2965 How Adolf Hitler Destroyed Germany | George Reisman and Stefan Molyneux
Stefan Molyneux discusses "Why Nazism Was Socialism and Why Socialism Is Totalitarian" with George Reisman and the economic destruction of Adolf Hitler's totalitarian controlled Germany. | George Reisman is the author of Capitalism: A Treatise on Economics; and is the Professor Emeritus of Economics at Pepperdine University. For more from George Reisman, go to: http://www.capitalism.net | http://georgereismansblog.blogspot.com | https://twitter.com/GGReisman
Hi everybody, this is Stefan Molyneux from Freedom Aid Radio, taking my cue from History Channel.
It's Nazi Week!
And right up we have not a Nazi, but an avowed anti-Nazi, Dr.
George Reisman.
He's an author of Capitalism, a Treatise on Economics, and also has authored an article on the degree to which Nazism was not a free market philosophy.
He's a professor emeritus of economics at Pepperdine University.
You can follow his work at Capitalism.net.
Dr.
Reisman, thank you for taking the time today.
My pleasure.
Glad to be here.
So one thing that's always bothered me, and it's sort of a little salvo in the propaganda wars, but it's the degree to which Russia is referred to as communist.
But national socialism, and if you read the platform of the Nazi Party, the National Socialist Party in Germany in the 1920s and the 1930s, we'd find it has quite a lot in common with pretty socialist policies currently under All
right.
Well, first of all, we have to recognize Philosophically, the Nazis held the common good goes before the private good, and they had the idea the individual is subordinate to the state and is the means to the ends of the state, so no two would be his property.
But what actually created an actual socialist system in practice, as opposed to being philosophically present, is the combination of the inflation of the money supply, And price controls.
In order to pay for rearmament and all the public works projects, like the Autobahn, the Nazis greatly expanded the quantity of money in circulation, and that enabled people to spend more money.
But now, as they're spending more money, prices tend to rise, and the Nazis were terrified of rising prices Because in 1923, it had an inflation and consequent rise in prices to the extent that destroyed the old mark.
Prices were trillions of times what they had been prior to one.
So they were very much afraid of rising prices.
And to stop the rising prices, they imposed price and wage controls.
But they continued expanding the quantity of money.
So on one side, people are attempting to spend more and more money based on the additional money in circulation, and on the other, the prices and wages that they confront are fixed.
So they're attempting to buy more and more quantities of goods and labor, and very quickly they outrun the supplies of goods and labor.
So you have massive shortages of virtually everything.
In consumers' goods, what such a thing means is people who get to the markets early in the day are in a position to buy up all the supplies, and those who get there later in the day have to go away empty-handed.
So a consequence of shortages is the imposition of rationing.
So it's not enough just to have the money price of goods.
You, in addition, have to have the necessary ration coupons.
That's only the most obvious consequence.
At the same time, we had experience of this in our own country back in the 1970s in the oil crisis.
We had oil shortages starting in 1971, running for a few years, and then in the late 70s.
And both of the combination of an expanding quantity of money on the one side And price control on oil and oil products on the other.
And we had gasoline.
Most of your listeners probably are too young to remember such things as odd, even rationing days.
If your license plate ended with a number, you could get gasoline perhaps Monday, Wednesday, and Friday.
If it ended in an even number, you could only get gasoline Tuesday, Thursday, and Saturday.
Well, the government...
We introduced gasoline rationing in that form.
They were on the verge of having more serious rationing.
They should copy books with pictures of Washington on the coupons.
We were close to the point of people having to present ration coupons to get gasoline.
But the government was also having to determine to what extent refineries concentrated on the heating oil, gasoline, jet fuel, propane, butane, whatever, because each of these products came to have a shortage.
People were attempting to buy more of all of the products than were available.
Now, in that environment, production becomes chaotic.
What this means is When gasoline is confronted with a shortage and heating oil is confronted with a shortage, the possibility exists that the refineries could increase the supply of either one at the expense of reducing the supply of the other, and there would be no effect on price or profitability.
For example, if the oil refinery stepped up the production of heating oil at the expense of a reduced production of gasoline, The price of gasoline was not able to rise, nor the profit of gasoline, because of price controls.
At the same time, because of the shortage, the additional supply of heating oil would not reduce the price and profitability of heating oil.
So, the production between the two became simply random.
In a free market, you wouldn't have such a situation.
In a free market, if the refinery stepped up the production of heating oil at the expense of gasoline, The price of gasoline would immediately start to rise, and so would its profitability, while the price of heating oil would immediately start to fall, and so would its profitability.
So the market compels the oil refineries to provide a proper balance of the different oil products.
But price and wage controls destroy that.
They destroy a rational geographical distribution.
For example, if there's a shortage of gasoline in the San Francisco Bay Area, And in the Los Angeles Basin area, well, it's possible then for more gasoline to be taken away from either area and shipped to the other area with no effect on price and profitability.
So that becomes random.
When you have universal price controls, price controls on everything, the production of anything in the economy can be made to expand at the expense of the production of anything else, however important and vital and urgent it may be, Without any effects on price and profitability.
So production becomes totally random and chaotic.
And in this environment, to deal with the chaos its own policies create, the government assumes control over what's produced, how it's produced, where the product is set, in what quantity things are produced, what methods of production are used.
So if you add all of this to setting the prices and wages of everything, The government is exercising all of the substantive powers of ownership.
It may appear that things are privately owned.
If you went to the city hall in Germany, the city hall of Berlin or Dusseldorf or wherever, you undoubtedly find a record that this particular factory is owned by that particular firm and so on and on.
But in reality, It was the Nazi government that was making all of the substantive decisions about what was produced, how much, by what methods, etc., etc.
So that's de facto socialism.
The man who discovered this was Ludwig von Mises, who I'm proud to say was my mentor, and he distinguished two varieties of socialism.
There's the Russian or Bolshevik pattern, where the government openly nationalizes everything, and it's clear who owns the means of production.
It's the government.
And he also recognized the German or Nazi pattern, which was first enacted in World War I under Ludendorff.
And there, while everything had the outward guise and appearance of private ownership of the means of production, it was actually the government that exercised all of the substantive, all of the de facto powers of ownership.
So, in actuality, Nazi Germany was a socialist country.
Right.
And people have this confusion because they look at the legal ownership of the structures and say, well, you know, Adolf so-and-so, whatever his name would be, would be the person who would be deciding whether to produce more or less of a particular good.
But of course, if the government is imposing wage and price controls, they're using levers which have a direct effect on the production decisions made by people whose concerns are nominally private.
Right, and they're telling the firms what, in fact, to produce.
Like the government in our country, with the oil shortages, ordered the refineries when the winter was approaching.
They had to order them to step up the production of heating oil and cut back the production of gasoline.
Because in the chaos of the price controls and the shortages, they had no reason to do that.
So the government took control of the actual determination of what's produced and what quantities, where it goes, Now, even when the government assumes all these powers, they really don't solve the problems to any great degree.
They can assure the production of certain things which are of special priority, but they have no way of rationally dealing with the economic system as a whole.
Most things are in a state of chaos.
You have to realize You can't decide the production of any one thing without in some way taking into account the effect on the production of everything else.
For example, if the Soviet government wanted to expand shoe production, there are a lot of questions in connection with that.
Do you step up shoe production in Minsk or in Pinsk?
Each decision has different side effects.
Do you make the shoes out of leather or can you use other materials like canvas?
To what extent can you use rubber instead of leather?
If you're deciding to step up the production of leather to have more shoes, should you raise more cattle or should you get the leather from other places that use leather?
If you get the leather from other industries that use leather, what substitutes do they have available?
Now, what this means is that a socialist government, in trying to decide the production of any one thing, really has to simultaneously decide the production of everything.
That's what people expect from the socialist government.
They think, under capitalism, everyone is going off just doing his own small thing, concerned only with his own particular spot in the economy, not paying any attention to the rest of the economic system.
That's true, and that's fine under capitalism, Because what ties all of the individual decision makers together is the price system.
All of the decisions being made in production under capitalism are based on a consideration of prices.
Prices both in the form of revenue and income and in the form of costs of production.
So what the revenue and income indicates is the extent to which your production dovetails with the plans of the buyers.
All the buyers have their own plans.
And what the cost of production bring about is that your plans will dovetail with the plans of all of your suppliers and the competitors of your suppliers and the suppliers' suppliers.
The price system ties together the plans of all of the individuals in the economic system and coordinates them.
It makes a harmonious whole.
I need to elaborate on this a bit.
Let me give you the following kind of example.
First of all, we need to realize that capitalism even has planning.
Most people assume that capitalism is characterized by what they call an anarchy of production.
Everybody races around like a chicken without a head.
He's only interested in his own profit or loss.
It's true that people are only interested in their own profit or loss, but that's precisely what ties their activity together with the wider economy.
For example, when my wife and I decided we wanted to move to California, we had a housing plan.
Our housing plan was we wanted to get a house high on a hill overlooking the Pacific Ocean.
Well, we stopped off at a couple of such houses that were offered for sale, and when we learned their prices, we realized we just couldn't afford such a house, so we had to revise our housing plan and settle for a house several miles inland.
Now, as an economist, I am able to know that the reason we had to change our plan is that there were other people with plans that entailed obtaining the same houses, only they were willing and able to pay more for those houses than we were.
So when we changed our housing plan, our new housing plan was consistent with, coordinated with, the housing plans of others able and willing to pay more than we were.
Well, and just to point out that if the government had set the housing prices overlooking the ocean artificially low, you would have been even less likely to end up with one of those houses because either they would have been snapped up by the first comer or so they never would have been built in the first place.
Right, and then even those who had the money that could have obtained the house in a free market, they would have been deprived of the house too.
So it would have been snapped up by the first passerby.
Now, another example, imagine you have a college student in his freshman year He wants to major in some esoteric subject.
Maybe he wants to be a shepherd or God knows what, a Renaissance French literary expert.
But perhaps by the time of his sophomore year, he wakes up to the fact that if he pursues that path, he'll spend his life starving in a garret.
So he decides to change his major to something like accounting or marketing.
Now, he's changing his job plan And without him realizing it, he's selecting a new plan that coordinates better with the plans of other people in the economy.
There are far more people planning to use the services of marketers and accountants than who are planning to use the services of shepherds and French Renaissance literary experts.
He is reducing the demand or he's decreasing the price of accountants while increasing the price of shepherds and French literature majors as well.
So he's actually contributing in a different way to people making different decisions who come after him.
Right.
But the main point is he's changing his plan to coordinate with the plans of others throughout the economic system.
Now, planning goes on every day by everyone.
People have all kinds of economic plans.
There are people planning to buy homes or to rent apartments.
There are people planning to buy a new TV set or a new refrigerator.
There are people planning to keep their jobs or learn a better job.
People planning to stay where they are or move to a different location.
Business firms are planning to open branches or close branches, to increase their inventory or decrease their inventory, to hire new workers, fire existing workers, to keep their methods of production the same or change their methods.
And all of these plans are based on a consideration of prices.
And this consideration of prices is what ties the plans of all of the millions and tens and hundreds of millions of individuals throughout the economic system into a cohesive, coordinated whole.
So capitalism has planning.
It's not recognized.
It's like the character in a Moliere play back in the 17th century, Monsieur Jourdan, who spoke prose all of his life but never realized it because he didn't understand the meaning of the word prose.
Well, that's the situation with economic planning under capitalism.
It goes on all around us.
It exists everywhere, but people just don't recognize it as planning.
What they think of as planning is a handful of government officials getting together somewhere and giving orders as to what everyone else will do.
Now, this is an insane situation, and you can see why socialism necessarily has to fail.
The government is attempting to monopolize planning in the hands of a small group, the members of the central planning board, or maybe even in the hands of just one man, the supreme dictator.
And they're prohibiting economic planning on the part of all of the millions, tens, hundreds of millions of their subjects.
Now, this is comparable to an arrangement whereby the legs of a handful of people are being expected to bear the weight of the whole population.
We need everyone to go on his own legs.
We need everyone to think and plan to have a planned economic system.
We need the planning of everybody, which is what we have under capitalism and the price system.
Under socialism, there is no economic planning.
It's impossible.
What you'd have to have for the economic planning of socialism would be a supreme being.
The supreme deity would have to descend from heaven and run the socialist system, because what you'd need is a mind capable of knowing all of the different factors of production, all of the different factories, all of the different machines, The warehouses,
the stockpiles of materials of all descriptions, their specific locations, what their technological capabilities were, what they could possibly produce within the next week, month, quarter, whatever, and then on the basis of all of those permutations and combinations,
what could be further produced in the next week, month, or quarter, and carry this process forward over a period of years And then pick some distinct combination and give orders to take the steps week by week, month by month, to achieve that ultimate goal.
That's just utterly impossible.
No one has the kind of brain required to do that.
We would all understand this in the realm, in affairs of the heart, which is somehow distinguished from the affairs of the head and the hands.
Like if there was a government agency that claims to have the ability to know who everyone should marry, everybody would be like, say, this knowledge is not possible.
Everyone has their particular taste.
That's a very good example, a very good analogy, and I'll try to use that in the future.
Thank you.
Yeah, it should be a pull market.
In other words, it should be based upon what people are willing to expend resources on.
Of course, everyone forgets that while human desires are infinite, all resources are finite, and you need some way of allocating them.
And I think, as Mises has pointed out, as early as the 1920s is coming up to a century ago, that without the calculations available to people for free, instantaneously, dynamically, in real time, through the mechanism of price, there is absolutely no way.
There's not a second best way.
There's absolutely no way to rationally or even morally allocate resources in the absence of price.
That's exactly true.
So the irony is that socialism, which people think of as a system of planning, is an unplanned chaos.
And capitalism is a highly rationally planned economic system.
It's planned by all of the individual participants and their individual plans are integrated, harmonized, coordinated by the price system.
Now you've talked in this article, I think one of the...
One of the great arguments that you put forward, not that great is a particularly rational term, but hopefully my audience knows what it means, is the degree to which totalitarian forms of control, not just related to economic activity, are necessarily like dominoes falling from things like wage and price controls.
And I think this ties into some degree to some of the disasters that have been seen in In government policies designed to counteract economic transactions where there is no victim or no complainant, like illegal drugs at the moment or prostitution or gambling and so on.
So can you just talk a little bit about the dominoes that start falling in the less economic spheres, in the more the personal spheres, in what happens to the court system, how many government agents you need, how intrusive they need to be as a result of these economic controls to counter the black market?
Well, yes.
If you consider price controls, on the one side, the businessmen would be happy to be able to get a higher price and make a better profit, and there are many customers who'd be happy to pay the higher price to get what they want.
So the potential is there for a black market, and if the government did nothing further, the black market could become enormous and totally destroy its price controls.
And taxes as well, of course, the tax base as well that it needs.
Right.
So if the government is serious about enforcing the price controls, they have to have pretty severe penalties, and they have to create a good chance that violators of the controls will be caught.
Now, if they were simply imposing a fine, the fines could come to be regarded just as an extra cost of doing business, and the fines wouldn't be effective.
So they have to impose penalties of a kind that you'd normally find on a major felony, like 10 years in jail or something like that.
And in order to create a real chance of people being caught, they need an army of spies and secret informers.
So you'd have to worry if someone is in your shop looking to pay you an above-price-controlled price, is he legitimate or is he an agent of the police?
And so people have to be suspicious of one another, including their longtime friends and associates, even their relatives.
So no one can trust anyone in such an environment.
And this is an important feature of a totalitarian dictatorship.
And you probably would have a difficult time getting these severe penalties imposed as a result of a jury trial.
So what the government needs is not only severe penalties and an army of spies and informers, but also the ability to convict without a jury trial.
They need to have an administrative process of convicting people and imprisoning them.
So this is a feature of a totalitarian dictatorship.
And then further, given the economic chaos, the leaders of socialism are in a dilemma.
On the one hand, they promise a life of improving prosperity.
They promise that they'll take care of people from cradle to grave.
But what they deliver in practice is an economic nightmare.
There are shortages of everything.
In the Soviet Union, people had to spend hours and hours each week Waiting in line for things like potatoes.
You couldn't get clothing in the department stores, except rarely they'd get a bunch of things in.
People would walk around with huge quantities of cash, lists of the clothing sizes of their friends and relatives, and when something was available, they would all be snapped up immediately.
That's your only hope of getting something.
Also, when the government is allocating the factors of production, one of the most important things they're allocating is human labor.
The government decides which uses require how much labor and where.
So, in the Soviet Union, the graduates of colleges and technical schools were compelled to work wherever the government ordered them for a number of years.
People living on the collective farms could not be away for more than a few days.
People could not quit their jobs without the approval of their existing government employer.
And so here you are, you've got people who are spending hours waiting in line every week forgetting their rations.
And in jobs that they don't like, that they can't leave, You have tremendous overcrowding in housing.
You have different families living in the same apartment.
We have housing shortages.
There are some cities where it's more desirable to live than others, like Moscow and Leningrad.
In order to prevent everyone attempting to move to those places, the government has to restrict the internal freedom of movement.
So you need a passport and the equivalent of a visa to be able to travel to certain cities in your own country.
Now, put all this together, here's someone wasting hours every week in line in a job he hates, living in overcrowded conditions.
He's not going to be a happy-go-lucky sport.
He's going to be seething with anger, resentment, hatred.
And who would be the logical target of his anger and hatred?
The people who are making all of these decisions, who have promised, who have said that socialism is a perfect system, that only evil can prevent its perfection from coming to the fore.
They're the people you'd hold responsible.
So the potential exists in every socialist country for a violent dictatorship And overthrowing the existing government, who people have every right to blame for their miserable economic conditions.
And in order to prevent that, the socialist government has to keep a tight lid on the population.
They have to have an army of spies and informers to make people afraid to utter the slightest remark that could be interpreted as against the regime.
The government has to have hysterical propaganda, blaming the conditions on foreign records, Party officials who supposedly represent an illegitimate branch.
You have periodic purges where whole groups of officials are sacrificed as though it's their responsibility, the bad conditions, not the responsibility of the socialist regime as such.
Well, and of course, given that people are so discontented with the regime, un-muzzling the fourth estate, having freedom of the press would be incomprehensible in terms of serving the self-interest of the rulers.
Right.
There's no freedom of the press, and of course, there's no freedom of the press based simply on the fact of government ownership or control of the means of production.
If the government owns the presses or determines who gets newsprint, you can't print what the government doesn't want printed.
But under socialism, the violation of the freedom of press is even beyond that, because there's hysteria attached to it.
The government is terrified of people getting any idea as to the government's responsibility.
So you have this constant propaganda on the virtues of socialism, that all the evils are caused by foreign wreckers or disloyal party officials, and you've got, as I say, these periodic purges.
So there's no freedom of the press.
There's no academic freedom.
You can't even have a group assembling.
You can't even have an art show.
There's no activity independent of the state.
You couldn't even have a non-governmental stamp collectors association.
Wherever it's possible for people to meet, if the government doesn't have control over it, it's in danger.
And one of the great efficiencies of this Nazi approach to socialism I think, as Tom Sowell has pointed out, that you get the scapegoats.
You get the middlemen.
Because when the government openly controls the means of production, as in the Soviet Union, all disasters are easily traceable to the government.
But, of course, if the government's imposing wage and price controls, people don't go to a government store.
They go to a, quote, capitalist local store and find it empty or find the prices too high.
And so they have someone to blame that's not the government itself.
And, of course, in Nazi Germany, that turned disastrously towards the Jews as well.
Right.
That's a good point, too.
Under socialism, any black market activity entails automatically the further charge of the theft of state property.
Because if you're using materials from a government-owned factory and you're selling the products in the black market, that is tantamount to stealing the materials.
So that's a further charge.
Now, both under socialism of the Soviet variety and socialism of the Nazi variety, whoever is engaged in black market activity is interfering with the government's economic plan.
And we know how chaotic that is.
Conditions are nightmarish.
Now, if on top of everything else, the government can't even rely on its statistics of what are the materials available to it, Where they're located and so forth because people are diverting them into the black market.
Well, that's disruption of the national economic plan and that's tantamount to sabotage.
So for this reason that you end up with people getting shot for such things as dealing in the black market, because by the logic of socialism, they are committing an act of sabotage, namely sabotage of the government's national economic plan.
And they're certainly disrupting the plans of the central planners, of the managers, by, quote, allocating resources that are outside of the plan.
But in a way, they're almost necessary as a way of explaining why things are going so badly, despite all of this central planning.
Well, I mean, the irony is on the one side, the socialist regime will be trying to execute these people to help blame its problems on them.
But on the other side, the fact that things are being sold in the black market helps to alleviate the destructive consequences of socialism.
And a good deal of such economic activity as took place in the Soviet Union was on the basis of the black market.
And that made it possible for things to get done, at least in some places, to some extent.
Now, I wonder if we could switch gears for a moment because, you know, to me, one of the great and valuable reasons for studying history is to apply their lessons to the present.
And I've made the case on this show many times that if you want to know whether there's a free market, the first place you need to look is, is there a free market in money?
Are there competing currencies?
Is there perhaps a gold-based standard or some other basket of currencies that limits the production of money and thus keeps inflation to some degree at bay?
Because, of course, what consumers want is deflation.
Price going down is good for everyone.
I would hesitate to call that deflation.
Consumers do want falling prices.
No, you're right.
Yeah, that's a better way of putting it.
So, wage and price controls...
In the West, and you know, you're the expert, so correct me where I go straight, but it seems to me that wage and price controls, in particular, price controls on money, the degree to which Central banks manipulate the price of money through the manipulation of interest rates would seem to me the most invisible levers that are currently tearing apart the remnants of the free market in the West.
Could you see if there's a way to apply some of the lessons that we've been talking about with Nazi Germany into modern central banking and the manipulation of currency, of debt, and particularly of interest rates and see if that's having an effect on current economic problems?
Well, I don't think the manipulation of interest rates is comparable to wage and price controls.
The government is expanding the quantity of money.
You see, when you have wage and price controls, the government is not in a position to expand the production of the various individual goods under the price controls.
I mean, the government might be able to do this with some goods.
The government might be able, let's say you have a small country, And the government spends an awful lot of money on buying potatoes in the world market, and then it offers these potatoes at a very, very low price domestically.
I think that would be somewhat analogous to the low interest rates.
But this would be along the lines of a government subsidy driving down a price rather than a price control.
If the government wants to lower a price, a possible way is to subsidize the expanded production.
But they can't do that across the board, and it gets very expensive.
So they think they can just lower the price without having to increase the supply, and then you get shortages.
Yeah, because certainly up here in Canada, the subsidization of farmers has led to increased prices.
The subsidization, of course, in America of university tuitions has, to a large degree, driven increases in prices.
You may get a temporary drop, but then all the bureaucrats and rent seekers come swarming in and tend to drive the price and keep it rising.
Are there other areas where you think that these disastrous planning mechanisms of the National Socialists in Germany may be showing up in the American economy?
Well, I think that's by far the main connection, the popularity of price and wage controls.
People don't realize that that would give us a Nazified economic system.
There are some ideas that the Nazis held, which some people hold here, but I don't think they're particularly widespread, and that is the idea that a country needs to own its own natural resources.
A major idea of the Nazis was that Germany needed to control the territory large enough so that within its borders would be all of the different raw materials that a modern economy needed.
That's their rationale for wanting to conquer the Soviet Union.
Well, and that would be the case for a war economy because, of course, when you wage war against your neighbors, they tend not to ship you the raw materials for your war machines, but if you have that within your own borders, it's easier to wage a longer war.
Right.
It's sort of circular.
They wanted to go to war to get the resources, and then, of course, having the resources would enable them to go to war again.
The truth is, and here the Nazis connect with conventional socialists again.
You see, the socialists believe that in order to get the benefit of property, you have to own it.
The socialists think of other people's private property as serving only the owners.
The socialists have the idea that all private property has the status of consumers' goods.
You know how they depict a capitalist?
He's always a fat man, and the capitalist has...
This huge pile on his plate, a huge pile of pasta, and on the other side of the table is the starving worker who has three beans.
And the socialists think that what's entailed in redistribution is taking a little bit away of the superfluity of the capitalists and putting something on the plates of the starving workers.
That's how they see things.
They're totally unaware that the overwhelming bulk of the wealth of the rich in a modern capitalist economy is not in the form of consumers' goods.
It's in the form of means of production, in the form of factories, pipelines, freighters, railroads, whatever.
But the physical beneficiaries of this wealth are the buyers of the products.
For example, if we ask, who gets the benefit of the oil fields owned by the Exxon Corporation?
It's not the buyers of Exxon stock.
It's everyone who buys gasoline, heating oil, or any petroleum product.
They're getting the physical benefit of Exxon's oil fields and the physical benefit of U.S. Steel's steel mills and General Motors auto plants and on and on and on.
In a market economy, the physical benefit of the means of production goes to the buyers of the products indirectly through the products.
So you don't have to own something to get its benefit.
You get the benefit of the auto plants, the oil fields, the department stores, just by being able to buy the products.
Well, and there's a frustrating incomprehension on the part of people who talk about the market who often have never actually been in the market.
And it's not necessarily the case with you because I think we agree about the value of the free market.
But in my late 20s and up until about the age of 42, I was a software entrepreneur.
I sort of co-founded, built companies.
And you actually are a slave to the people you want to sell to.
You don't gain money by exploiting people.
I mean, you don't go out and beat people up in a parking lot and get money.
What happens is you find a way to make other people's money go further, their time be more enjoyable, or you find some way to improve other people's lives.
It is through service to human happiness and human productivity that we end up with profits.
It's not just ripping off starving workers.
That's just a caricature.
Right, exactly.
Now, the point I wanted to make between this conventional view of the socialists and the Nazis is the Nazis think that to get the benefit of natural resources, your country has to own them.
That's not true.
In order for the people of Germany to get the benefit of the wheat fields of Russia, all they have to do is be in a position to buy the wheat.
They don't have to have sovereignty over Russia, and that's a fundamental simple point that nationalists don't recognize.
We're in the same position as the conventional socialists.
I don't need to own a movie studio to watch a movie.
In fact, it would be ridiculous if I had to, because they're very expensive.
Exactly.
Now, not only does everyone who buys the products get the benefit of the means of production, there's also a second benefit to the non-owners of the means of production, and that's in the form of the demand for labor.
The privately owned means of production are the foundation of the demand for the labor of the non-owners.
So the greater the wealth that's invested in means of production, the more abundant is the supply of products and the lower their prices, and the greater is the demand for labor and the higher the wages.
This is a profound, simple truth of which people are equally unaware as they are of the fact that there's economic planning under capitalism and that socialism is planless.
There are two huge areas of economic ignorance.
One is the fact that under capitalism, non-owners of means of production have a two-fold benefit from the private property of the owners, namely it's the foundation of the demand for their labor and the source of the supply of the products they buy.
And then also that capitalism is a totally planned economic system based on a consideration of prices in the form of sales revenue and costs and in the form of wages.
So there's immense, incredible ignorance about capitalism, which I think could be relatively easily overcome.
Oh, it is very frustrating, and it goes back to what Bastiat said, that there's a mistake between society and the state.
And if people say, well, the government shouldn't do X, That somehow people think that we're saying X should not be provided.
Like, oh, if the government shouldn't provide education, somehow we're against education.
As Bastiat said, he said, if I'm against government monopoly of wheat production, that doesn't mean I don't want to have any wheat in society.
It simply means I want to have it voluntarily, freely, more efficiently and traded openly.
So what happens is, of course, people say, well, if there's no central planning, there's no planning.
And they confuse central planning with politically expedient chaos.
And they think that there's no coordination without a central planner because they don't understand the value of price.
Right.
Mises described this as statology, state worship.
You could also call it the Pharaoh mentality.
People have the idea that they are all nothing.
The Pharaoh is everything.
And the Pharaoh is capable of doing everything.
The Pharaoh can solve all of their problems.
They can't solve any of their problems.
That's their mentality.
Well, and it becomes one of these self-fulfilling prophecies in that when the government accumulates so much economic power, major economic players, even nominally private ones, Have to focus on pleasing the government, have to try and gain government contracts.
So the belief almost transmutes itself into a reality because, of course, as a CEO, you have a fiduciary responsibility to produce maximum profits.
And if that means courting the state, buying off congressmen and so on, you actually have to do that or you can be found negligent.
So it does become one of these situations where once the state becomes big enough, people do need it in order to profit and triumph in what remains of the free market.
Yes.
Well, I just want to thank you for your time.
For those who don't know, just listening to this conversation, I'm going to read...
Dr.
Reisman's article, which is really important to get into your head because there is this misconception that, you know, this terrible left-wing, right-wing paradigm that is just a Mobius strip of incomprehensibility where you've got Stalin, who's a dictator on the left, and Hitler, who's a dictator on the right, which means, what?
I don't know.
This is a useless scale.
But it's really important to recognize the degree to which all totalitarian, all central planning is hostile to the free market.
And the free market is simply the non-initiation of forced respect for property rights and allowing people to live voluntarily with each other, to shake hands rather than draw weapons.
So it's really important to understand this.
Please go to Capitalism.net for fantastic articles and historical articles, archives, current events.
Dr.
Reisman, do you have any other things coming out imminently that my listeners would be wise to know about?
Yes.
I'd like to urge everybody to look me up on Amazon.com under Kindle Books.
I just posted a new one called Freedom of Opportunity, not Equality of Opportunity.
Whoever is interested in the problems we've discussed today, I'd like to refer them to my main economic treatise, Capitalism, a treatise on economics.
It's available on Amazon.com, both in Kindle format and hard copy.
I have a blog, George Reisman's blog, at.blogspot.com.
My website, as has just been mentioned, is www.capitalism.net.
I will put links to all of that to make sure that people can get a hold of your stuff.
Lucid writing, clear-thinking writing, and writing that will be like Roman Spears against the Genghis Khan hordes of status propaganda we've all been exposed to since day one.
