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    George Reisman, Capitalism – A treatise on economics

    Johnathan R. Razorback
    Johnathan R. Razorback
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    Date d'inscription : 12/08/2013
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    George Reisman, Capitalism – A treatise on economics Empty George Reisman, Capitalism – A treatise on economics

    Message par Johnathan R. Razorback le Sam 18 Aoû - 16:59

    « The subject of this book is the principles of ecenomics. Its theme is that the application of these principles to the service of human life and well-being requires the existence of a capitalist society.” (p.1)

    “The classical and the Austrian schools and their allies have developed virtually all of the great positive truths of economic science. Their ideas, especially those of von Mises, Ricardo, Smith and Böhm-Bawerk –in that order- together with important element of the philosophy of Ayn Rand- are the intellectual foundation and inspiration of this book, which seeks to carry the work of these extraordinary individual a step further by integrating leading elements of it into a logically consistent whole and by incorporating the present author’s own contributions.” (p.2)

    “In response to utterly flimsy criticisms, easily capable of being answered, and apparently based on nothing more than his own growing attachment to socialist ideas, Mill abandoned the so-called wages-fund doctrine, according to which wages are paid out of savings and capital. In so doing he cut the ground from under the entire classical perspective on the role of saving and capital in the productive process, including his own previous brilliant contributions to that perspective, and set the stage for the intellectual success of Keynesianism in the 1930’s.” (p.3)

    “A fundamental accomplishment of the book, which makes possible almost all of its other accomplishments, is the integration and harmonization of the ideas of the classical and Austrian economists.” (p.3)

    “When von Mises appeared, there was virtually no systematic intellectual opposition to socialism or defense of capitalism. […] What von Mises undertook, and which summarizes the essence of his greatness, was to build a systematic intellectual defense of capitalism and thus of material civilization.” (p.5)

    “Largely thanks to von Mises, there have been other important recent or contemporary advocates of capitalism. F. A. Hayek and Milton Friedman are the two leading examples. But, in my judgment, neither they nor anyone else begins to compare to von Mises in logical consistency and intellectual breadth and depth in the defense of capitalism. Hayek, for example, finds “a comprehensive system of social insurance” to be consistent with capitalism. Friedman believes that fiat money is consistent with capitalism.
    Other, lesser defenders of capitalism have even more serious inconsistencies. The so-called supply-siders –Robert Mundell, Arthur Laffer, and Jude Wanniski- apparently want to achieve capitalism without facing the need to reduce government spending and eliminate the welfare state. Much worst, Rothbard, who was widely regarded as the intellectual leader of the younger generation of the Austrian school and of the Libertarian party as well, was a self-professed anarchist and believed that the United States was the aggressor against Soviet Russia in the so-called cold war.” (p.5-6)

    “The leading members of the mercantilist school were Louis Bodin (1530-96), Thomas Mun (1571-1641), William Petty (1623-97), Josiah Child (1630-99), and the philosopher John Locke (1622-1704).” (p.6)

    “I define economics as the science that studies the production of wealth under a system of division of labor, that is, under a system in which the individual lives by producing, or helping to produce, just one thing or at most a very few things, and is supplied by the labor of others for the far greater part of his needs.” (p.15)

    “The division of labor is an essential characteristic of every advanced economic system. It underlies practically all of the gains we ascribe to technological progress and the use of improved tools and machinery ; its existence is indispensable for a high and rising productivity of labor, that is, output per unit of labor. By the same token, its absence is a leading characteristic of every backward economic system. It is the division of labor which introduces a degree of complexity into economic life that make necessary the existence of a special science of economics. For the division of labor entails economic phenomena existing on a scale in space and time that makes it impossible to comprehend them by means of personal observation and experience alone. Economic life under a system of division of labor can be comprehended only by means of an organized body of knowledge that proceeds by deductive reasoning from elementary principles. This, of course, is the work of the science of economics.” (p.15-16)

    “The division of labor does not exist or function automatically. Its functioning crucially depends on the laws and institutions countries adopt. A country can adopt laws and institutions that make it possible for the division of labor to grow and flourish, as the United States did in the late eighteenth century. Or it can adopt laws and institutions that prevent the division of labor from growing and flourishing, as is the case in most of the world today, and as was the case everywhere for most of history.” (p.16)

    “In the absence of a widespread, serious understanding of the principles of economics, the citizens of an advanced, division-of-labor society, such as our own, are in a position analogous to that of a crowd wandering among banks of computers or other higly wandering among banks of computers or other highly complex machinery, with no understanding of the functioning or maintenance or safety requirements of the equipment, and randomly pushing buttons and pulling levers. This is no exaggeration. In the absence of a knowledge of economics, our contemporaries feel perfectly free to enact measures such as currency depreciation and price controls. They feel free casually to experiment with the destruction of such fundamental economic institutions as the freedom of contract, inheritance, and private ownership of the means of production itself. In the absence of a knowledge of economics, our civilization is perfectly capable of destroying itself, and, in the view of some observers, is actually in the process of doing do.” (p.16)

    “Because it explains what promotes and what impairs the functioning of the division of labor, economics is an essential tool for understanding the world’s history –the broad sweep of its periods of progress and its periods of decline- and the journalistic events of any given time. Its applications include a grap of the causes of the decline of ancient civilization and of the rise of the modern, industrial world, both of which can be understood in terms of the rise or fall of the division of labor.” (p.17)

    “A knowledge of economics is indispensable for anyone who seeks to understand his own place in the modern world and that of others. It is a powerful antidote tu unfounded feelings of being the victim of perpetrator of “exploitation” and to all feelings of “alienation” based on the belief that the economic world is immoral, purposeless, or chaotic. Such unfounded feelings rest on an ignorance of economics.” (p.17)

    “A thorough knowledge of economics is essential to understanding why the exercice of individual rights in the economic sphere not only is not harmful to the interests of others, but is in the foremost interest of everyone. It is essential if the American people are ever to reclaim the safeguards to economic freedom provided by their Constitution, or if people anywhere are to be able to establish and maintain systems of government based on meaningful respect for individual rights. Indeed, in demonstrating the harmony of the rational self-interests of all men under freedom, this entire book has no greater or more urgent purpose than that of helping tu uphold the philosophy of individual rights.” (p.18)

    “Capitalism is a social system based on private ownership of the means of production. It is characterized by the pursuit of material self-interest under freedom and it rests on a foundation of the cultural influence of reason. Based on its foundations and essential nature, capitalism is further characterized by saving and capital accumulation, exchange and money, financial self-interest and the profit motive, the freedoms of economic competition and economic inequality, the price system, economic progress, and a harmony of the material self-interests of all the individual who participate in it.” (p.19)

    “Capitalism is the economic system that develops insofar as people are free to exercise their right to life and choose to exercise it. As will be shown, its institutions represent, in effect, a self-expanded power of human reason to serve human life. The growing abundance of goods that result is the material means by which people further, fulfill, and enjoy their lives. The philosophical requirements of capitalism are identical with the philosophical requirements of the recognition and implementation of man’s right to life.
    It was no accident that the gradual development of capitalist institutions in Western Europe that began in the late Middle Ages paralleled the growing influence of prosecular, proreason trends in philosophy and religion, which had been set in motion by the reintroduction into the Western world of the writings of Aristotle. It is no accident that the greatest era of capitalist development –the last two centuries- has taken place under the ongoing cultural influence of the philosophy of the Enlightenment. […]
    The cultural acceptance of the closely related philosophical conviction that the world operates according to definite and knowable principles of cause and effect is equally important to economic development. This conviction, largely absent in the Dark Ages, is the indispensable foundation of science and technology. It tells scientists and inventors that answars exist and can be found, if only they will keep on looking for them.” (p.19)

    “From the dawn of theRenaissance to the end of the nineteenth century, the growing conviction that reason is a reliable tool of knowledge and means of solving problems led to a decline in violence and the frequency of warfare in Western society, as people and governments became increasingly willing to settle disputes by discussion and persuasion, based on logic and facts. This was a necessary precondition of the development of the incentive and the means for the stepped-up capital accumulation required by a modern economic system. For if people are confronted with the chronic threat of losing what they save, and again and again to do lose it –whether to local robbers or to marauding invaders- they cannot have either the incentive or the means to accumulate capital.
    During the same period of time, as part of the same process, a growing confidence in the reliability and power of human reason led to the elevation of people’s view of man, as the being distinguished by the possession of reason. Because he was held to possess incomparably the hightest and best means of knowledge, man came to be regarded, on philosophical grounds, as incomparably the hightest and best creature of the natural order, capable of action on a grand and magnificent scale, with unlimited potential for improvement. In conjunction with the further philosophical conviction that what actually exist are always individual concretes, not abstractions as such, and thus not collectives or groups of any kinds, the elevated view of man meant an elevated view of the individual human being and his individual potential.
    In their logically consistent form, these ideas led to a view of the individual as both supremely valuable –as an end in himself- and as fully competent to run his own life. The application, in turn, of the view of the individual to society and politics was the doctrine of inalienable individual rights, and of government as existing for no other purpose than tu secure those rights, in order to leave the individual free to pursue his own happiness. This, of course, was the foundation of freedom of capitalism. The same view of man and the human individual, when accepted as a personal standard to be lived up to, was the inspiration for individuals to undertake large-scale accomplishments and to persevere against hardship and failure in order to succeed. It inspired them when they set out to explore the world, discorver laws of nature, establish a proper form government, invent new products and brand new industries. It as the inspiration for the pioneering spirit and sense of self-reliance and self-responsibility which once pervaded American society at all levels of ability, and a leading manifestation of which is the spirit of great entrepreneurship.” (p.20)

    “Freedom means the absence of the initiation of physical force. Physical force means injuring, damaging, or otherwise physically doing something to or with the person or property of another against his will. The initiation of physical force means starting the process –that is, being the first to use physical force. When one has freedom, what one if free of or free from is the initiation of physical force by other people. An individual is free when, for example, he is free from the threat of being murdered, robbed, assaulted, kidnapped, or defrauded. […]
    The existence of freedom requires the existence of government. Government is the social institution whose proper function is to protect the individual from the initiation of force. Properly, it acts as the individual’s agent, to which he delegates his right of self-defense. It exists to make possible an organized, effective defense and deterrent against the initiation of force. Also, by placing the use of defensive force under the control of objective laws and rules of procedures, it prevents efforts at self-defense from turning into aggression. […]
    An effective government, in minimizing the threat of aggression, establishes the existence of the individual’s freedom in relation to all other private individuals. But this is far from sufficient to establish freedom as a general social condition. For one overwhelming threat to freedom remains: namely, aggression by the government itself.
    Everything a government does rests on the use of force. No law actually is a law unless it is backed by the threat of force. So long as what the government makes illegal are merely acts representing the initiation of force, it is the friend and guarantor of freedom. But to whatever extent the government makes illegal acts that do not represent the initiation of force, it is the enemy and violator of freedom. In making such acts illegal, it becomes the initiator of force.
    Thus, while the existence of freedom requires the existence of government, it requires the existence of a very specific kind of government: namely, a limited government, a government limited exclusively to the functions of defense and retaliation against the initiation of force –that is, to the provision of police, courts, and national defense.
    In a fully capitalist society, government does not go beyong these functions. It does not, for example, dictate prices, wages, or working conditions. It does not prescribe methods of production or the kinds of products that can be produced. It does not engage in any form of “economic regulation”. It neither builds houses nor provides education, medical care, old-age pensions, or any other form of subsidy. All economic needs are met privately, including the need for charitable assistance when it arises. The government’s expenditures are accordingly strictly limited ; they do not go beyong the payment of the cost of the defense functions. And thus taxation is strictly limited ; it does not go beyong the cost of the defense functions.
    In short, in its logically consistent form, capitalism is characterized by laissez faire. The government of such a society is, in effect, merely a night watchman, with who the honest, peaceful citizen has very little contact and from whom he has nothing to fear. The regulations and controls that exist in such a society are not regulations and controls on the activities of the peaceful citizen, but on the activites of common criminals and on the activites of government officials –on the activites of the two classes of men who use physical force. Under capitalism, while the government controls the criminals, it itself is controlled (as it was for most of the history of the United States) by a Constitution, Bill of Rights, and system of checks and balances achieved through a division of powers. And thus the freedom of the individual is secured.” (p.21)

    “The fact that freedom is the absence of the initiation of physical force also means that peace is a corollary of freedom. Where there is freedom, there is peace, because there is no use of force: insofar as force is not initiated, the use of force in defense or retaliation need not take place. Peace in this sense is one of the most desirable features of freedom. Nothing could be more valuable or honorable.” (p.22)

    “Under freedom, everyone can choose to do whatever he judges to be most in his own interest, without fear of being stopped by the physical force of anyone else, so long as he himself does not initiate the use of physical force.” (p.22)

    “This book will show […] that such phenomena as inflation, depressions, and mass unemployement –the leading causes of economic insecurity –are resultats of violations of economic freedom by the government, and not at all, as is usually believed, of economic freedom itself.” (p.22)

    “In the name of economic security, the freedom of individuals to dispose of their own incomes has been violated as they have been forced to contribute to the social security system. A major consequence of this has been that an economous amount of savings has been diverted from private individuals into the hands of the government. Had these savings remained in the possession of the individuals, they would have been invested and would thus have helped to finance the construction and purchase of new housing, new factories, and more and better machinery. In the hands of the government, these savings have been dissipated in current consumption. This has resulted from the fact that the government has an overwhelmingly greater interest in its own immediate financial needs that in the future economic security of any private individuals and thus has spent the funds in financing its current expenditures. This has meant the dissipation of these savings and thus the serious undermining of the wealth and productive ability of the entire economic system.
    These result have proceeded from the essential nature of the case, which is that while private individuals have an interest in their long-run future economic security, and will provide for it they are left free to do so, the government does not have such an interest. The interest of government officials is to get gy in their term of office and leave the problems of the future of their successors. Thus the violation of economic freedom necessarily results in making individuals less economically secure. Indeed, having been deprived of the existence of actual savings to provide for their future economic security, individuals are now in the position of having to depend on the largesse of future legislators, who will have to turn to future taxpayers for the necessary funds.” (p.22-23)

    “Economic freedom and political freedom are indivisible. They are, in fact, merely different aspects of the same thing. They alleged dichotomy between economic freedom and political freedom, between property rights and human rights, is groundless. Virtually every human activity employes wealth – property. To respect the right and freedom to use property is to respect the right and freedom to carry on the activities in which property is used. To deny the right and freedom to carry on such activities is to deny the right and freedom to use the property involved.
    For example, the freedom of speech is implied in a farmer’s right to use his pasture as he sees fit. The farmer’s property rights include his right to invite people onto his land to deliver and or hear a speech. Any effort by the government to stop or prevent such a speech is an obvious interference with the farmer’s property rights.
    Property rights also include the right to build meeting halls and radio and television stations and to use them to propound whatever ideas one likes. Freedom of speech is fully contained in the economic freedom of the owners of property of the kind that facilitates speech to use their property as they see fit. By the same token, the freedom of speech of those who do not own such property is implied in their right and freedom to buy the use of such property from those who do own it and are willing to rent it to them. Government interference with any such speech is simultaneously an interference with the property rights of the owners of meeting halls or radio or television, stations to use or rent their facilities as they see fit.
    In the same way, freedom of the press is fully contained in the freedom of an individual to set his type to form the words he wants to form, and then tu use his presses, paper, and ink to reproduce those words, and to sell the resulting product to buyers of his choice. Freedom of travel is contained in the property right to build railroad and hightways, automobile and airplanes, to drive one’s automobile where one likes, or buy a bus, train, or plane ticket from any willing seller. It is contained in the freedom to use one’s shoes to walk across the frontier.
    In prohibiting the freedom of speech, press, or travel, one prohibits property owners from using their property as they wish. By the same token, in respecting property rights, one respects these freedoms. On this basis, one should observe the irony of alleged conservative defenders of property rights advocating such things as antipornography legislation –a violation of the property rights of press owners.” (p.23)
    -George Reisman, Capitalism – A treatise on economics, Ottawa, 1998 (1990 pour la première edition états-unienne), 1046 pages.



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    « La racine de toute doctrine erronée se trouve dans une erreur philosophique. [...] Le rôle des penseurs vrais, mais aussi une tâche de tout homme libre, est de comprendre les possibles conséquences de chaque principe ou idée, de chaque décision avant qu'elle se change en action, afin d'exclure aussi bien ses conséquences nuisibles que la possibilité de tromperie. » -Jacob Sher, Avertissement contre le socialisme, Introduction à « Tableaux de l'avenir social-démocrate » d'Eugen Richter, avril 1998.

    "La vraie volupté est remportée comme une victoire sur la tristesse [...] Il n’y a pas de grands voluptueux sans une certaine mélancolie, pas de mélancoliques qui ne soient des voluptueux trahis." -Albert Thibaudet, La vie de Maurice Barrès, in Trente ans de vie française, volume 2, Éditions de la Nouvelle Revue Française, 1919, 312 pages, p.40.


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