians, who follow the ideas of one of Menger’s pupils, Friedrich von Weiser. I have discussed the differences between these two branches of Austrian Economics in this recent post.]
While still in his 30s, and a widely admired young Professor of Economics at Vienna University, Menger was “selected” by the Empress Catherine (for his reputation as a “classical liberal”) to deliver a series of lectures on “political economy” to the teenaged Crown Prince Rudolph – and he began these lectures by telling the lad three very important facts:
First: That the real world out there is one of endless toil and trouble for almost all of humanity. All their energies, physical as well as mental, are used up in satisfying their “economic needs,” upon which their very survival depends.
Second: That there are very few who can afford the luxury of stepping out of this real world and actually studying abstract economic theories, and
Third: It is thus of utmost importance that those who want to call themselves “economists” get their theoretical formulations and policy prescriptions right – because, if they do not, then the toil and trouble, and the endless sufferings, of humanity will only INCREASE!
[I have 27 posts under the label “Carl Menger” – among which there are quite a few on these lectures.]
Allow me to now write of the context in which I was placed just the other day – and which prompted this post.
First: I was introduced to a practicing Chartered Accountant with the words, “You can happily discuss Economics with this man.”
My immediate reply: “Economics is a study of market phenomena – while all this man knows are the rules and regulations of taxation, which come from the State. These taxes reduce the wealth of all those who participate in market exchanges – and what concerns Economics is the Principles of Public Finance, which is the principles of taxation, by which the State is to be funded. That is, whether the Income Tax, or all the Indirect Taxes, are just, efficient, and whether they reduce private capital accumulation: that is, whether they are "expropriative." This man knows nothing of these principles. And the only “economists” who pretend to know this important aspect of Economics are employed by the very same State – in the National Institute of Public Finance and Policy.”
I ought to have added that no student of Economics in any Indian university knows the implications of terms used by the State when asked about how it manages to meet its expenses: terms like "deficit financing," or "monetisation of the debt," or the latest of these synonyms - "quantitative easing": that these all mean "inflationary finance."
Now, the man who introduced me to this chartered accountant happens to be some sort of "legal man": that is, he knows the "written law," he knows lawyers, he knows all about "legal remedies" available from our socialist courts, as well as from our socialist bureaucrat-administrators.
After I had dismissed the chartered accountant as someone I had nothing to discuss anything with, this "legal man" than made a truly astounding statement: "We the people are supposed to obey the Constitution of India."
I immediately asked whether it was this Constitution that imposed any of the provisions of the "criminal law" on us – as in the case of murder, theft, or rape. Or was it the Indian Penal Code? I asked him whether the Constitution or the Narcotics & Psychotropic Substances Act imposed the prohibition on ganja-charas upon us? He got the idea that something was amiss in his own thinking.
And so I proceeded to ask this "legal man" what exactly a Constitution is meant for - and he did NOT seem to know that this piece of "public law" is meant especially for the personnel of the State. It is they who are supposed to obey this public law. The Constitution exists to ensure that these “public functionaries” are not able to misrule, to abuse power, to become despots. It is only then that we the people can enjoy possession of our properties, our liberties, and pursue happiness, even.
Recommended reading: My old post dated October 2008, titled "An Illiterate Bar." In this, I refer to a Supreme Court advocate. And the exchange of comments between a critical reader and me published below the post are also noteworthy. I may add, especially for the benefit of my foreign readers, that "Singur" (in the opening line) refers to a village where land was "acquired" by the State - and then handed over to the Tatas to build a small car factory.
Now, if my reader looks up at the opening paragraph of this current post, he will find these words highlighted exactly as I now reproduce them: “the highest degree of disorder.”
Why is this vast sub-continent in “the highest degree of disorder"?
Well, these words are from the following very famous quote from Adam Smith's first book – A Theory of Moral Sentiments (1759) – written when he was still Professor of Moral Philosophy at the University of Glasgow. He subsequently resigned from this position to tour Europe as tutor to the young Duke of Buccleuch, and it is only after this tour that he, as a private citizen, began to ponder and then pen the book he is more famous for – An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
[In his later years, Smith went on to pen six editions of Moral Sentiments (his personal favourite) and four of Wealth of Nations – and for those who wish to read the latter, it is only the fourth edition I recommend, because it is in this last edition that he looks upon favourably at the Bank of Amsterdam’s then practice of maintaining a 100 percent gold reserve against their note issue.]
In A Theory of Moral Sentiments, Smith wrote the following on how legislatures can cause the "highest degree of disorder":
The man of system... seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard. He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chessboard of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably and the society must be at all times in the highest degree of disorder.
Thus, the "root" of all this chaos and disorder of today has to do with certain ERRONEOUS IDEAS – and these errors did not exist during the Scottish Enlightenment.
For example, in a recent post, I quoted the following from Adam Ferguson's An Essay on the History of Civil Society (London, 1767):
“Nations stumble upon establishments, which are indeed the result of human action, but not the execution of any human design.”
This is the germ of the idea that much of what we find useful and even indispensable in society – as with morals, law, markets, money, and language – have not been "invented" by any ONE MIND (like a "ruler" a "planning body" or a "legislature") but have emerged because free humans "acted" in certain ways that ended up creating these institutions "without design."
In that post, I also quoted the following from the new foreword to Ferguson's History of Civil Society:
Ferguson, like Smith, Millar, and others, has dispensed with the “Legislators and Founders of States,” a superstition that Durkheim thought has hindered the development of social science more than anything else, and which is to be found even in Montesquieu…. The Legislator Myth flourished in the eighteenth century, for a variety of reasons, and its destruction was perhaps the most original and daring coup of the social science of the Scottish Enlightenment.
Carl Menger followed precisely this tradition, and his second book on the Methodology of the Social Sciences (1883) posed this vital question as the one that social scientists must seek to answer through their scientific inquiries and theories:
“How can it be that institutions which serve the common welfare and are extremely significant for its development come into being without a ‘common will’ directed towards their establishment?”
This Mengerian approach to social science may immediately be contrasted with the lunatic French “sociologists” I wrote of the other day, who believed that the logic their sociology would lead inevitably to socialism; who looked upon society as a “whole” requiring “social engineering” in order to achieve “perfection” – by achieving socialism – and this social engineering was to be effected by legislatures through legislation, and then “implemented” by bureaucrats who would be suitably “empowered” to do so; and for whom the “magic word” was NOT INDIVIDUALISM, but ORGANISATION. It becomes clear that these fraud socialist sociologists hated Liberty – and all the diversity that a free society displays.
Thus, as I argued in that post, their “political ideal” of EQUALITY is just another of their many shams – for with “organizations” everywhere, what they really seek is the arrangement of all individuals into HIERARCHIES; and then, UNIVERSAL SUBORDINATION of all these hierarchies under their Supreme Leader and his Party High Command.
I ought to have added that this is what they mean when they cry out their motto – “All for One and One for all.”
Thus, “India is Indira” was the battle-cry of the CONgress precisely during her notorious and dictatorial Emergency!
Frederic Bastiat, a great classical liberal and a Frenchman, has written what ought to be the motto of all who love Liberty – and that is, “Each man for himself, each man by himself.”
[The very brief essay is titled “The Two Mottoes.”]
Individual liberty, Individual rights, Individual responsibility – this is what Liberty, Property and the “subjective” Pursuit of Happiness are all about.
Nothing is “collective” – and most certainly not Property.
There is no “nationalism” – the entire idea is free trade, world peace, and the “international division of labour.”
Bastiat was inspired by Richard Cobden’s (successful) Free Trade Movement in England – and even traveled all the way there to meet him.
My reader should now be able to see a link between erroneous doctrines and ideas that had been eliminated by the philosophers of the Scottish Enlightenment, whose central proposition, that the uncoordinated actions of free individuals, each seeking his own interest, miraculously produce useful as well as indispensable institutions for society that are “the result of human action, but not the execution of any human design” was carried forth into the nineteenth as well as twentieth centuries by Carl Menger and Ludwig von Mises, respectively.
Those on the other side, who are responsible for the mess and disorder of today, are the socialists, their political parties, their lawyers, and their professors of Economics, Law, Sociology, and History, too.
It is particularly noteworthy that when India and Pakistan were “created” as separate states in 1947, all the key “leaders” of the sub-continent’s diverse people were lawyers: Jinnah, Gandhi, Nehru, and Patel. Such socialist lawyers dominate politics and the political parties even today: Kapil Sibal (of the CONgress, who is Education Minister now); Arun Jaitley (of the BJP, who is a Rajya Sabha “indirectly elected” MP and party spokesman, forever hogging up television screens); and P Chidambaram (Police Minister till recently, now in-charge of Finance once again, a Harvard MBA).
It is particularly galling when a socialist lawyer-politician is appointed Education Minister armed with coercive powers to compel all kids to attend his schools, when it is this socialist-interventionist-overlegislated legal system that exhibits “the highest degree of disorder.” It is only because of excessive legislation that the courts are overburdened with litigation – from which lawyers profit.
It is for the very same reason that we find the Supreme Court handling a gamut of cases that have nothing whatsoever to with “constitutional matters” – from imposing fuels on auto-rickshaws, to actually administering forests, and so on. The list is endless. And only lawyers can become judges.
We also find that the socialist loop is endless – what with the added fact that these “illiterate” socialist lawyers have a monopoly on legal education.
Since I began with Menger, let me end this post with Menger: that he posited three aspects to Economic Science:
First, Economic Theory,Second, Economic Policy, andThird, Public Finance.
From the above discussion, it becomes apparent that our rulers – all these “practical men of the world” – have got it COMPLETELY WRONG on all three fronts. Hence the “highest degree of disorder.”
Hence the complete MESS.
Hence the inevitable DE-CIVILISATION.
All “political and administrative corruption” we see today is only on account of the false idea of COLLECTIVE PROPERTY – which is socialism – be that of the telecom spectrum, the illegal iron mines, coal (which Indira Gandhi “nationalized”), or anything else. Think things through for yourself – including forestry, wildlife, and armed rebellion among forest-dwellers nationwide – and you must inevitably arrive at this same conclusion.
Thus, look once again at the book cover I have placed at the top of this post – the word “collective choice” refers not only to socialism and planning, but also to the choice of a State-owned “economist” to RUN THE NATIONAL ECONOMY.
But Economics is the “study of market phenomena” – and NOT “central economic planning”!
And socialists do NOT know what “constitutionalism” even means!
The book cover above refers to a collection of “Essays in Honour of Mancur Olson.” I have a previous post on the seminar he held long ago in Delhi, which I attended. In that seminar, his paper was entitled “India’s Collective Choice is the Cause of India’s Poverty.” He proceeded to refute each and every cause of mass poverty in India trotted out by our socialist politicians, socialist central planners, and socialist bureaucrat-professors of Economics as well – from population, to illiteracy to everything else – and then concluded that our “collective choice” of a SOCIALIST STATE is the real cause of all our miseries.
I have related in that post how Rakesh Mohan (PhD Princeton), then Economic Advisor to the Ministry of Industry, later Director-General of the State-owned National Council of Applied Economic Research, and finally Deputy Governor of the Reserve Bank of India till fairly recently, dismissed Olson’s paper with the ludicrous assertion that India is poor because of the hot weather: “Never have hot countries progressed,” said this IDIOT.
Was Ancient Egypt a COLD PLACE?
Is the region around the Mediterranean, the “cradle of civilization,” a COLD PLACE?
And then, what about Himachal, Kashmir, Ladakh, Uttaranchal, Sikkim, Darjeeling, the hill-states of the North-East, the Western Ghats, the Nilgiris – why are all these cold parts of India not rich?
Yes, it’s nothing but a wrong COLLECTIVE CHOICE – and it boils down to rejecting our INDIVIDUALITY.
Think it over, dudes, what Bastiat implied when he said that Liberty means, “Each man for himself, each man by himself.”
Or, better still, RUGGED INDIVIDUALISM.
You think for yourself.
You are the architect of your own fortune.
You are the chief of your own “private economy” – as is everyone else.
You are the King of your own Castle.
THE PURSUIT OF HAPPINESS!
In other words, it is you and you alone who ultimately must decide as to what you wish to "become" - your specialisation in the division of labour - and, thereafter, it is you who must search for the necessary knowledge with which you wish to try and succed. You must be responsible to yourself for your own successes and failures; for your own gains or losses. Your life, your fame, your fortune, your happiness - these are all in your own hands.
This is not just the only way all humans can merely survive; rather, this is the only way in which we can all actually flourish; indeed, the only way in which "the greatest creative flowering of the human race" can be achieved.
The phrase - "the greatest creative flowering of the human race" - is one that Herr Doktor Karl Marx used and his followers popularised. But nothing of that kind ever happened in any communist or socialist country. To understand why what Herr Doktor Karl Marx actually preached is "The Dialectic of Destruction," I recommend this article excerpted from Murray Rothbard's History of Economic Thought.