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By Dr Tim Evans, on 29 January 12
When Labour peer Maurice Glasman recently went on BBC Radio 4 with TCC’s Detlev Schlichter I was disappointed and a little taken aback to learn of his Lordship’s ignorance when it came to the Austrian School of Economics. While towards the end of the interview he accepted the need for honest – backed – money, he went on to demonstrate his ignorance when he implied that free marketeers have a prescriptive attitude to ownership philosophies and organisational models. I was really saddened by this not least because like so many other Austro-libertarians I have spent years pointing out that genuine markets would encourage more open and diverse forms of ownership including mutuals.
When I was fifteen I avidly watched this excellent BBC documentary on the Mondragon Experiment which sparked a life long interest in mutuals, friendly societies and co-operatives. Later, as a university student I went on to study a wide range of radical dissenters including a wide range of anti-statists. Indeed, it is with this history in mind that I find it ironic that away from the naïveté of Lord Glasman, it is Conservative Prime Minister David Cameron who is planning to introduce a Parliamentary bill promoting co-operative forms of ownership and doing so in key areas such as education and healthcare.
Thirty-two years on from the BBC’s film on the Mondragon Experiment, maybe opinion formers are finally rediscovering the libertarian tradition of collective forms of organisation and self-help without the state. As much a part of a market as any other form of non-coerced organisation or ownership philosophy, I do hope Lord Glasman and his Purple Book friends take note.
By Allan Stevo, on 17 January 12
On December 18, 2011, Vaclav Havel the longtime Czech dissident passed away. Havel ’s role in the Velvet Revolution – the uprising of Czechs and Slovaks against their government is one of the great ironies of that autumn of 1989, when the Iron Curtain fell.
Havel, a dissident, in and out of jail, in and out of trouble with his government, got out of prison just long enough to join fellow dissidents and to oversee the crumbling of his government, during which time his fellow countrymen gathered in the streets and medieval squares calling for his installation in Prague Castle.
In a turn of poetic justice, Havel in a matter of weeks went from a prison cell as a political prisoner to President of Czechoslovakia. He chased his former tormentors from office in a popular revolution and then replaced them in office, in hopes that he would succeed at stripping the power to torment from that office. But during the 1960s, 70s, and 80s few in society had any idea that the government would collapse. It was a great surprise to many when that collapse took place. Opposing the government was opposing an entity that looked like it would be omniscient and omnipotent for all eternity. Havel ’s death has caused me to ask myself “Would you have stood against such an entity?”
His plays were not welcomed by the censors to be part of official culture – government didn’t want him having a voice. He couldn’t go to university because his parents were considered class enemies. Havel was unable to find work that matched his artistic skill set; that wasn’t because of job shortages, but because the government didn’t like him and got to control who worked. In Communist Czechoslovakia, where unemployment was illegal, you either went to work or you went to jail.
How many people would today act on conscience, knowing that doing the right thing might not only land you in jail, but would prevent you from travelling abroad, prevent you from success in your career, and prevent your children from attending the university of their choosing? All were considered legitimate punishments for standing against the government.
Today in the U.S. it is controversial to simply speak a name like Ron Paul or to share a pro-freedom viewpoint on a host of topics from guns, to healthcare, to the FDA. Anyone who would speak pro-freedom viewpoints on such topics is seen as a kook. This isn’t bold action I’m referencing; it’s just talking. We have somehow found ourselves in a place in the history of the “land of the free and home of the brave” where talking is controversial.
There are some freedom-lovers who believe Ron Paul is the answer, yet giving to Ron Paul’s campaign is too great a task for those same freedom lovers. To speak his name to family and friends is too great a challenge. We are called today to move in such effete ways that we can barely even rise to the challenge of. It’s part of our situation in the world today where so many feel that no single moment in life seems to matter. When compared to a man like Havel , nearly anything we do through a ballot box will appear minimal.
In his Civil War, Julius Caesar talks about his rationale for invading his homeland and destroying the 500-year-old Roman Republic . He had felt insulted by its government. He had been dishonored. I realize that he is the dictator in history’s eyes, the tyrant killed by his buddy Brutus, but can you imagine someone doing that today? Can you even picture that an American would feel dishonored by the U.S. Government and resolve to invade Washington D.C. ?
No. Few of us will take any real risks in favor of freedom. If you’re a daring person you might obediently protest in a free speech zone, holding up some slogan and avoiding the even more socially risky behavior of talking to a fellow human being about ideas that are important to you. You will shout slogans at strangers, but you might not have the courage to sit down with your grandma and have a conversation (which by definition involves both listening and expressing). Again, that’s because talking is controversial.
What would you have done in Havel ’s homeland in the last century? Would you have hidden Jews when society tended to be anti-Semitic and government punishments for aiding Jews were severe? Would you have been the one who didn’t send his children to indoctrination camps as a “pioneer” even though everyone else was doing that, even though being a pioneer would help your child secure a spot in the Party and to later find a good job? These are factual situations of the past, but are intended as metaphor. The greatest task a person of conscience is called to is to rise to the occasion in his own times.
Our times today do not equate to those times. It’s hard to find comparison. No party rules all aspects of life. There is no deportation of Jews. There are other ills in the world, but those ills won’t be clear to most of society without many years of hindsight. Distance makes the black and whites easier to recognize.
We can force our actions into an ideology of freedom that has been tested over time – constantly being against all government encroachments on freedom. But even blanketed inside such an ideology, you will not protect yourself from the know-it-alls of the future who judge you with 20-20 hindsight.
When you truly take a stand you likely find yourself risking life, fortune, and position. The last of those is the most difficult. It’s relatively easy and romantic for a person to give his life. It’s easy for a person to give his wealth. What can be hard to justify is the lost opportunities that you will never regain when you are punished with a loss of position. By sticking your neck out, there are opportunities you lose.
I don’t know what I would have done. I would like to think that I can be the Havel of our day. I would like to think that I am constantly on the watch for injustice and do my best to remove myself from participation in that injustice. The deaths of dissidents like Havel give us time to reflect. For a week in December, every newspaper in the world was eulogizing Havel, giving us a special time to see into the past of communist Czechoslovakia .
This gives us a moment to ask ourselves – “What would I have done?” and more importantly “What should I be doing?
By Steven Baker MP, on 20 December 11
Following his recent paper The law of opposites: Illusory profits in the financial sector, TCC Advisory Board member and founder of Cobden Partners Gordon Kerr appeared on Bloomberg. The video is here.
 Click for video Gordon dealt with the flaws in IFRS, the reasons for the debt crisis, the case for hardening money, the need for international money in support of trade and more.
Later in the day, I said in the Commons that the Government’s response to the ICB report seemed to take accounting for granted, asking the Chancellor to consider the issue seriously in the forthcoming white paper.
By Steven Baker MP, on 8 December 11
This post originally appeared on www.stevebaker.info.
I spoke last night in the general debate on the economy, saying*:
As I rise to speak I am reminded of a quotation from an economist who was a fierce critic of Keynes, a chap called Henry Hazlitt, who said:
“Today is already the tomorrow which the bad economist yesterday urged us to ignore.”
We have heard today some moving accounts of individual and collective suffering in different regions of the country and among different sections of the public. We should be asking ourselves why, oh why, have we been delivered into this misery, which looks as if it will extend over years. Much of the conversation we have heard has been along the lines of aggregates, coarse economic aggregates, and has tended to stray away from individual choices and consequences. We have talked about markets in the abstract, and it is a pity that we seem to have forgotten that markets are a social phenomenon, and that they are about people co-operating. When we talk about markets, we tend to imagine overpaid people, high-frequency trading and those who add nothing to society.
I am reminded of something a constituent said to me recently after hearing a Minister’s speech. He asked, “Why is it that everything always seems to get harder for the working man, whoever is in power?” Indeed, in my constituency unemployment is up by 6.3% among the over-50s, up by 9.5% among those aged 25 to 49 and, scandalously, up by 23% among the young. We have heard that child poverty increased by 200,000 under the previous Government and that it is likely to increase by up to 100,000 under this Government. In the 21st century, that should not be our economic position.
Why are we in this debt crisis? I have just checked the M4 money supply figures—I am sorry to return to aggregates, but needs must. When Labour came to power the money supply was about £700 billion and it is now about £2.1 trillion, so it has tripled over the past 14 years. Unfortunately, most economists talk about money flowing into the economy as if it were water poured into a tank that found its own level immediately, but what if it is like treacle or honey? What if it builds up in piles when poured into the economy and takes a while to spread out? What if that money was loaned into existence in response to individual choices led by the excessively low interest rates pushed by the central bank? What if it was loaned into existence in particular sectors, such as the housing sector, where prices have more than doubled over the same period, and what if it was the financial sector that received the benefit of that new money first? Would that not explain why financiers and bankers are so much wealthier than everyone else, and why economic activity and wealth has been reorientated towards the south-east?
Unfortunately, the idea that money takes some time to move around the economy is lost on most economists, which I very much regret. Why did most economists not see the crisis coming? I put it to the House that it is because their theories of credit are mistaken. They make fundamental errors. Unfortunately I do not have time to go into that, but the fundamental point is that credit is a choice to consume more now and less later. It is about the exchange of present goods for future goods, and co-ordinating the economy through time, and I am afraid that the current intellectual mainstream in economics has dropped us into this desperate mess.
Opposition Members criticise the Thatcher and Reagan years. I think that there was much to applaud in those years, but unfortunately their intellectual underpinning was monetarism, which, like Keynesianism, is infected with those dreadful mistakes. People in the Occupy movement, and our constituents, are right to question the justice of our economic processes. The hon. Member for Penistone and Stocksbridge (Angela Smith) said earlier that the system cannot endure, and I am inclined to agree. I agree that the current debt-based and—I am afraid to say—statist system cannot endure. However, if this system is not to endure, which way should it fall? [Humanity] tried the statist direction in the past and it led to misery and murder. I stand for free markets and free co-operation, but I say this to the House: if this is capitalism, I am not a capitalist.
* (I have made a small correction to the quote and a clarification in [], both of which I have requested from Hansard)
Related reading can be found here:
- Hazlitt, Economics in One Lesson (buy, PDF), chapters 1, 6 and 23 in particular.
- Mises, Human Action (buy, online), especially chapter 20 “Interest, Credit Expansion, and the Trade Cycle”
- Hulsmann, The Ethics of Money Production (buy, PDF).
The Bank of England’s money supply measure M4, which I referred to, may be found here. I used M4 in this context because it is the conventional mainstream measure, but I prefer Kaleidic Economics’ MA for reasons explained on that site (Notes and Coins is too narrow and M4 too broad). MA tells a clear story of where jobs and growth came from and where they went – money supply growth created the illusion of prosperity, broke the banking system and collapsed, taking the illusion with it:
 Year on year change in Kaleidic Economics' MA - click for source
By Toby Baxendale, on 8 October 11
Who made this very sound statement two years ago in relation to QE I?
The last resort of desperate governments when all other policies have failed
Answer: George Osborne, our Chancellor.
Sometime soon it will have to stop because in the end printing money leads to inflation.
Answer: our Prime Minister.
Both of these statements were made in 2009 when the first round of QE unfolded.
If people are spending less, it follows that the money unit is being used less. Indeed corporate balance sheets are paying down debt and chalking up healthy cash balances. Coupled with this, in a fractional reserve system, when money gets repaid and not relent, as we know, it came from nothing, and it goes back to nothing.
Personal savings are at their highest for many years as households do the same, pay off debt and replenish cash balances.
Bank reserves are the highest they have been for a long time in relation to overall bank balance sheet size.
God help us if people do start to spend again in the fashion of old as there will be the mother of all inflations.
By the way, many empirical studies, most notably by Friedman, show us that the demand for money is very stable.
As we have discussed here before, regime policy uncertainty will cause people to hold precautionary balances, but only for a short period of time.
With the first round of QE of £200bn and now the second of £75bn we have nearly added 15% to the money supply.
They way out for the Bank of England is to massively raise interest rates as part of a very tight money policy. Either way, this is bad news for us.
Hoping a mild inflation will reduce our real debts over time is a very dangerous game. As soon as the inflation genie is out of the bottle, and we all realise that our money is depreciating, we will spend it, retailers will reprice to take into account the new demand, and prices will soar.
They are hoping not only for a mild inflation, but also for those in receipt of the new money, the people who have had their gilts bought with the new money, to then go and spend it and get those “animal spirits” working again.
So the bankers once again win. More expensive houses, more fast cars and boats, with their bonuses for organizing the buying of the gilts.
The banks get the new money deposited with them and can then shore up their balance sheets even further, as I suspect they are still concerned about all the wonky property loans and dodgy sovereign debt they need to wipe off their books. Thus, giving effectively £75bn of money out of the ether to the banks will not have the desired effect of increasing lending or spending (besides the bankers’ toys already mentioned). We all just have our purchasing power diminished while that of the banking system is raised. They get the new wealth effect, not you!
As most of these institutions are replete with failed corporate executives, still in the same jobs, who will more than likely repeat the same mistakes, who are regulated by the same people in differently named organizations, we have once more a recipe for disaster.
As we always say on this site, the creditors get fleeced . A pensioner buying an annuity today with a £300k pension would have got £22,500 pa and now will get £18,500, should the yields go down to where they want it. The ongoing war on the poor is relentless. Pensioners just have to swallow a 30% pay cut. Forget looters in Tottenham, we will have geriatrics in the streets of green and leafy middle class suburbia smashing the place up if they are not careful. They will suffer for the mistakes of past governments who in partnership with the banks created the mother of all credit booms, which has led to the largest misallocation of resources since the 30s.
As blame for the artificial boom does not lie with the Conservative Party, but with the Blair and Brown money regimes, I can’t fathom why the current government keeps trying to repeat the policy mistakes of the previous one, especially when they condemned this approach to money policy back in 2009.
One further thing, if they do pull yields down on gilts, this may well make borrowing costs marginally cheaper, but lets face it: if 50 basis points means you live or die in business, you are kidding yourself that you have a viable business anyway.
Likewise, if you are a home owner who is so close to the wire that a fraction of a interest rate move wipes you out, then you are a renter of a home, not an owner. The quicker you default, then better for you and your family. Release your burden, rent, and feed your family. No one will be saying at your funeral “he was a great man, he honoured his mortgage. Even though he never should have taken it out because he could not afford it, he was advised by the bank to do so. What’s more, they were so kind that they gave him a mortgage worth more than the house, so he could buy his furniture. Failing to feed his kids and getting divorced did not trouble this honorable man; for the rest of his life he toiled for the bank.”
Embrace default and let’s get this correction over and done with, so we can carry on and rebuild our lives in peace.
By Steven Baker MP, on 6 September 11
Over at ConservativeHome, I have promoted Douglas Carswell’s ten minute rule Bill on legal tender laws and currency choice:
People today have unprecedented choice. They can shop around online. They can tune into numerous television and radio channels. They can even decide between different hospitals for medical treatment.
But why are people not allowed to decide for themselves in which currency to transact their business and store their own wealth?
Today, Douglas Carswell introduces a Bill designed to make a range of different currencies legal tender in the UK. It would mean that, with the click of a mouse, people would be able to store wealth and pay taxes in a range of different currencies of their choice.
The BBC are covering it here. Read the full article.
By Dr Tim Evans, on 16 August 11
We are pleased to announce a special discount for Cobden Centre readers on The Letters of Richard Cobden from Oxford University Press:
In four volumes, The Letters of Richard Cobden, edited by Anthony Howe, provide a unique insight into the career of one of Britain’s leading nineteenth-century politicians. Oxford University Press is pleased to offer a special 20% discount on the series.
“Anthony Howe’s comprehensive, erudite and superbly annotated edition… [is] an indispensable resource for understanding the Victorians.” – Miles Taylor, London Review of Books.
Please see this page for details.
By Dr Tim Evans, on 27 June 11
A couple of weeks ago in the offices of the Adam Smith Institute, I addressed more than twenty of China’s most senior economic thinkers while they visited London. All were members of China’s Development Research Centre (DRC) – the leading think tank of Communist Party’s Central Committee and the State Council.
At their request, I touched on the history of the UK’s free market think tanks, the importance of maintaining independence and how, in the Anglo-sphere, such organisations are often funded by a diverse array of non-governmental sources including individuals, foundations and enterprises.
I also talked about money, banking, accountancy rules, the sovereign debt crisis and I even briefly managed to touch on the issue of gold. Everyone smiled when we mused over the fact that the Chinese state represents 32 percent of GDP while the UK government is heading towards 52 percent.
However, the real fun started when we moved to the questions and answers section. Very quickly, a hand went up in the front row and through the translator a gentleman on my right asked “have you ever heard of the Austrian School of Economics?” I smiled, paused, said “yes”, explained why, and we all moved forward.
Later, the leader of the delegation said that while Adam Smith had been translated in to high Chinese at the beginning of the twentieth century, the Communist Party had had it more accessibly translated thirty years ago – in the early 1980s.
Now, reflecting on all of this after the event, I was reminded of something a friend at Liberty Fund had said to me concerning the launch of The Online Library of Liberty in the middle of the last decade. Within two days of the library going live its South East Asian server out of Australia crashed. Under investigation it turned that it had been due to the number of students in China trying to download J.S. Mill’s On Liberty.
I have no idea how many people in China are reading the classical liberal ideas of Adam Smith and J.S. Mill or are in any way familiar with the greats of the Austrian School of Economics. But this is a question to which I wish I had an answer.
By Steven Baker MP, on 12 May 11
I do not doubt that the Government is sincere in its wish to make Britain “open for business” and to deliver greater life chances through reform of the welfare state. I gave some time to the Centre for Social Justice and now I see many of their ideas filtering through to public policy. I support those reforms from both a practical perspective and in view of their moral necessity.
The Prime Minister is correct to talk of the culture we have lost, particularly in respect of private shame. I am put in mind of C S Lewis’ book The Abolition of Man: there is, after all, such a thing as right and wrong. Lewis predicted humanity’s ultimate destiny on the path which embraces subjective morality: a dystopian society in which “we find the whole human race subjected to some individual men, and those individuals subjected to that in themselves which is purely ‘natural’ — to their irrational impulses.”
Some readers will recognise the problem and the dangers but reject the state’s role in finding a solution. However, we do not live in that world where the state is comprehensively rejected. There is a welfare state and it needs reform. The Government is getting on with it, and in the right direction too.
However, what the Government is not addressing is the de-civilising effects of inflation, that is, increasing the money supply.
What is commonly called “inflation” – a rise in the general price level – is an automatic consequence of debasing the currency. And currency debasement has been fierce in our lifetimes: the consequences have been and remain profound.
There is a presentation which, in one form or another, I have given many times. It shows, in a few charts:
- How the state has grown inexorably since 1900,
- How taxation reached an apparent limit at rather less than the scale of state spending, remaining there since 1971 or thereabouts.
- Where our debt projections are heading,
- How our money has been debased, particularly since 1971.
By the end of the presentation, I have explained our banking, fiscal and economic crisis. Given that what it shows is a monetary and fiscal catastrophe, people receive it surprisingly well. As far as I can tell, people can handle the truth and they want it.
One of the key slides is a price index from 1750-2003:
The grotesque debasement since 1971 – when Bretton Woods finally collapsed – hides the detail of the nineteenth century on a linear scale, so I include the same chart on a log scale. The log chart shows that, despite a number of crises and fluctuations, a pound in 1900 bought about the same basket of goods as a pound in 1800.
In contrast, money has lost almost all its value since the Second World War.
The Ethics of Money Production by Jörg Guido Hülsmann is particularly relevant at this point. Hülsmann writes:
To appreciate the disruptive nature of inflation in its full extent we must keep in mind that it springs from a violation of the fundamental rules of society. Inflation is what happens when people increase the money supply by fraud, imposition, and breach of contract. Invariably it produces three characteristic consequences: (1) it benefits the perpetrators at the expense of all other money users; (2) it allows the accumulation of debt beyond the level debts could reach on the free market; and (3) it reduces the [purchasing power of money] below the level it would have reached on the free market.
While these three consequences are bad enough, things get much worse once inflation is encouraged and promoted by the state. The government’s fiat makes inflation perennial, and as a result we observe the formation of inflation-specific institutions and habits. Thus fiat inflation leaves a characteristic cultural and spiritual stain on human society
He goes on to write of inflation’s tendency to centralise government, to extend the length of wars, to enable the arbitrary confiscation of property, to institutionalise moral hazard and irresponsibility, to produce a race to the bottom in monetary organisation, to encourage excess credit in corporations and to yoke the population to debt. He explains how “The consequence [of inflation] is despair and the eradication of moral and social standards.”
That all sounds familiar.
Hülsmann’s work is not scripture of course, but neither are his ideas isolated. Consider Ayn Rand:
Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence.
It is my firm view that inflation – the debasement of money – was the primary cause of the banking crisis. That inflation was a deliberate policy choice of welfare states. You may recall Eddie George’s remarks in 2007 and now Mervyn King has said, “Of all the many ways of organising banking, the worst is the one we have today.”
Moreover, if Hülsmann, Rand and other scholars including Mises and Hayek are to be believed, then inflation is also a major contributor to the moral and spiritual decline of our country. No amount of welfare reform alone will solve that.
All is not lost however. To return to that log-scale price index, money’s value was substantially more volatile in the first half of the nineteenth century than in the second. In 1844, the Bank Charter Act, Peel’s Act, took from the banks the privilege of extending bank notes in excess of specie (coins of inherent worth). It was recognized that this extension of candy-floss credit un-backed by prior production of real value was a systemic cause of economic and banking crises.
Unfortunately, that Act left the banks unmolested in their ability to create deposits. As our system of money and bank credit has evolved, that loophole, combined with central banking and the socialisation of risk, has delivered us into our present predicament.
It falls to our generation to solve this problem and that is why we established The Cobden Centre.
As Martin Wolf wrote in the Financial Times on 9th November 2010, “The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.” And then we wonder why house prices have raced out of reach. We wonder why the basement garages in Canary Wharf are full of supercars while what was once our industrial heartland languishes in state dependency.
I admire the Prime Minister and the coming welfare reforms. I will back them gladly. But, until we end inflation as a way to fund the promises of the welfare state, we shall not have done the decent thing. We shall not have established objective morality in banking and in that lifeblood of society: money. Honest money is a prerequisite for social progress and it must be delivered if reform is to succeed.
By Steven Baker MP, on 18 April 11
 In October 2009, Toby and I attended the Ludwig von Mises Institute’s Supporters Summit in Salamanca, the birthplace of economic theory:
One of the great discoveries of the 20th century concerns the origins of economic science in the late middle ages in Spain and Italy. Long before Adam Smith wrote, many scholastics from the 14th through the 17th centuries were writing systematic economic theory.
No spot on the planet was as fruitful as the School of Salamanca in Spain. Here was the world center of economic research. The writings by the intellectuals gathered here explained price, value, money and its function, saving, entrepreneurship, inflation, contract and exchange, and so much more – and they closely engaged the modern world that was being born at that time, providing at theory and a rationale for the rise of prosperity.
For me, it was a particularly memorable and moving trip. I took the call informing me that I had been shortlisted for the Wycombe Parliamentary selection procedure, against all expectations, while sitting in the departure lounge at Girona after a week’s skydiving in Empuriabrava. I arrived at the Summit, knowing it was suddenly possible I would be an elected politician within the year.
Moreover, it’s no secret that I am a Christian, so it was reaffirming to discover that classical liberalism can be traced to men of God who developed their theory on the basis of morality, jurisprudence, theology and reason. An early speaker at the Summit was a contemporary Spanish friar whose passion for the poor and whose commitment to liberalism transcended the barriers of language. He knew as I know that the proper formula for widespread prosperity and the improvement of mankind is the doctrine of liberty: peace, equality before the law, freedom from arbitrary government, property and the family. In Cobdenite language, we might call for honest money, free markets, free trade, peace and the classical rule of law.
And so as I write on this Palm Sunday, we come to the Telegraph’s report “Catholic church: Big Society is failing“:
The Archbishop of Westminster, Vincent Nichols, criticised the Prime Minister’s flagship policy as lacking “teeth”. The archbishop has been one of the most prominent supporters of the Big Society, but he told The Sunday Telegraph that he feared communities hit by the economic downturn would suffer if they did not get support.
The head of the Catholic Church in England and Wales said Catholics were afraid the Coalition was “washing its hands” of its responsibilities to communities and expecting volunteers to fill the gap.
“It is all very well to deliver speeches about the need for greater voluntary activity, but there needs to be some practical solutions,” he said.
The Archbishop asks,
“Has the Conservative part of the Coalition simply seized the economic crisis as an opportunity to push through the unfinished neoliberal agenda of the last Conservative administration? We should not forget the enormous social division that was entailed in this. It signalled the end of a humanist and humane consensus in British society.”
How far the Archbishop has come from the scholastics of Salamanca. Yet the Archbishop is on to something:
“The poorest are taking the biggest hit while at the same time you see huge bank bonuses and profits and this is not right,” he said.
Now we have a point of agreement. We know we have the worst of all possible banking systems – the Governor of the Bank of England has told us so – and one of its effects is to distort the economy into unsustainable patterns thereby unjustly widening wealth inequality, driving the business cycle and precipitating banking crises, such as the one from which we are apparently recovering and at enormous cost to society. It is a statist banking system characterised by government monopoly, central planning, legal privilege and the socialisation of risk.
That very statism is the origin of the injustice the banking system is meting out to the rest of us.
The various doctrines of statism have failed. For those of us who wish to live in an ethical society which benefits all its members, it is time to rediscover that moral tradition of social thinking which began formally in Salamanca. It is time to refine and apply the doctrine of justice, peace, prosperity and fulfilment which is humble about the uses of coercive power and optimistic about the potential of individuals cooperating in society.
It may be true that those who wear the badges of ethical authority reach often for the coercive power of the state, but those of us with an intellectual, moral and practical basis for another way would do well to remember both the origins of our school of thought and the motto of one of our inspirations, Ludwig von Mises:
Do not give in to evil but proceed ever more boldly against it.
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