Gary North - Why He's a Conservative

[Virginia Foulk]

Liberty's Greatest Enemy Today

Gary North - February 04, 2016

Remnant Review

I am a conservative.

I am a conservative by way of three phenomena that have linked together American conservatives since about 1920: (1) anti-Communism; (2) free market economics; (3) conservative social theory.

I regard the most important world figure of the 20th century as Vladimir Lenin. Had it not been for the assassination of the Archduke Ferdinand in 1914, there would not have been World War I. Had there not been World War I, the German government would not have shipped Lenin by train back to Russia in 1917. Had Lenin not been successful in his revolution in October, he would never have come to power. That would have meant that Adolf Hitler would never have come to power, for Lenin and the Communists provided the model for Hitler's revolution.

Let us not forget this rarely mentioned fact: of all the 19th-century social revolutionaries, only one man ever came to power by means of a revolution he personally designed, and then maintained power long enough to implement it. That man was Lenin.

Free-market economics has been with us ever since the Spanish school of Salamanca in the early 16th century. It has been improved on repeatedly, culminating in the Austrian school of economics. We date the Austrian school of economics with the book by Carl Menger's Principles of Economics, which was published in 1871. The modern formulation of it came in a series of books by Ludwig von Mises, beginning in 1912.

There was also a British school of economics that was free market, which we obviously date with Adam Smith in 1776, although David Hume's anti-mercantile essays on free trade in 1752 came earlier. Smith's tradition was extended over the next 114 years, culminating with the classic textbook by Alfred Marshall in 1890. In between was William Stanley Jevons, who died young, who was one of three men who developed what we call the marginal or subjective school of economics in the early 1870's. Menger was one of them. The third was an economist in Switzerland, Leon Walras. Walras' mathematical approach has grown in influence in academia. It is incoherent both methodologically and operationally. It cannot deal with two crucial facts: man's lack of omniscience and historical change.

Then there is the political legacy of Edmund Burke. He was a follower of Adam Smith, and Adam Smith was a follower of Burke. Burke believed in slow, evolutionary social and political change. He was a social evolutionist, as was Smith. He opposed centralized political revolution as a way to increase liberty. His classic book, published in late 1790, was critical of the French Revolution. It became the rallying exposition of the conservative position in Western Europe from that time on. He did not believe in great theoretical systems. He complemented Adam Smith, who devised the dominant theoretical defense of free market economics. It was a strange alliance.

The enemy of free market economics is obviously socialism and communism in general, but also the statist extension of mercantilism that is represented in the United States by Alexander Hamilton, Henry Clay, Abraham Lincoln, both of the Roosevelts, and the followers of John Maynard Keynes. In other words, the mixed economy is the other enemy. It is the dominant enemy today.

There is of course the other strain of thought in the West, Christianity. It is dominated either by Roman Catholicism or by Protestantism, but both of them have proven impotent to resist the spread of the Social Gospel and liberation theology. The present Pope is a liberation theologian. In the United States, most denominational leaders and most seminaries, if they preach anything about economics, preach some version of the mixed economy, either in the form of the Social Gospel or a more radical form of liberation theology. That is to say, neither the Catholic hierarchy nor the Protestant establishment has been able to offer a theological challenge to either Keynes or Lenin. Most of the truly radical Central American liberation theologians were shot by government troops in the 1980s, and the collapse of communism in 1991 and the Soviet Union ended any appeal of Western communism in Latin American Catholic circles. Only a handful of Maoists still operate, but not extensively. Their last stronghold was in Peru.

So, conservatism in America is a mixture. It is mainly dominated by the Hamiltonian's. They are the defenders of the mixed economy. They are the defenders of Empire. Their Trinity in American history is made up of Hamilton, Lincoln, and Teddy Roosevelt. Their acolyte was Henry Clay. They were all defenders of a strong national government. They were all advocates of central banking.

We have not had anything resembling an American political philosophy of conservatism. That is because it has been made up of irreconcilable parts. There is no way to reconcile Hamiltonianism with Austrian economics. There is no way to make the philosophy of empire consistent with free market economics. There is no way to get Keynesian central planning consistent with Austrian school economics, and it is a stretch to get it to work with Milton Friedman's Chicago school. Friedman made his peace with the Federal Reserve System. He made his peace with the methodology of mathematical empiricism: an appeal to supposedly neutral economic facts to justify economic theory. Without these agreements, Friedmanites and Keynesians would have no common ground.

MY EXPERIENCE

I began in 1956 as an anti-Communist. This did not change until December 1991. I was brought into the conservative movement by a one-hour presentation by Frederick Schwarz, an Australian immigrant who ran the Christian Anti-Communism Crusade. That was in 1956.

I was also affected early by The Freeman. This was no later than 1958. It was the primary institutional source of Austrian school economics from 1956 until the creation of the Ludwig von Mises Institute in 1982. The other source after 1971 was a developing hard money newsletter industry. This was in reaction to Nixon's single-handed abolition of the last remaining traces of the international gold standard on August 15, 1971. I got into the hard money newsletter movement sometime around 1965.

I believed that the Soviet empire was a threat to liberty around the world, and I also believed that it had to be contained. But I was not in favor of war. I was strongly in favor of the technology known as Star Wars, which was defensive. But the Soviet Union went bankrupt before the strategic defense initiative was ever implemented. It was never intended to be implemented, except by Ronald Reagan.

In the fall of 1958, I became convinced that Franklin Roosevelt not only knew that the Japanese were going to attack the United States, he had actively lured the Japanese into attacking the United States. Therefore, I became a revisionist historian. From that point on, I opposed all wars in American history subsequent to the American Revolution. I was squishy on the American Revolution. I changed my mind on that only late in life.

I never bought into mercantilism in any way, shape, or form. I believed in free trade.

I always opposed all aspects of the welfare state, from 1959 onward. I knew by the spring of 1959 that Social Security would go bankrupt, and I knew in 1965 that Medicare would accelerate the process.

I voted for Goldwater in 1964. I never again voted for anybody with any enthusiasm. By 1965, I knew about the American establishment, and by 1989, I was convinced that the American Revolution was a coup d'état against the conservatives. I even wrote a book on this: Conspiracy in Philadelphia. This outlook has pretty much cut me off from American conservative politics. I have not believed that politics would be a major instrument of social reform since the election of 1964.

I became a disciple of Robert Nisbet in the late 1960's. He taught me in graduate school. He was basically a Burkean.

If we are to believe Burke, the family is the central institution. I happen to believe that the church is the central institution historically, but I think that in most societies, the family remains the hard-core of resistance against state expansion. The church can and has been bought off too often.

The great threat of the Left against any society is the welfare system, which cuts off the responsibility of fathers and mothers, and which ultimately undermines the family. Women don't trust their husbands, and they vote for politicians who guarantee that the state will intervene if the husbands defect, run off, or in other ways abandon their responsibilities. The expansion of the state therefore increases the likelihood that husbands will defect, runoff, or in other ways abandon their responsibilities. We see this most clearly in the black community, which is barely functional as a community. A rising illegitimacy rate is destructive of community. We are now beginning to see it in lower middle-class white communities. The main scholar who has chronicled and examined both declines is Charles Murray.

THE MISSING LINK

There is one more factor that is almost never talked about by conservatives or liberals. This is missing piece of the puzzle. It is best described in the 1983 book, Law and Revolution. The Introduction to that book is most important single academic article I have ever read. (In second place is Raymond Kurzweil's "Law of Accelerating Returns.") In his Introduction, legal historian Harold Berman described the six revolutions in the history of Western legal theory: the Papal revolution of 1076, the English Puritan Revolution of 1643-58, the Glorious Revolution of 1688/89, the American Revolution, the French Revolution, and the Russian Revolution. These six revolutions have shaped the West in ways that are barely understood by scholars or voters. They shaped the way in which the law applies to individuals.

Berman was convinced that a seventh revolution began in the early 20th century: administrative law. This revolution separates the courts from the executive and the legislative branch. It separates the idea of law as possessing a separate foundation and separate jurisdiction from the executive. This revolution centralizes power in the state, and crushes the earlier legal revolutions. I disagreed with him with respect to the Russian Revolution. I think it was an administrative law revolution. But that tradition ended in December 1991.

Here is Berman's basic position on revolution. If there is no change in the legal order within a generation after a major political change, there has been no revolution. There has only been a coup d'état.

This is why I do not take Keynesianism seriously. This is why I do not take Social Security and Medicare seriously. This is why I do not take politics seriously. The legal revolution of administrative law is the greatest single threat to liberty in the world today, and it is firmly locked into the American social and legal order. People unthinkingly accept it. They are unaware of it. They do not understand the implications of the Federal Register, which now publishes 80,000 pages of fine print administrative law every year.

Politics is impotent to change this. Politics is unaware of it. Those few laws that get passed by Congress and signed into law by the President are then administered by the federal bureaucracy, and there is almost nothing that a President or Congress can do to stop it. Occasionally, the Supreme Court may hand down a ruling that will stop some minor aspect of the expansion of the federal bureaucracy, but this is rare.

Berman did not see anything on the horizon that would indicate a rollback of administrative law.

CUT THE FUNDING

One thing can stop it: the Great Default. As long as the money rolls in, whether taxed, borrowed, or printed, administrative law courts are going to expand their jurisdictions, and our freedom is going to be constrained. Something else is shrinking it: Moore's law. This was described best in Kurzweil's article. The escalating effect of Moore's law in reducing the cost of information is changing the whole world in ways we can barely perceive today. There is no way that any federal bureaucracy can keep up with the social, economic, educational, and political transformations that are taking place as a result of Moore's law.

Law is now moving back to the private sector. It is moving away from centralized government control. Arbitration is becoming more popular. People are finding ways to participate in the world economy that are outside the jurisdiction of the administrative state.

I do not believe that bitcoin is going to make a difference, but I would like to believe that, someday, something like bitcoin will work. In any case, Moore's law is on the side of decentralization. Decentralization is basic to Edmund Burke's theory of conservatism. It is consistent with Ludwig von Mises's system of economic analysis. It is consistent with private education. It is therefore a threat to Hamiltonianism, which means central banking and Keynesianism.

The collapse of the Soviet Union in 1991 was the great example of the defeat of centralization in modern times. The decentralization of the Chinese economy in 1979 was the other great example. Socialism is finished as an ideology. It really did get thrown onto what Leon Trotsky correctly described as the dustbin of history. It is finished.

Bernie Sanders can call himself a socialist, but he isn't one. He is just a Keynesian on steroids. He is one more defender of welfare state redistribution. But welfare state redistribution is impotent in the face of Pareto's law of wealth distribution. Governments can change who will prosper at the top of the Pareto pyramid, but they cannot restructure the Pareto pyramid. About 1% of the world's population owns half of the world's capital, and there is nothing that any national government can do about it. This has not changed since 1897, and it is unlikely to change between now and 2097.

The big change is going to come from robotics and the re-allocation of human labor by computerization. That is going to take place, no matter which economic group gains political influence, temporarily, at the head of any national government. Smartphones, 3-D printing, the Internet of things, and maybe even nanotechnologies are going to combine to decentralize economic power away from the state. These developments cannot be stopped by tariffs, taxation policies, central bank inflation, or any of the other tools of Keynesian central planning.

We are approaching the point at which the exponential curve of computerization turns upward. This means that the cost of communication will decline exponentially. Here is the #1 economic rule: "As the price of anything falls, more is demanded." There is nothing that any central government can do to reverse this. Well, this may be an exaggeration. Biological warfare could at least restrain it. But I do not see anything else that the state can do that will slow down this process of computerization. This means decentralization.

This process is going to accelerate when low-cost smartphones and free Internet access are available to Indian villagers and villagers generally around the world. Young men and women who would otherwise have been excluded from the international division of labor are going to prosper, and they are going to prosper at the expense of central planners' power.

THE FUTILITY OF NATIONAL POLITICS

That is why I do not pay much attention to national politics anywhere, other than national movements favoring secession. There are no more national politicians who speak eloquently on behalf of the nation-state. There is no Ronald Reagan. There is no Margaret Thatcher. There is not even a Mikhail Gorbachev. These people did not change much anyway. They were just good at rhetoric.

With the triumph of William Jennings Bryan at the 1896 Democrat national convention, there was no further political institution that had both clout and also a tradition of minimal national government. That one speech ended the old Democratic defense of localism, the gold standard, and low tariffs. There has been no gold standard defender to run for President since Teddy Roosevelt defeated Alton Parker in 1904. I see the defense of the gold standard as the single most important political defense of liberty, and we have not seen it anywhere since England went off the gold standard in 1931, and Roosevelt followed suit in 1933.

The gold standard was an institutional restraint on the expansion of government spending, and central banks were designed to thwart the gold standard. We live in an era of the triumph of central banking. We therefore live in an era of the comprehensive defeat of gold coins as restraining factors on the expansion of the government.

Here is the good news: we no longer need gold to do this. I favor a gold coin/digital standard established by the free market -- not any government -- but we no longer need it. If we did, then liberty would have been lost after 1971 or 1933. Moore's law has replaced the gold standard as a means of restraining civil governments' central planning.

The inevitable bankruptcy of every national Western government because of compulsory government medical insurance programs and old-age retirement programs will complete the destruction of the Hamiltonian movement in America and the Keynesian welfare state everywhere else.

This is why I think it is crucial that we focus our political concerns on what is going to exist beyond the Great Default. We need to ask this: What is going to exist in terms of employment opportunities in two decades or three decades, when the robotics revolution and the Internet of things have combined to transform the world economy? These are issues that are beyond discussion today. Nobody talks about the Great Default as being an international phenomenon, other than Peter G. Peterson. Nobody listens to him. He is a multibillionaire, and he formerly ran the Council on Foreign Relations, but his scenario is so dark for the Keynesians that they simply ignore him.

AMERICAN POLITICS IS AN AFTERTHOUGHT

Americans are practical people. Most of them do nothing about politics. Only every four years do most people in the United States get even vaguely interested in politics. I was taught this by California State Sen. Bill Richardson back in the late 1960's, and I have learned my lesson. He founded Gun Owners of America in 1975. He was a major figure in California politics for three decades. He understood direct mail as nobody else in politics did in California. But he was correct: most people just do not care about politics.

Americans are not committed to any ideology. Most people in the world are not. They pick up their political ideas through their peers. Once in a while, they may get involved in some political organization, but not often, and they never have.

Americans care about their families, their businesses, their economic status, their churches, television, sports, and the World Wide Web. They care about Facebook, not politics. This is good. They really don't believe in political salvation.

Politics for most Americans is simply keeping the other guys out of office. It is essentially defensive. This also is good. Most Americans don't trust the federal government any longer. This is good. Faith in political salvation was never strong in the United States, and it has waned dramatically ever since the election of George H. W. Bush.

OUT OF GAS

One by one, the movements unfavorable to liberty are running out of gas. They are running out of money. They are running out of ideology. They are running out of rhetoric. They are running out of believability. Meanwhile, Congress is building up massive unfunded liabilities that will eventually break the bank, meaning the central bank, in every nation. Keynesians will then lose their institutional support. This is happening already. When interest rates are at zero, or even negative, central banks can no longer goose the economy. Governments can run massive deficits, but this will simply accelerate the advent of the Great Default. They are all going bankrupt.

What is lacking is any kind of systematic political philosophy, social theory, and economic analysis which will provide guidance to decision-makers in the world beyond the Great Default. No one is articulating a philosophy or theology that will give coherence to a world of 3-D printing, when mass production will be produced through coordinating low-cost printers and people's basements.

Here is the problem: "You can't beat something with nothing."

There is only one institution that we can be sure will serve as the coordinating factor: the free market economy. Any social philosophy, theology, or worldview that does not rest on the concept of the built-in sanctions of the profit-and-loss system, based on voluntary exchange, open entry, and competing producers, is going to fail.

It is our job -- our calling -- as defenders of liberty to integrate the findings of Austrian school economics into the worldview we proclaim as fundamental. I am not saying that Austrian economics is more fundamental. It only appeared in consistent form in 1949: Mises' Human Action. But any worldview that fails to integrate Mises' findings will not prevail against the competition.

This is why I wrote 31 volumes in my economic commentary on the Bible.

CONCLUSION

The greatest institutional enemy of liberty today is administrative law. As long as this condition prevails, defenders of liberty will remain on the defensive.

In the United States, the greatest institutional enemy of liberty is the administrative law judge. You don't read about this often, which is greatly to the advantage of administrative law judges.

The greatest institutional defense of liberty today is what it has been for 500 years: the jury system.

What we need today, more than anything else in civil government, is citizens who will vote not to convict on a jury because a specific law is corrupt. We need a hung juries and bankrupt administrative agencies. Case-by-case, jury by jury, the lone citizen who refuses to vote to convict because a law is corrupt is the crucial defender of liberty. A hung jury forces the state to start over again. This increases costs of state authority.

Here is a law we can trust: Moore's. Moore's law is on our side. What we need now is lone jurors.