George Reisman has an excellent essay that has tremendous relevance today due to the resurgence of Keynesianism under Bush and Obama. Here are the opening lines of Production Versus Consumption:
There are two fundamental views of economic life. One dominated the economic philosophy of the nineteenth century, under the influence of the British Classical Economists, such as Adam Smith and David Ricardo. The other dominated the economic philosophy of the seventeenth century, under the influence of Mercantilism, and has returned to dominate the economic philosophy of the twentieth century, largely under the influence of Lord Keynes. What distinguishes these two views is this: In the nineteenth century, economists identified the fundamental problem of economic life as how to expand production. . . .
In the twentieth century, economists have returned to the directly opposite view; . . . In the twentieth century, economists have returned to the directly opposite view; . . . the problem is erroneously believed to be how to expand the desire to consume so that consumption may be adequate to production.
My favorite part of this excellent analysis is under the sub-heading “Consumptionism and Parasitism.” Here are a few excerpts:
The idea that by consuming his product, one benefits the producer, by giving him the work to do of making possible one’s consumption, is absurd. . . . Only the use of money lends it the least semblance of plausibility. If it were true, then every slave who ever lived should have cherished his master’s every whim, the satisfaction of which required of him more work. A slave should have been grateful if his master desired a larger house, an improved road, more food, more parties, and so on; for the provision of the means of satisfying these desires would have given him correspondingly more work to do.
The belief that the consumption of the government benefits and helps to support the economic system is on precisely the same footing . . . as the belief that the consumption of the master benefits and supports the slave. It is a belief the absurdity of which is matched only by the injustice it makes possible. It is the means by which parasitical pressure groups, employing the government as an agent of plunder, seek to delude their victims into imagining that they are benefitted and supported by those who take their products and give them nothing in return.
. . . [T]he consumptionist is highly adept at bringing forth totally imaginary causes of economic catastrophe. Invariably, the solution advanced is consumption by those who have not produced, for the sake of those who have. Always, the goal is to demonstrate the necessity and beneficial effect of parasitism—to present parasitism as a source of general prosperity.
The consumptionist’s advocacy of consumption by those who do not produce, to ensure the prosperity of those who do, is, the productionist argues, a pathological response to an economic world which the consumptionist imagines to be ruled by pathology. The consumptionist has always before him the pathology of the miser. His reasoning is dominated by the thought of cash hoarding. He believes that one part of mankind is driven by a purposeless passion for work without reward, which requires for its fulfillment the existence of another part of mankind eager to accept reward without work. This is the meaning of the belief that one set of men desire only to produce and sell, but not to buy and consume, and the inference that what is required is another set of men who will buy and consume, but who will not produce and sell. In the consumptionist’s world, the producers are imagined to produce merely for the sake of obtaining money. The consumptionist stands ready to supply them with money in exchange for their goods—he proposes either to take from them the money he believes they would not spend, and then have someone else spend it, or to print more money and allow them to accumulate paper as others acquire their goods.
Hoarding is not the only phenomenon upon which the consumptionist seizes. Where nothing in reality will serve, the consumptionist is highly adept at bringing forth totally imaginary causes of economic catastrophe. Invariably, the solution advanced is consumption by those who have not produced, for the sake of those who have. Always, the goal is to demonstrate the necessity and beneficial effect of parasitism—to present parasitism as a source of general prosperity.
—George Reisman on Consumptionism and Parasitism from his essay Production Versus Consumption. The whole essay is worth reading and rereading. It’ll provide much needed clarity on how you view the modern economic debates. I know it has for me.
Related Reading:
Why a Government Can't "Stimulate" an Economy
3 comments:
Prof. Reisman has seemingly been banging on doors, walls and windows for decades. He might've stopped after GVT' AGAINST THE ECONOMY about 1970, but that was just preparatory for CAPITALISM: A TREATRUS ON ECONOMICS about 1995, which gained him tenured Prof. Emeritus at Pepperdine U., so I believe. After GVT. AGAINST THE ECONOMY, I, personally, can't see what he's added. What he's wrote since, I read 50 years ago (from Ayn Rand). Same with much from Craig Bibble, who's still under 50. Recently, I about cut his nuts about that, plus other stuff before, with profanity. I think Biddle hates me for it. Reisman would, too, if I hit him like I did Biddle. But, I think, neither of them does, or would, care, given me.
They ain't added nothing for me because I've THUNK beyond them, and beyond about everybody, so I believe, such that you disagree with me, totally [arresting legislators in their chambers (the House and the Senate)].
The central control of human action and human relations outside the bounds of law and government, though under the cover of the guise of law and government, is crime, physically punishable by law and government, even by rag-tags from 'outside'.
The rag-tags are inside. The legislators (not law makers) are outside. Drag those crooks outa the House and Senate Chambers, on charges, and throw them in the clink. That must be an executive function, even if done by 'outside' rag-tags from out in the rural fields, even if they are nothing but a bunch of white males. Screw the President, even if he disagrees, with force. If he does, he's OUTSIDE! Force him back, PHYSICALLY, from the INSIDE. Damn it. I'm tired of pulling punches. Sick the FBI on me.
I've just tried making amends with Craig Biddle. I'm hoping for a positive response.
When speaking of the 'inside' and the 'outside', I'm speaking of inside or outside individual rights, not the power structure or organization running the corrupt regime of today. The legislators are obviously inside that power structure and any rag-tags are outside it as are, in my view, law abiding citizens.
I just see the whole Objectivist movement, or any advocacy for freedom as hopelessly behind the curve, by many generations, although thru no fault of theirs. There's no blame to be placed anywhere. We needed the likes of an Ayn Rand in 1805, which didn't come until 1905, but that establishes no sort of blame.
The Objectivist movement, ultimately, will have to become something more, in addition, to an intellectual and educational process. When the intellectual and educational process makes enough inroads to seriously threaten the statist status-quo, those holding statist power will start becoming more overtly, openly violent. They won't give in and give up power in response to reasoning, moral suasion or votes. That must be seen as criminal and not legitimate. The intellectual and educational process will, in time, be met with violence, with criminal violence, where the criminals' cover under the guise of law and government will no longer hide their identity as criminals, likely in the context of censorship and incarceration for speaking up. What then? More talk? Until such a time, I don't actually advocate rag-tags invading legislative chambers.
I would turn to the Founding Fathers for guidance, as expressed in the Declaration of Independence.
While the Founders declared that “whenever any Form of Government becomes destructive of these ends [the individual’s rights to life, liberty, and the pursuit of happiness], it is the Right of the People to alter or to abolish it, and to institute new Government,” they warned that “Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”
While the trends are ominous, we are not there yet—hopefully not even close.
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