Friday, February 5, 2010

Inside the Whale

The theme of underliberalskin is partly a comment on life as a conservative lived in the heart of liberal country (Cambridge, MA, USA). In this sense it has something in common with Orwell's "Inside the Whale" (with no serious attempt to compare myself to Orwell). And in part it is a reflection on the events that have led the "educated classes" so horribly astray in the last half century. That is, I want to explain as best I understand what are the irritations, the bogeymen and, most of all, the daydreams of the everyday liberal. In that regard, I will return again and again to (a) the triumph of von Mises, Hayek, Friedman and the Chicago school of economics; (b) the ascent of Ronald Reagan; (c) the fall of communism; (d) the attempt by Al Gore to steal the presidential election in 2000 and last (e) the all-encompassing desire to be the one who "saves the planet."

To get the narrative rolling, I start with one fact. As documented by Yergin and Stanislaw in "The Commanding Heights," the essential failure of Soviet communism was the abolishment of the price system. Aside from undermining the relationship between consumers and producers, the command economy undermined the relationship of businesses to businesses as well. When one business (i.e. one Soviet production unit) contacted another one to obtain raw materials, manufactured items, etc. required for their business and their product, there was no consistent method for determining what one business should charge another business. The entire close-knit fabric of production came unraveled. As a result, when the Soviet economy was fully examined after its fall, it was discovered that the gross domestic product of the entire Union (with some 300 million inhabitants) was comparable to that of Denmark (5 million) or South Korea (35 million). The utter failure of the world's premier command economy is now documented and theoretically, philosophically understood in depth. This is the origin of the Chicago School of Economics. We are living in a period where economic theory represents a footnote to the Chicago School and where liberal philosophy is entirely based on exceptions to the rules of price as information and freedom as prosperity.

Margaret Thatcher, in her moment of the Lady is not for turning, famously held up a copy of Hayek's "Road to Serfdom" and exclaimed "this is what we believe!"


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