October 2011 issue of Freedom's Phoenix magazine - fr33aid

Continued from Page 36 - The Myth that Laissez
Faire Is Responsible for Our Financial Crisis
tant respect the financial success or failure of a
bank. Only if they are satisfied that the bank is
making sufficient loans to borrowers to whom
it would otherwise choose not to lend, will it be
permitted to succeed. The most prominent such
community group is ACORN.
Part and parcel of the environment that has made
an act such as the CRA possible, is threats of
slander against banks for being “racist” if they
choose not to make loans to people who are poor
credit risks and also happen to belong to this or
that minority group. The threats of slander go
hand in glove with intimidation from various
government agencies that exercise discretionary
power over the banks and are in a position to
harm them if they do not comply with the agencies'
wishes. The same points apply to mortgage
lenders other than banks.
What this extensive analysis of the actual causes
of our financial crisis has shown is that it is government
intervention, not a free market or laissez-faire
capitalism, that is responsible in every
essential respect.
The Laissez-Faire Myth and the Marxism of
the Media
The myth that laissez faire exists in the present-day
United States and is responsible for
our current economic crisis is promulgated by
people who know practically nothing whatever
of sound, rational economic theory or the actual
nature of laissez-faire capitalism. They espouse
it despite, or rather because of, their education
at the leading colleges and universities of the
country, When it comes to matters of economics,
their education has steeped them entirely in
the thoroughly wrong and pernicious doctrines
of Marx and Keynes. In claiming to see the existence
of laissez faire in the midst of such massive
government interference as to constitute
the very opposite of laissez faire, they are attempting
to rewrite reality in order to make it
conform with their Marxist preconceptions and
view of the world.
They absorb the doctrines of Marx more in history,
philosophy, sociology, and literature classes
than in economics classes. The economics
classes, while usually not Marxist themselves,
offer only highly insufficient rebuttal of the
Marxist doctrines and devote almost all of their
time to espousing Keynesianism and other, less
well-known anti-capitalistic doctrines, such as
the doctrine of pure and perfect competition.
Very few of the professors and their students
have read so much as a single page of the writings
of Ludwig von Mises, who is the preeminent
theorist of capitalism and knowledge of
whose writings is essential to its understanding.
Almost all of them are thus essentially ignorant
of sound economics.
When I refer to the educational system and the
media as Marxist, I do not intend to imply that
its members favor any kind of forcible overthrow
of the United States government or are
necessarily even advocates of socialism. What
I mean is that they are Marxists insofar as they
accept Marx's views concerning the nature and
operation of laissez-faire capitalism.
They accept the Marxian doctrine that in the absence
of government intervention, the self-interest,
the profit motive — the “unbridled greed”
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— of businessmen and capitalists would serve
to drive wage rates to minimum subsistence
while it extended the hours of work to the maximum
humanly endurable, imposed horrifying
working conditions, and drove small children
to work in factories and mines. They point to
the miserably low standard of living and terrible
conditions of wage earners in the early years of
capitalism, especially in Great Britain, and believe
that that proves their case. They go on to
argue that only government intervention in the
form of pro-union and minimum-wage legislation,
maximum-hours laws, the legal prohibition
of child labor, and government mandates concerning
working conditions, served to improve
the wage earner's lot. They believe that repeal
of this legislation would bring about a return to
the miserable economic conditions of the early
nineteenth century.
They view the profits and interest of businessmen
and capitalists as unearned, undeserved
gains, wrung from wage earners — the alleged
true producers — by the equivalent of physical
force, and hence regard the wage earners as
being in the position of virtual slaves (“wage
slaves”) and the capitalist “exploiters” as being
in the position of virtual slave owners. Closely
connected with this, they regard taxing the businessmen
and capitalists and using the proceeds
for the benefit of wage earners, in such forms
as social security, socialized medicine, public
education, and public housing, as a policy that
serves merely to return to the wage earners some
portion of the loot allegedly stolen from them in
the process of “exploitation.”
In full agreement with Marx and his doctrine
that under laissez-faire capitalism the capitalists
expropriate all of the wage earner's production
above what is necessary for minimum subsistence,
they assume that the government's intervention
harms no one but the immoral businessmen
and capitalists, never the wage earners.
Thus not only the taxes to pay for social programs
but also the higher wages imposed by
pro-union and minimum-wage legislation are
assumed simply to come out of profits, with no
negative effect whatever on wage earners, such
as unemployment. Likewise for the effect of
government-imposed shorter hours, improved
working conditions, and the abolition of child
labor: the resulting higher costs are assumed
simply to come out of the capitalists' “surplus
value,” never out of the standard of living of
wage earners themselves.
This is the mindset of the whole of the left and
in particular of the members of the educational
system and media. It is a view of the profit motive
and the pursuit of material self-interest as
inherently lethal if not forcibly countered and
rigidly controlled by government intervention.
As stated, it is a view that sees the role of businessmen
and capitalists as comparable to that of
slave owners, despite the fact that businessmen
and capitalists do not and cannot employ guns,
whips, or chains to find and keep their workers
but only the offer of better wages and conditions
than those workers can find elsewhere.
Not surprisingly, the educational system and
media share the view of Marx that laissez-faire
capitalism is an “anarchy of production,” in
which the businessmen and capitalists run about
like chickens without heads. In their view, rationality,
order, and planning emanate from the
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