Here Comes The Sun – To Shine On The BLACK HOLE Of The So-Called “Nobel Prize for Economic Science”: Take #3

It’s the “silly season” of Nobel prizes once again – but the one for Economic Science was never instituted by the Swede who invented, manufactured and sold the high-explosive he named DYNAMITE. 

Rather, this “two-inch fuse” to the few tonnes of dynamite that were bequeathed by Alfred Nobel for these annual firecrackers in his own honour was instituted much later, and that too, by the Swedish CENTRAL BANK which, as discussed earlier, was the first “nationalized central bank” in the world to monopolise the issue of paper currency notes NOT backed by sufficient specie – what ought to be called “property titles without property.” This was in the 1650s – and England followed in 1690. The consequences are now there for the entire world to feel – a planet wherein money means fiat papers, with NOTHING behind them, something unprecedented in History.

The “money substitute” has substituted itself for money!

The Nobel prize for Economic Science was instituted in 1969, well after the death of John Maynard Keynes (1946) - and not long before the US dollar was de-linked from gold (1971). 

All that this so-called Nobel Prize has accomplished since is the perpetuation of errors – and these errors in Economic Science matter hugely, for what is really at stake here is civilisation. This requires “private capital accumulation” – while what is actually transpiring worldwide today is its polar opposite: CAPITAL DESTRUCTION. 

The root cause: central banking, welfarism, and the consequent "destruction of capital."

The only happy news is of a Dalit Chamber of Commerce - with the slogan "fight caste with capital."




Think! - great finds in theoretical physics, chemistry, in medical science, and even great literature require a setting in which civilisation is flourishing. And as for PEACE - which recently went to OBAMA! - it requires nothing less than free international trade and the consequent international division of labour. The world of today, divided into "nation-states," each with its own central bank and fiat paper currency, each practicing protectionism, inflationism, and welfarism, is DESIGNED to perpetuate wars.


  

Sweden itself has been a “model socialist welfare state” since ages. And Keynesianism must perforce go together with Welfarism. The evil scheme is not only to “cheat the working classes,” but also “buy their votes” – all through inflationism, and the consequent increase in the size and scope of government, ignoring all the precepts of classical liberal “political economy”; ignoring even the opening lines of Thomas Paine’s Common Sense.

The capital of the poorest – who save – is eroded, while rich borrowers gain. But these gains are temporary – for not only can this game not continue forever, but also because modern capitalism, which is “mass production for mass consumption,” requires increasing purchasing power among the poorest for its true source of demand. The deliberate erosion of the capital of the poorest goes against the interest of every big corporation – but every MBA is MISEDUCATED worldwide, being fed on Keynesian “macroeconomics” and its nonsense. 

If there is “stagflation” everywhere today then it is at least high time the FINANCIAL PRESS carefully examine the deeper issues this raises on the Keynesian “stimulus.” There have been QE1, QE2, and now QE3 – and there is my 2008 column on “What pumps up the economy,” in which I discuss Jean-Baptiste Say’s “Law of Markets,” which dates back to the 1830s. The “traditional” Quantity Theory of Money is much older – and its predictions are purely "qualitative," bearing no resemblance to the “mathematical equation” of Irving Fisher, Milton Friedman’s teacher at the University of Chicago, which now bears the same name, and is taught worldwide as the “real thing” only because it reinforces Keynesian errors when couched in this “quantitative formula.”

“Economics is the youngest of all the sciences,” wrote Ludwig von Mises in the opening lines of his magnum opus Human Action: A Treatise on Economics, published first in English in the 1940s, by which time its author had been forced to flee Switzerland for New York to escape the Nazis. The first 150 pages of this treatise that is over 1000 pages in length are entirely devoted to the “scientific epistemology” of this Science, entirely rooted in the “logical categories” of the naturally trading human mind. This yields "laws of thought" - on the basis of which the science begins making qualitative predictions on individual trading behaviour. It is these laws of thought that guide human actions.

It is SHOCKING that Yale University Press DELIBERATELY BUTCHERED the second edition. 

Mises’ last book was The Ultimate Foundation of Economic Science – on these epistemological roots, which again shows how important this was to him. This was published in 1962, when he was over the age of 80 – and he died in 1973, eleven years later, at the age of 93. 


The Nobel Prize of 1974 went to Friedrich Hayek' who was briefly Mises' student in Vienna – and Hayek has never written anything on epistemology. Hayek’s ideas on money and banking have very little to do with either Economic Science or Law – and these are best exemplified today by Lawrence White, Hayek Professor of Monetary History at some US university or the other, whose deliberate distortion of facts I have recently pointed out, while referring to Joseph Salerno’s excellent paper “Mises and Hayek De-Homogenised.” 

Indeed, I have seen a video of Professor White being interviewed by one of his students on the occasion of the 50^th anniversary of the publication of Human Action – and, when asked whether the book is still worth reading, he replied that it is, but “skip the first 150 pages”! 

I myself was led astray for ages by Hayek’s Fatal Conceit: The Errors of Socialism – his last book – in which the opening chapter is mischievously titled “Between Instinct and Reason.” I stress the word “mischievously” because he is DELIBERATELY ignoring HUMAN REASON: viz. the “logical categories” of every naturally trading human mind.

Of course, Hayek had to face the ignominy of having to share the prize with that Swedish arch-socialist and trade unionist, Gunnar Myrdal – and here is the picture of him bowing before the King of Sweden on that occasion. 

Myrdal was one of the BIGGEST MORONS ever born – especially when it came to the “economic development” of Third World nations. Myrdal’s Asian Drama asserted that the poor of the Third World could not take rational economic decision in the market – and so needed an “intellectual-moral elite” of Central Planners to take these decisions on their behalf. Peter Bauer, the great DISSENTING development economist accused Myrdal of “denying the economic principle” – but Bauer, a true-blue "classical liberal," himself relied on “observations,” and his was NOT a Science based on any Epistemology. His permanent sparring opponent was Amartya Sen – and this camp-follower of Keynes and Myrdal got the Nobel, of course! Sen thinks the poor are STUPID - and need "education" from the same "intellectual-moral elite."

Gunnar Myrdal was also opposed to machinery - saying these "decreased the demand for labour" - and thus a LUDDITE like Gandhi, and I have this very old column against such shallow thinking. 

Here is the list of Nobel prize-winners in Economic Science - it began with Tinbergen, the "econometrician." This is COMPLEX MATHEMATICS - and is to "understanding the trading human mind" what "psychometrics" - as with IQ tests and other "numbers" - is to traditional Psychology, which is "literary," and seeks to understand the human mind in other ways. 

Note how Samuelson of the Massachusetts Institute of Technology was the very next winner - and his TEXTBOOK PRESCRIBED WORLDWIDE poisoned billions of bright minds with Keynesian nonsense, and in technicolour, that too. We in India got a special "Eastern Economy Edition" published by Tata-McGraw Hill - like "get your brain killed cheap-cheap!"

Kuznets got the prize then - and he "invented" the "absurd measurements" of the mythical national economy: like Gross Domestic Product (GDP), its "growth rate," and so on. This insane "social accounting" only serves the "national socialists" who supposedly exist to look after and manage this national economy which is as false as the money it uses.

The entire list is composed of socialists - like Wassily Leontief of the former USSR whose "input-output analysis" was supposedly the "method" of central planners. Ask yourself, if they still teach you this crap, what input-output analyses go into the Public Distribution System, the State Electricity Boards, or ANYTHING ELSE that is centrally planned in India today.

The prize has often gone to Keynesians, with Paul Krugman being the latest of this immoral bunch, with some Chicago University types thrown in.

There is one "public choice" man - James Buchanan - but his is NOT any science at all. It merely extends traditional assumptions and methods of Marshallian Economics to politics and government - and arrives at unsurprising conclusions. The best and briefest guide to all that this school of thought has produced is Gordon Tullock's The Vote Motive - and how I LOVE his title. 

Getting back to the MOMENT, and in INDIA, that too – the news has it that the banking sector is reeling under accumulated bad debts totaling over 1.5 trillion rupees, which is 1.5 lakh crores in our lingo. I read it in Mint - but you must check the website for the story.

These are all CAPITAL DESTRUCTION – to State Electricity Boards, real estate and so on. The giant State bank of India is one the biggest losers. What do we do? Do we “create credit out of thin air” and thereby “recapitalise the banks”? Inflationism will continue then – forever. Or until the “crack up boom” appears – and money itself FAILS.

And there is this interview in Mint (check website yourself, please) with that Harvard MBA Palaniappan Chidambaram, currently Finance Minister – just as he was in 1984 when the first Maruti 800 rolled out priced at less than 40,000 rupees. They are now saying the “new” Maruti 800 will be a “game changer” for the Indian automobile industry – and it is priced at 2,40,000.

The “moral question” on money and banking is about PROPERTY – and, as I just discussed, Keynes was a self-confessed “immoralist.”

Issues pertaining to PROPERTY are all that there really is to almost any and every legal dispute, for example:

1. The new “Land Acquisition” Bill by which they will “legally plunder” as usual. The nonsense about Sonia increasing the required percentage of those who agree to parting with their lands from 66 to 80 percent for any acquisition to go through goes against the PRINCIPLE of justice being "minute" - that is, examining each individual case on its own merits. Further, there seems to have been absolutely no "application of mind" over this - as the 20 percent of those who DISAGREE could be holding 80 percent of the land! Socialism is UNLAW and LEGAL PLUNDER - period. Anti-social.

2. The BRT corridor by which they will run their own HUGE BUSES on specially reserved space on public roads and streets – while auto-rickshaws are “limited by license” such that one of these beasties costs 650,000 in Delhi, and the smallest player in urban transportation gets SCREWED. Anti-social!

3. The radio spectrum in outer space - and what is best not only for ORDER, but also for the CONSUMER.

4. The oil and gas underground - and what is best not only for ORDER, but also for the CONSUMER.

5. The proposed new “land reforms” for the “landless” – while every one of India’s 5 metros are full of slums, wherein dwellings are nothing but “properties without titles.” What about all the UNOWNED LAND.

6. Socialism means The State owns everything; the people own nothing. This is the MYTH OF COLLECTIVE PROPERTY.

And then, there is the Lockean Principle – which guided the Honourable East India Company, by which they settled land tenures and rights, ensured public order, and private accumulation of capital as well – without any “legislation.”

Not just the Indian Police Act of 1861 and the Indian Penal Code of 1863, both the Land Acquisition Act (1894) as well as the Reserve Bank of India Act (1934) were creatures of the British Crown.

During the centuries of the Company 80 hill stations were established, with roads and railways to connect them - before the invention of the automobile, and even before Japan got its first railways, and all this WITHOUT FORCIBLE LAND ACQUISITION or any "eminent domain" style LOOT. Millions of acres of tea and coffee estates – all entirely “homesteaded.”

Property is NOT a “political right” – and as I have been explaining all along, Property arises from a LIBERTY and is maintained and exchanged thereafter as a “right under Private Law.”

So we don’t need no “fundamental rights.”

Not that Property is included in that list anyway.

We need REPUBLICANISM - and Kashmiris should note that Scotland is now trying to free itself from its union with England. 

Too much TIME is going by – wasted on NONSENSE that masquerades as the most vital Science ever known to Man.

Leave you with these thoughts:

Do the poorest need “microfinance” – when they are seeing the erosion of their savings? Who is “creating the credit” for all these microfinance companies? And one of these microfinance chaps also got a Nobel prize - for PEACE, that too, which can NEVER be achieved if "national socialism" and its "national paper currencies" prevail.

Thus, when the Finance Ministry and the RBI are asking banks to “step up retail lending” to CONSUMERS – for housing, motor vehicles, and appliances, is it not the SAME THING, only for the middle classes this time? If your savings rose in value – and the price of the Maruti 800 DECLINED, which is DEFLATION, wouldn’t YOU be much better off?

Recommended reading: My post on how “Only the Laws of the Natural Order can resolve the current money and banking crisis.” 

By some stroke of luck, there is this interview with the 2008 Nobel prize winner in Economics - Joseph Stiglitz, of the World Bank and Columbia University, published in the Sunday Times of India. He reveals himself to be nothing but a STATIST, an INFLATIONIST, and a PROTECTIONIST as well - and most certainly NOT an "economist." He PRETENDS to be in favour of EQUALITY - but if you read between the lines, it becomes obvious that he is on the side of the GLOBAL POLITICAL-FINANCIAL ELITE.

The basic truth is that we are all unequal in our capacities, talents and interests - which is why we specialise and trade amongst each other. What we receive from The Market in exchange for whatever we offer others has NOTHING to do with "merit" and "worthiness" and stuff like that - which is why most professors are quite poor while sportpersons, musicians, and purveyors of trashy books, films, and television soaps make Big Bucks.

As for FDI in retail - meaning supermarkets - that fact is that we as a capital-poor and labour-rich country must allow foreign capital into EVERYTHING. This alone will raise wages - so I hope the Dalit Chamber of Commerce reads my "Labour, Love Thy Capital."

If this field is restricted to wealthy Indians (who possess no "expertise" or even "experience" in the area) the fact remains that these people will DIVERT RESOURCES from other areas to do so. Capital will not be "added"; capital will actually be "debarred"; and all that will transpire is that both capital and enterprise will be "diverted" to areas where they ought not to go. These inept Indian entrepreneurs will also BORROW. And many will surely FAIL. Further, we see so many of these Indian swadeshi supermarkets nowadays - but do they really satisfy us as CONSUMERS?

Stiglitz concludes on the side of "labour" - as they all do - saying Walmart is not a "good employer." But is Walmart the ONLY supermarket chain in the world. Will many chains not open - and compete for both buyers as well as workers? When big firms invest and hire workers they COMPETE - and workers must be free to choose between them. A bad employer will lose workers - and that is the BEST THING that can happen for workers. A closed economy in which STATE EMPLOYMENT is the ONLY EMPLOYMENT is precisely what we went through for so many decades. And in this socialist "workers' paradise" all the hard-working people FAILED AS CONSUMERS! Despite all the "trade unions."


So, what do I think of Joseph Stiglitz, winner of the Nobel Prize for Economic Science, 2008?




Let me put it this way: I now have plans of inventing an ATOMIC SPLIFF containing ganja with the highest THC imaginable, made possible through genetic engineering - and I shall call that spliff HIGHNAMITE!

Beats this two-inch fuse to a little stick of dynamite any day.