As we saw
yesterday, disconnecting production from consumption is a sure recipe for
disaster . . . if you define “disaster” as an avalanche of non-productive
debt. Spending your way out of trouble
doesn’t work, even if it looks as if it does in the short run. In the long run, of course, somebody has to
pay the bill, or the system collapses.
 |
| Thomas Hobbes: the State is a "Mortall God." |
If you’re a
Keynesian, of course, there’s nothing to worry about. Taking a statement by Keynes slightly out of
context, but still applicable in this instance, “In the long run, we’re all
dead.” Clever, glib, and the sort of
thing you’d expect from someone whose entire system is built on contradiction
that can only be hidden for a time by having an absolute faith in the power of
government to do anything, i.e., in
which the State has become the Hobbesian “Mortall God.”
To recap Rep. Tom
Snozzi’s proposal to create jobs rebuilding infrastructure, it embodies at
least three fundamental flawed assumptions:
·
The
purpose of production is job creation. This violates Adam Smith’s first principle of
economics, “Consumption is the sole end and purpose of all production,” and
offends against human dignity by — in the ideal case — forcing people to
produce presumably useless goods and services simply to gain income (anyone who
doubts this should read Keynes General
Theory, III.10.vi, in which he outlines his solution to involuntary
unemployment: jobs created to produce goods and services solely to generate
income, not for consumption).
·
The only
way ordinary people can gain income is to have a wage system job. This offends against human dignity by denying
the natural right of private property; an important policy goal of a Keynesian
political economy is the elimination of people who use investment income
instead of labor income to meet their consumption needs (ibid., VI.24.ii, “the euthanasia of the rentier”).
·
Human
labor is the sole factor of production; capital at best only enhances the
productivity of labor. This offends
against human dignity by denying the validity of human reason and the evidence
of the senses that capital is clearly productive (ibid., I.3.i, Keynes rejected Say’s Law of Markets, that posits
production by labor, land, and technology, on the grounds that demand — income
— generated by labor is not sufficient to clear all supply, that is,
production, ignoring that land and technology are also productive).
 |
| Keynes: the State has the right to re-edit the dictionary. |
In order to try
and make the system work despite the bad principles embodied in Keynesian
economics, a few definitions had to be changed, or (as Keynes put it), the dictionary
“re-edited.” Three key concepts
especially had to be targeted for change:
·
Liberty/Freedom
of Association and Contract. Instead
of a right that permits people to enter into fair contracts for any lawful
purpose (i.e., “create money”),
liberty now means that people are only free to act in ways that the State finds
useful; the State can unilaterally alter the terms of any contract at will
(yes, Keynes said that, in the opening passages of his Treatise on Money).
·
Private
Property. Instead of a right
inherent in each person, albeit with the exercise socially determined, private
property now means a grant of rights from the State, to be defined or abolished
as the State sees fit or finds most expedient (General Theory, V.24.iii).
·
Money. Instead of anything that can be accepted in
settlement of a debt (“all things transferred in commerce”), that is, how one
person exchanges what he or she produces for what others produce, money is now defined
not by what it is, but by what it does.
Because what money does is buy
things, money now means a general claim against the wealth of society issued by
the State.
 |
| Pius XI: Socialism embodies a concept utterly foreign to truth. |
The results of
the Keynesian re-editing of the dictionary have been disastrous. Three things, especially, have wreaked havoc
on society, and even changed the concept of society itself:
·
Human
Personality. A human person is not
someone with inalienable rights to life, liberty, and private property. Instead, the State determines whether a human
being is a person at all, what rights he or she has, and what those rights mean. (This, as Pope Pius XI noted, is a “concept of society . . . utterly foreign to Christian truth.”
— Quadragesimo Anno, § 117.)
·
Justice. Instead of meaning “rendering to each his or
her due,” the premier natural virtue of justice now means “rendering to each
what best meets the needs of the State or is most expedient.”
·
Money
Creation. By defining money by its
function, separating money creation from production, and claiming the right to
alter all contracts at will, the issuer of money — the State — need only
consume, not produce, while producers need only produce, not consume.
This, by any
objective assessment, is insane. The
problem becomes what to do about it — which we will look at tomorrow.
#30#
