Freedom, Society, and State - Ludwig von Mises Institute

desire to represent the views of the community, the
signals conveyed to the politcal leaders will almost
invariable depart from the actual state of demand by
the commun i ty. Thus, despite the demands made on the
political system, government is ipso faeto an island
of calculational chaos, and it is therefore impossible
for it to operate efficiently.(60) This, in turn, means
that even if people desire such things as education,
roads, and police protection, it would"be more advantageous
for them to purchase these on the market.
The very fact that the government uses its monopolyon
the use of force to outlaw competition with itself
demonstrates this point, they argue. For if it
actually provided its customers, i.e., the taxpayers,
wit h the best pos siblede fen s e s e r vicesther e wo u I d be
no need for it to ban competitors.(61)
6. THE BUSINESS CYCLE AND DEPRESSION
Another problem that must be dealt with is the
business cycle and, its corollary, depression. Aren't
government contra-cyclical policies needed to moderate
the tendency of the market to gyrate wildly between
boom and bust,· between inflation and depression?
There are many different explanations of the business
cycle. Most of these -- such as the Keynesian
over- investment argument, Schumpeter's "cluster" of entrepreneurial
error thesis, and the "acceleration principle,"
associated with the names of the American econom
i s t, J. M. C I ark and the Eng 1 ish e conom i s t, R. F 0
Harrod(62) -- see the cause of the cycle in some aspect
of the market process and generally see the solution in
some form of government activity. One explanation that
reverses the causal flow and sees the cause of the
bus iness cycle in government manipulation of the economy
and "Its solution in a completely unhampered, or
laissez faire, economy is the "Austrian," or monetary,
theory of the trade cycle. While this explanation can
cIa i m 0 n I yam i nor i t Y f 0 I I ow i n g am 0 n g e con om i s t s , ( 63 )
it is hardly surprising that the overwhelming majority
of individualist anarchists subscribe to the "Austrian"
explanation. At some risk of over-simplification, the
Austrian theory is presented below.
The problem that must be explained by any theory
of the business cycle is why do entrepreneurs, who only
obtain their positions by being better forecasters than
others, suddenly, collectively and so grieviously mis-
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