Frédéric Bastiat

If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? - Frédéric Bastiat

Ben Stein quote

 From Ben Stein:

"Fathom the hypocrisy of a government that requires every citizen to prove they are insured... but not everyone must prove they are a citizen."

Now add this, "Many of those who refuse, or are unable, to prove they are citizens will receive free insurance paid for by those who are forced to buy insurance because they are citizens."

Between Conformity and Reform, - Hans-Jurgen Wagener

These are a few statements I have taken from the book Economic Thought in Communist and Post-Communist Europe, edited by Hans-Jurgen Wagener. The book is a good scholarly presentation of economists ways of thinking under repression and later under more liberal or free sovereignty of thought. The only thing left out of the book that I wish was there would be Pre-Communist Economic Thought.

These first ones come from Wagener himself. Other quotes will follow as I have time to post them. Italics are mine and not the authors, unless otherwise stated.

 

When political guidance, or even repression, is mentioned, it becomes immediately clear that science, teaching and research could not enjoy any constitutionally guaranteed liberties under a communist regime. This leads to the question that Lukaszewicz (1997: 13) asked in the course of discussion of the present project: “is it possible that under conditions of an abortive civilizational mutation any cognitive process can proceed and bring about successful results in terms of general scientific progress?” he answered in the affirmative claiming, at least within the Polish environment, the possibility of intellectual sovereignty. The claim did not remain unchallenged: sovereignty presupposes liberty which is precisely what was not given.                   -p. 4

It is tempting, even if counterfactual, to ask what would have happened if the evolution of the socialist system had been allowed to continue without too much political interference. Would the Czechoslovak “socialism with a human face” have proved viable? Would there have been real systemic innovations? One possible result of such a development can be hypothesized: perhaps what appeared as radical change in 1990 would have evolved continuously anyhow. A socialist market economy would not have worked properly, practice and thinking would have propelled the system to further liberalization and, finally, privatization. Isn’t that the Chinese reform path? It is too early to draw such sweeping conclusions, but in face of this hypothesis the notorious dichotomy of shock versus gradualism seems ill-placed within the radical change of transformation as it happens in Central and Eastern Europe. Once continuity has become a stationary rather than an evolutionary process, radical change is the only emergency exit if stagnation is to be avoided. The chance for gradualism has been missed. This is one of the lessons the experience of state socialism has taught.                        - P.6

 

7 false pretenses of socialism, these may also be called the core of the Stalinist doctrine. They remained more or less unchallenged in the open until the mid-1980’s:

1.       Under socialism there are no contradictions between productive forces and production relations, because the latter are always in advance of the former. Hence, socialism does not know stagnation, structural crises, and any system that is going to supersede it.

2.       There are no fundamental conflicts between individual, collective and social needs. Democratic centralism mediates between all levels and provides for organizational unity.

3.       In socialist production labor has a direct social character due to planning. A market transforming individual into social labor is redundant.

4.       Collective social production is superior to all other (cooperative, individual) forms of production. From this follows the hierarchy of ownership forms.

5.       Workers as bearers of labor power are the objects of central planning, i.e. planning is not coordination of independent economic subjects, but conscious organization from above.

6.       Utility functions of individuals contain only material arguments. Hence, the economic system can be separated from the social, cultural and emotional system, and can be organized from above.

7.       Really existing socialism is scientific socialism: the level of knowledge is sufficient for conscious order and planning.                                                 - p. 11

 

Several features of real socialism have been isolated that lead to the unreformability of the system:

·         Priority belongs to politics. The central taboo of the primacy of politics made universal state ownership control and universal interference of party organs a property of the system which could be abolished only together with the political power structure.

·         Soft budget constraints. It has been disputed theoretically whether central planning is in principle incapable of making the firms budget constraints really hard and thus inducing the efficient use of scarce resources. In practice this has undoubtedly been the case.

·         State monopoly of foreign trade with a tendency to autarky. To subject foreign trade to political decision making and to exclude the national economies from international division of labor has grave consequences, especially for small open economies. Again, some theoretical solutions of the problem of calculating foreign trade advantage under such conditions have been offered (e.g. Trzeciakowski 1978). In practice, political foreign trade control remained on of the central instruments of socialist economic policy.

·         Secondary role of money and finance. Economic calculation and prices, despite valiant theoretical attempts and numerous policy reforms, never functioned properly. The Lange solution to this problem was never implemented – it may be assumed for good reasons. And where market socialism was tried out, as in Yugoslavia, it was unable to put all needed markets into operation (including a capital market and foreign exchange market). The importance of economic calculation was theoretically recognized, put practically it collided with the parties planning autonomy.

·         Unity of economic activity and social policy. The provision of a great part of social services and (existing) unemployment was the task of state-owned enterprises, and this impeded the development of efficient business management and structural change. A separation of economic activity and social policy would have spoiled the system’s alleged major achievement – full employment.

·         Closed-shop system of nonmenklatura. The selection mechanism for higher personal was biased in favor of political conformity and against professional qualification, in order to stabilize the ruling elite.

·         Reliance on paternalism. Political control was exercised in a discretionary manner. This led to patronage by the party secretary on all hierarchical levels instead of objective rule of law (a rational ‘Weberian’ bureaucracy). The ensuing governance regime resembles pre-modern enlightened absolutism and mercantilistic policy rather than the hoped for post-capitalist rationality and glasnost.                     -pp.13, 14

 

This one is particularly interesting to me because I see continual reforms and preferred stagnation of our country today.

Politics in other socialist countries, notably the Soviet Union and the GDR, noticed the inevitability ever progressing requirements of continued market oriented reforms and preferred stagnation to transformation which would not have left the political system, i.e. their power base, untouched. In other words, party elites in the Soviet Union and East Germany, for instance, recognized the unreformability of the existing politico-economic regime and deliberately decided to go on with it at the price of efficiency. This also implies that by the end of the 1960’s the stage was set in Central and Eastern Europe for gradual system transformation. The power structure of the individual countries saw the danger and was still vigilant enough to prevent it: ‘normalization’ as it was called. From 1970 on the system was only ‘perfected’, and no longer reformed. Stagnation was the inevitable result. In order to overcome it, radical change became unavoidable.                     - pp. 14, 15

 

 

Socialist claims of installing a progressive and fair society were deeply rooted in the region and could be shaken only by persistent system failure. Closer research would probably reveal that they are still in place and that transformation is considered to be an attempt to find more suitable institutional solutions.                             - p. 21

 

Stalin was quite far-sighted when he said: we will either catch up within 10 years with what the West has attained within 150 or we will perish. His major error was to confine the insight to material production and to disregard the systemic resilience of capitalism.                 - p. 29

Peter Schiff on C-span

Peter Schiff is an American businessman, investment broker, author and financial commentator. Schiff is CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut and CEO of Euro Pacific Precious Metals, LLC, a gold and silver dealer based in New York City.
Schiff regularly appears on financial television and has been quoted in major financial publications. He is host of The Peter Schiff Show, on terrestrial and internet radio and was formerly host of an internet radio show called Wall Street Unspun now archived as podcasts. In 2010, Schiff ran as a candidate in the Republican primary for the United States Senate seat in Connecticut, but lost to Linda McMahon.
Schiff is known for his bearish views on the U.S. Dollar and Dollar-denominated assets and his bullish views on investment in tangible assets, foreign stocks, and foreign currencies. Schiff also voices strong support for the Austrian School of economic thought, first introduced to him by his father.