- Capitalism and Alternatives -

A note on harmony and 'state' capitalism.

Posted by: borg on October 19, 1999 at 15:09:23:

2. This letter by Mises Institute senior fellow Jeffrey Herbener of Grove City College appears in the Wall Street Journal, May 7, 1999:

"Steve Hanke's expose on the hyperinflation-induced collapse of the Yugoslavian economy ('Yugoslavia Destroyed Its Own Economy,' editorial page, April 28) illustrates a principle about war and peace proffered by the great Austrian economist Ludwig von Mises. 'Free trade, both in domestic affairs and in international relations,' Mises wrote, 'was the necessary prerequisite of the preservation of peace.' Ignorance of this fact has led to the erroneous conclusion by some that the cause of modern wars has been aggressive nationalism. But Mises saw that 'aggressive nationalism is the necessary derivative of the politics of interventionism and national planning.'

"No peaceful solutions can be found to the conflicts that arise in dire economic circumstances between people with nationalistic hatreds for each other. The prosperity and voluntary, mutually beneficial interactions of the unhampered market economy, in contrast, create a peaceful normalcy in which diverse groups can live in harmony.

"Yugoslavia only repeats the pattern of countries with ethnically diverse populations, living in peace and prosperity under the market, where nationalistic hatreds have ignited into war in the wake of central-bank inflationary disruption and destruction of the market system. The central-bank-produced hyperinflationary collapse in Indonesia has been followed by violence against ethnic Chinese and Christians. Nationalistic fervor has been excited in Russia in the aftermath of its central-bank hyperinflation. And these are just examples of central-bank hyperinflationary disasters from the 1990s; the 20th century is chock-full of others, e.g., Weimar Germany and Nationalist China.

[BTW, central banks have no place in a market economy. -ed]

"Only the socialist destruction of economic activity has rivaled hyperinflation as a source of conflict in the 20th century. In North Korea, Rwanda and Sudan, to name a few examples in the 1990s, stark economic conditions resulting from socialism have unleashed, respectively, Korean nationalistic impulses against Japan, Hutu genocide of Tutsis, and Muslim ethnic cleansing of Christians.

"No panacea of political form exists to solve the problem of aggressive nationalism. Neither democracy nor supranational structures per se will do any good. 'What can safeguard durable peace is not simply government by the people,' Mises wrote, 'but government by the people under unlimited laissez faire.' He realized that, 'What is needed to make peace durable is neither international treaties and covenants nor international tribunals and organizations.... If the principle of the market economy is universally accepted, such makeshifts are unnecessary; if it is not accepted, they are futile. Durable peace can only be the outgrowth of a change in ideologies'."

Follow Ups:

The Debating Room Post a Followup