Ratchet effect in the long-run

Economics Political Theory
1

So, we all are aware of Robert Higg’s “ratchet effect”: the theory that for every step back they take, they take two steps forward (in terms of growth). Applying this to the concept of liberty, it seems as if the “ratchet effect” suggests that over the long-run a State will become more absolutist. Over the “longer-run”, though, does this remain true? I wan to apply my argument within the current context of the Keynesian revolution, including the 1970s and 1980s, and the current Keynesian revival.

I am currently reading Murray Rothbard’s history of economic though before Adam Smith, and I see a trend. Economic thought saw its origins in the writings of Ancient Greek scholars. Apart from marginal figures, most Greek scholars were suspicious of merchants and trade, although Aristotle set a trend for private property (although he was still suspicious of trade, money and merchants). Nevertheless, the concept of private property rights grew through the period of the early Roman Empire, and there was even the development of Roman law which protected rights of merchants and whatnot. There was, of course, price fixing and whatnot during the Roman Empire, but in regards to the scholarly outlook on economics is was leaning more towards a libertarian stance than any other economic perspective, at the time or near that era.

Roman law, although forming the basis of Medieval codex, fell into disfavor when it came to private property and trade, it seems, after the fall of Rome. The Catholic Church prohibited usury, disliked trading and set the definition of the “just price” as that fixed by the government or by the Church. There were few scholars who disagreed, but it was not really until after the 12th century that real progress was made against the banning of usury and whatnot. What can be considered proto-liberty was finally developed by the Spanish scholastics, in particular the School of Salamanca. However, their teachings were basically erased with the coming of the Protestant Reformation and Calvanism (although Rothbard conceded that when Protestants had to combat the State, they too shifted towards a more liberty-oriented perspective). Thereafter, fell a new “dark age” on economic thought, as it invited the introduction of mercantilism (the coming of the absolute state, and the need to collude with business in order to guarantee tax profits, et cetera).

We can, therefore, see two periods of relative liberty, interrupted by long periods of tyranny. The mercantilist tyrrany would be fought against the new liberals, such as Cantillon and Turgot, and later Adam Smith, and this can symbolize a third period of intellectual liberty. Although near the end of the 19th century came Karl Marx, intellectualy I think it would be safe to say that in Western world (at least) there remained a semblence of logical intellectuality. What remained, however, would be almost fully erased by the arrival of Keynesian thought. Much like mercantilism, Keynes seemed to justify the State’s programs and therefore found favor throughout international courts. Like mercantilism, Keynes’ theories (and the developments thereof) seem to threaten liberal scholasticism with extinction (this is a hyperbole, but you get the point).

But, like mercantilism and the coming of the European liberals, do you think that liberal ideology will eventually prevail within the context of the Keynesian revolution?

2

Here’s my opinion.

I think it can be boiled down to pessimism or optimistism pertaining to human nature. Are people becoming more depressed or happy when they reflect upon their individual selves and then how do their project their own state of affairs upon other people around him or her self? Are people generally optimististic that humans upon their own liberty will be morally responsible; or are people in general pessimistic about humans in their own liberty doing what is morally appropriate. Therefore will humanity in general, which obviously includes politicans, bankers, the breadmaker, car mechanic, etc…, think people are destroying themselves and so they believe somebod(ies) needs to intervene to stop the madness because in general they have no true hope for people? Thus do people in general not trust that their neighbor, or maybe even their own self, will be able to do it own their own accord?

pessimism or optimistism… I keep coming across people that are so fed up with humanity and are pessimistic about humans in general. It’s why the world government grows. Generally it seems people are not trusting each other and so at least in government positions the call is for more intervention as humanity is seen as a disease rather than the cure. It’s a negative spin in general. It’s easy in this context to see why that Obama only needed one word: “Hope” and he wins the elections with people crying for joy as they chase the utopian fantasy.

Personally, I am optimistic about human nature, but whether that potential will ever allowed to be fulfilled is a whole other question. I don’t know. Maybe next year, maybe in ten years, maybe in a millions years, maybe never and humanity will have been the creature that had so much potential. So much going for him and her, but never took it upon themselves to live it. But as I said, I’m more optimistic than that.

3

No, the liberal ideology will prevail within the context of the collapse of the Keynesian revolution.

4

I admittedly may have used the wrong words; that liberalism will prevail with the collapse of Keynesian thought is obvious. When I said “within the context”, I simply asked what people thought about applying these trends of liberalism vs. Statism to the modern era, especially in regards to … say … Austrian economics vs. Keynesian economics.

5

The trend that I see in Rothbard’s book is not so much about human nature or individuality, but the ability for the State and scholasticism to marginalize liberalism. That is, for liberals to be shunned out of the intellectual world by their Statist colleagues. This seemed to be the cased during the late Middle Ages, and then during the first and second centuries of the Protestant Reformation. It again happened after the 1930s, where the State and the scholars who supported said State were able to marginalize the liberals (whether it be the Austrian school, or even the Chicaco school [who adapted by accepting Keynesian theories, in order to fit in within this new intellectual order]).

6

yes. But to marginalize liberalism is to marginalize what liberalism is about. What it advocates. And liberalism is optimistic about human nature, meaning, in liberty people will generally cope with their own needs. People can determine on their own accord what to do. It’s the free market, but central planners don’t think the free market can work without their centrally controlled implementations. They are pessimistic that the individual will go into the market and the market, full of these individuals, will be able to remain stable. Central planners view the free market as chaos. The same way that politicans or those needing them, view anarchy as chaos. But that mindset to view the free market and anarchy as chaos to point the finger at the individual and say: ‘chaos’. Again this means that the individual is chaotic without central planners, ie. Keynesian, statists. They are pessimistic about the individual making the right choices so they plan on making the right choices for them (the individuals).

Here’s a question and I don’t know if anybody knows this, but it might shed light on this: When liberalism was shunned during the late Middle Ages or in any previous times, is this also when monasteries shut their doors and sharing with ‘outsiders’ rarely, if at all, happened. Is this when monestaries sprung up in various places and libraries in these places were like ‘arks’ (as in Noah’s ark) saving and carrying forth knowledge? Also universities were only of the very few and I don’t even know how many of them existed during this time.

Because I do know that the Age of Reason was a time that knowledge from the monestaries, where books on various subjects, filtered out into the community. There was a trigger in which what was isolated (the knowledge in books) for so long somehow became very accessible. It was a maturation for civil society. What was taught at the universities became more and more accessible to the laymen as various authors could write about what might seem complex nuiances but in a style that the laymen could easily understood (this was one of Thomas Paine’s virtues and why ‘Common Sense’ was popular because he could write in a way that many could easily grasp. He was a role-model or a how-to-do-it, a ‘pioneer’ in writing in such a way about seemingly complex abstracts that didn’t fly over the heads of most people. Like a Tom Woods, Murray Rothbard, or Ron Paul in this regard. Writing about what might be a complex subject in an easily accessible manner) The understandings in writings were present but the time before the age of reason could be considered pessimistic for numerous reasons. But then somehow with science and other topics became ‘in vogue’ again and with such figures as Newton, Kant, and then libraries springing up all around England (and other countries?). most people were able to come into contact with the various kinds of knowledge in literature. Coffee and chocolate bars sprung up and people joined into hundreds of clubs that became other venues to learn not only about the newest scientific thoughts, but politics, sewing, or inventions, etc…

A good analogy is Star Wars 3. Is this the beginning of a growing Empire, I mean ever larger than even now, in which the Jedi are slaughered and those few that remain alive do they have to hide in remote, hidden places? Or have we seen the slaughter of most Jedi’s and, actually as Stranger recently said in another thread, is this the ‘Empire Strikes Back’ in which Luke Skywalker finds himself pretty much on his own to receive his last training from Yoda who then dies and it’s only, eventually, Luke left. The last of the Jedi. The ark of knowledge that holds what is good on it’s last leg but in the most pessimistic of times, the lowest of the low, where it may not be able to fall any lower, that’s when a Renaissance begins.

I think it is still a heavily pessimistic era, but from what I keep hearing, many people are waking up to what’s happening. So maybe this is turning around and optimisism is spreading once again. I don’t know.

maybe somebody could shed more light on this. Jonathan, does this fit into what you are saying?