Chyden Finance: profit from hypocrisy

In June 2009, I argued that the world twenty years from now could be as different from the world of twenty years ago, as 1933 was from 1893.

In November 2009, I discussed Wilhelm Röpke’s distinction between imperium and dominium, i.e. the difference between government domination and market domination. Essentially, imperium is delivered through military intervention by expansionist governments, and dominium is delivered through monopolistic transactions by expansionist firms.

I followed up in early December 2009 with a preliminary analysis of the critical flaw of Marxism, its foundation on the Labor Theory of Value fallacy that was refuted in the 1870s by Jevons, Menger, and Walras.

In spite of the recognition of its invalidity by economists for nearly a century-and-a-half, the Labor Theory of Value underpins the system of wages that prevails in most labor markets (known among software developers as The Mythical Man-Month), the misconception of information as property (information is a public good, regardless of the amount of effort that goes into its discovery), and a large part of conventional ethics (”He’s such a hard worker.”).

We need a new political movement based on the recognition that a) all human organization is based on contract and not property, b) networked markets are vastly more efficient than centralized hierarchies, and c) the integrated, hyper-competitive transnational economy is supplanting jurisdiction-bound, local-monopolist governments as the seat of power in human society.

First, we must dispel critical misconceptions. For example, ‘political’ does not imply ‘government’. Politics is the practice of collective action; its study is the purview of sociology. Similarly, ethics is the practice of individual action, and its study is the purview of psychology and microeconomics; and economics is the practice of exchange, among both individuals and periods of time, and its study is the purview of accounting and finance.

sidebar

The social science that goes by the name of ‘economics’ today is a pastiche of psychology, sociology, contradictory political philosophies, and mathematics based on outdated physics. Economists count among the objects of their study everything, from market transactions to marriage to smoking to the behavior of insects. Economists support large-scale government intervention, minimal government to the point of anarchy, socialist collective ownership, and everything in between. Even amongst themselves, economists joke that, if one put seven economists into a room, one would end up with eight mutually exclusive conclusions.

That is not science. That is playing at science.

This was not always the case. Prior to the 1930s, economics was predominantly microeconomics based on story telling and a bit of algebra. It made sense. In fact, one could adopt Marshall’s textbook from the 1920s, along with Mises’ Theory of Money and Credit, supplemented with some translations of Wicksell, and have a very solid Economics curriculum.

However, after the 1930s, the mathematized statist idealism that Keynesians dubbed ‘macroeconomics’, with its emphasis on unobservable Platonic noumena, became the guiding principle of government monetary and fiscal policy in the Anglo-Saxon countries. By the end of the 20^th Century, even journalists spoke in terms of GDP, unemployment, inflation, and money supply, even though all of these ‘data’ are the results of indexing at the hands of government statisticians, and they do not exist in the wild as observable market phenomena.

In a very real sense, the latter half of the 20^th Century was an utter waste of time and effort for the economics profession.

Libertarians’ syncretic obsessions with individual liberty and with the political process distract from the realities of individuals in society. On the one hand, they argue for highly focused government, minimal regulation, and free markets; on the other hand, they try to effect their program by running for political office and influencing members of government, promising that they will not abuse power once they have seized control.

We need a political movement that recognizes Max Weber’s observation that our gods cease to exist, when we stop worshipping them, and builds on a foundation of dominialism rather than imperialism. If one fulfills one’s needs through coercive government programs, one becomes a ward of the state. If one fulfills one’s needs through voluntary commercial transactions, one can achieve the status of individual sovereignty.

We do not need to confront government in the pursuit of individual liberty; government is an obstacle and not an opponent.

This is not to suggest that one should start paying government fees with ‘Personal Promissory Notes, refusing to pay taxes because paying taxes is voluntary, declaring oneself a Corporation Sole, and engaging in other overt acts of resistance. That would as useful as setting oneself on fire or starving oneself to death in protest. Engaging in behavior that is calculated to land one in prison is the antithesis of individual freedom.

If one dreams of living in a world in which one is free to engage in any activity that does not result in the initiation of harm against another — i.e., is neither evil nor stupid, in the way that Cipolla meant — the answer does not lie along the path that leads to the engagement of government, either positively or negatively.

As the global economy becomes increasingly integrated, and financial, physical, and human capital becomes increasingly mobile, jurisdiction becomes increasingly irrelevant. As Richard Buckminster Fuller pointed out a half-century ago, in a mobile society, rule by the sedentary becomes anti-democratic.

If one yearns to be free, one must transcend democracy, monarchy, and dictatorship. Throughout the world, one finds examples of democracies that are relatively free and democracies that are unfree, monarchies that are relatively free and monarchies that are unfree, and authoritarian regimes that are relatively free and authoritarian regimes that are unfree. Freedom is not a monotonic function of the proportion of the population that is eligible to vote.

Invest accordingly.

CWE