The Online Library of Liberty

A project of Liberty Fund, Inc.

• Associate Editors
• Editorial
• Bibliographic Essay: Forrest Mcdonald, a Founding Father's Library
• Bibliographic Essay: Murray N. Rothbard, Modern Historians Confront the American Revolution
• I: Paradigms of Freedom
• Conflicting Paradigms
• Paradigms As Procrustes' Bed
• Interest and Ambition
• Thesis and Antithesis
• Freedom and Authority
• Sin and Society
• Autonomy and Authority
• Virtue and Status
• Utility and Progress
• Diversity and Equality
• II: Nonspontaneous Order
• State Vs Society
• The Therapeutic State
• Order and Elites
• Order and Virtue
• Self-perfection
• Socialism and Freedom
• Market Socialism
• Centralism Vs Decentralism
• Voluntary Servitude
• Authority and Obedience
• Social Control
• Power and Ideology
• Hegemony
• III: Spontaneous Order
• Freedom and Knowledge
• The Case For Government
• The Case Against Government
• Community Vs. State
• State and Morality
• Freedom and Creativity
• Order Without State
• IV: Individual and Social Good
• The Right to Privacy
• Autonomy and Psychiatry
• Personal Choice
• Individuals, Groups, and States
• Social Dynamics
• Social Engineering
• Individuals and Groups
• Personal Vs. Social Goods
• Individual Rationality
• Self-interest and Social Good
• Self-interest Vs. Slavery
• Art and Autonomy
• Radical Individualism
• V: Ethics, Rights, and Freedom
• Objective Values
• Natural Law
• Preambles to Freedom
• Social Sciences and Values
• Reason and Change
• Reason and Choice
• Economics and Values
• Legal Naturalism
• Justice As Restitution
• Justice As Punishment
• Rights and Contract
• Virtue In the Market
• Justice Under Capitalism
• Profits and Choice
• Social Framework and Prosperity
• Ecology and Rights
• Business' Social Ethics
• VI: Equality
• Problems With Inequality
• Equality, Power, and Values
• Unequal Income
• Equal Opportunity
• Equal Liberty
• Equality of Condition
• The Egalitarian State
• Sexual Equality
• VII: Power
• Empire, Equality, and Envy
• Imperial Presidency
• Empire and Inflation
• Watergate As a Symptom of Empire
• The Pragmatic Presidency
• “absolute Power” and Corruption
• VIII: Planning Vs. Choice
• Origins of Planning
• Bureaucratic Growth
• Prediction and Control
• Government Planning
• Government Experts
• Useless Usury Laws
• Wartime Regulation
• Government Inflation
• Neomercantilism
• Compulsory Schooling
• Planning In Nonprofit Agencies
• Private Capital and Education
• Choice and Spontaneous Order

VII

Power

Liberty us. Power is an issue classically expressed in the debates leading up to the American Revolution, in the Declaration of Independence, and in our cover subject's (George Mason) efforts to include the Bill of Rights within the U.S. Constitution. The power that the Founders opposed was government hegemony based on the rule of violence, the substitution of the ruler's decisions for those of individual choices in society, and the exploitation of the ruled for the benefit of the ruler. Power thus usurped the free individual's right to self-responsibility, freedom from violence, and capacity to make personal choices and benefit therefrom.

What is the anatomy of government power in its origins, growth, and consequences? Must power inevitably lead to the welfare-warfare state, empire, or Watergate? How valid, in sum, is Lord Acton's much quoted axiom of power's tendency to corrupt?

Empire, Equality, and Envy

Marina, William

• Florida Atlantic University

Egalitarianism and Empire. Menlo Park, California: Institute for Humane Studies (1975) 32 pp.

Civilizations have evolved historically according to a syndrome of “E” factors: equality, egalitarianism, envy, and empire.

Equality of opportunity before the law tolerates differences in income, property, or status. Egalitarianism desires to level and eradicate even such inequalities. Envy hates and resents the person who possesses more than the envier does (e.g., beauty, wealth, status, or power). Empire, the drive towards a centralized, bureaucratic state, is the historical offspring begotten by the hate of envy coupled with egalitarianism.

Weber, de Tocqueville, and more recently Robert A. Nisbet (The Twilight of Authority) underscore this trend to empire or centralized statism and rule by bureaucracy. In discerning these symptoms, Spengler diagnosed civilization as declining in freedom and creativity while power and centralization of power were increasing and blocking creative energies.

The development of the “E” factors syndrome parallels a shift in the source of value or law. The West has drifted beyond equality towards egalitarianism and democracy. These values depend on more primary sources of value or law: supernatural law (God's plan), natural law (reason and experience), and positive law (state law). Each of these three concepts historically follow a sequence related to the “E” factors. Societies begin developing with a value system based on supernatural law. The breakdown of feudalism and the growth of equality follow natural law. Egalitarianism and empire subscribe to positive law and a belief in the state as the ultimate source of all value and law. Envy and resentment goad on this last development.

The egalitarian thrust of “social justice” (essentially a program for leveling income, property, and status) contradicts the idea of equality. For many, egalitarianism masks an envy to replace those at the top regardless of whether their position arose from state-granted privileges or from superior ability and hard work.

Why do so many people believe that state intervention alone can achieve social justice? This follows from their belief that the state is the source of value and law. Trapped within the blinkering paradigm of the state, society becomes fixated on state solutions and is blind to the possibility that statism may be the problem.

In the West, statists developed a policy of mercantilism: the state allows private property but the rulers regulate the economy for the “general welfare.” This inherently unstable mercantilistic state system tends toward “corporate syndicalism” where rival economic interests jockey to control the state. This condition results in three sets of critics: (1) reformers seeking to return the system to a “responsible” mercantilism; (2) socialists seeking to go beyond mercantilism and abolish even the nominal private ownership; and (3) free market advocates seeking to abolish mercantilism. These last mentioned critics view state intervention as the root problem.

Mercantilism tends toward empire or centralized state power. To solve the evils and instability of the mercantilist system, the state assumes ever more power to regulate. To avoid government by vested interests, man turns to government by a supposedly impartial and impersonal bureaucracy. Now an elaborate tug of war for state power occurs between the ruler, the bureaucracy, the economic interests, and the people as a whole. An added complication introduces the military to restore final order.

Bureaucracy, begotten to promote equality, spawns the Frankenstein monster egalitarianism. Envy and egalitarianism serve as the heart of this complex interaction of values and the “E” factor syndrome. One can trace this process by carefully examining the historical development of ancient Greece, Rome, China and the modern West.

Imperial Presidency

Bresler, Robert J.

• Pennsylvania State University

“The Ideology of the Executive State: Legacy of Liberal Internationalism.” Watershed of Empire. Edited by Leonard P. Liggio and James J. Martin. Colorado Springs: Ralph Myles, 1976: 1–18.

Since 1941 Americans have abandoned their isolationism and trusted an imperial presidency to conduct U.S. foreign relations. Liberal governments stressing “strong executives” used this as a mandate for foreign interventionism and domestic antidemocratic practices. They soon found themselves at war with the basic instincts of the American public for peace. The liberals' passion for political centralization and their search for a totally organized world to achieve stability and peace brewed a disastrous foreign policy. Abroad the result has been a “perpetual war for perpetual peace”; at home, a governmental system of executive royalism.

It is not accidental that American liberal promises of reform are followed by the reality of war (World Wars I, II, and Vietnam). Within the ideology of American liberalism there exist the seeds of the war-making state.

By its global, missionary foreign policy, liberalism drains American resources and thereby neglects domestic needs. Liberalism thus fails to deliver its promises and provokes dissent. What survived the liberals' aborted crusades was the powerful engine of the central state. In the frustrated attempts to push through reform measures involving “equality” and “democracy,” liberalism turned to antidemocratic centralization and government by “expert” elites to secure unity.

All this drift to the Leviathan state encouraged a bipartisan imperial presidency which followed an aggressive foreign policy. How better to use a strong central government and instill national unity in a fickle people who might otherwise resent the failed domestic programs of reform?

The executive state grew deeply suspicious of mass, popular politics. Professional elites alone, rather than the people, were deemed expert to shape delicate foreign policy decisions. Public debate on key issues was forbidden. In fact, the American public has consistently shunned war or policies leading to war. Unifying the apparently inconsistent U.S. popular enthusiasm for neutrality and isolationism (during the 20s and 30s), and the internationalism following World War II, was the belief that, in context, both policies seemed the best ways to avoid war. Liberal theorists could not tolerate any public unwillingness to “pay any price” for the risky business of global interventionism by a centralized imperial presidency.

Empire and Inflation

Hamilton, Earl J.

• University of Chicago

“The Role of War in Modern Inflation.” Journal of Economic History (USA), 37 (1977): 13–19.

Clear causal connections link wars and consequent inflations from the seventeenth through the twentieth centuries.

Although wars occurred more frequently in the seventeenth and eighteenth centuries than in the nineteenth and twentieth, earlier conflicts generated lees price inflation because of the comparative dearth of real resources consumed in earlier wars.

Inflationary finance supplied significant resources for both the American Revolution and the French Revolution. During the Revolution, Americans so detested and resisted direct taxation to support the war that Congress failed during some years to extract tax revenues from many colonies. In lieu of taxes, the only way Congress could finance the Revolution was through paper money inflation. As a result, the country suffered one of the worst inflations in modern times.

Stemming from war financing, France suffered its only hyperinflation during the French Revolution. The French financed their Revolution. The French financed their Revolution by issuing fiat money in the form of assignats. The inevitable hyperinflation that followed led the authorities to another fruitless experiment in agricultural price controls. Farmers then withheld their produce and near starvation set in. Finally, the government removed price controls and from 1790 to 1796 the assignat dropped to less than 1/1000 of its original par value. Napolean, on the other hand, relied mainly on direct taxation rather than money creation to finance his wars.

Likewise, the famous British price inflation of this period was slight compared to modern examples; prices rose only 15-20% more than they would have if tied to gold from 1797 (Bank Restriction Act) to 1815 (Waterloo).

During the nineteenth century in America, the War of 1812 and the Civil War both led to painful price inflations (for both wars, around 120% price rise spread over several years). But World War I produced price rises in the belligerent countries that made previous price inflations (whether generated by war or specie discoveries) pale in comparison. American prices over several years again rose 120%; whereas German prices from 1919 to 1923 skyrocketed in terms of the worthless mark.

World War II sent commodity prices soaring. A large portion of recent U.S. inflation, along with much of Western Europe's, was caused by American military involvement in Vietnam. Political leaders in both major American parties were unwilling to pay the costs of that war through current taxes.

Thus during the past two centuries, wars and revolutions (in which citizens show reluctance to pay “costs” directly) serve as the principal causes of hyperinflation in industrial countries. From a purely economic point of view, some see current taxation as the best way to finance wars. Bookkeeping and administrative costs would amount to less. Government and private sectors would be spared the headache of accounting, in both nominal and real terms, for prices and costs. Also ruinous war debts would not mount, and we would see the “costs” of wars more clearly.

This last consideration also explains why political leaders do not adopt current taxation. Educated people would quickly perceive that the cost of the war outweighed any possible benefits and would demand peace. Inflation as a hidden tax is far easier for politicians to levy, rather than resorting to straightforward direct taxes.

Watergate as a Symptom of Empire

Bernstein, Barton J.

• Stanford University

“The Road to Watergate and Beyond: The Growth and Abuse of Executive Authority Since 1940.” Law and Contemporary Problems, Duke University School of Law, 40 (1976): 58–86.

Presidential rascality and improprieties did not begin with Richard Nixon.

Watergate conjures up presidential illegalities such as break-ins, violations of privacy, cover-ups, and abuse of national security personnel (FBI, CIA, and Justice Department). In important ways, President Nixon's misuse of power followed similar abuses of the executive power that often invoked “internal security” and used the FBI for personal ends. Watergate was merely the culmination of a long series of abuses in presidential power since 1940 in both domestic subversion of civil liberties and in foreign affairs.

First let us consider domestic abuses. In the administrations of Roosevelt, Truman, Eisenhower, Kennedy, and Johnson we witness some presidents and their attorneys general manipulating the FBI for political espionage. All of these presidents accepted political information on friends and enemies, and all permitted the FBI to act outside the law. Presidents often exploited “national security” as a cover to justify many illegal acts, including breakins. During the Cold War, the FBI played on the fear of communism to try illegally to disrupt several leftist groups. Presidents and their attorneys general were either ignorant or preferred to acquiesce to such illegalities. They made no attempt to restrain J. Edgar Hoover's unsavory harassment of civil rights leader, Martin Luther King. President Johnson even used the FBI to spy on his political rivals in the Democratic and Republican parties.

Not until Watergate did the press and public seem outraged by the illegal acts permitted the FBI by modern presidents. Despite the current furor about the Watergate break-in, little concern seems to be expressed about the far more severe disruption of leftist political groups.

Next, on major foreign policy issues, the record shows that during the 30 years before Nixon, every administration deceived and manipulated Congress and the public. In the aftermath of World War II, modern presidents used covert warfare against many nations. Richard Nixon did not invent deceit and dishonesty. Inheriting these “dirty tricks” from his presidential predecessors, he did not fear violating the law. He expected, like them, that he would not get caught. Nixon's predecessors' policies in foreign affairs were serious affairs. Watergate, although a corruption of the political process, did not involve life and death issues.

The Pragmatic Presidency

Miroff, Bruce

“Reassessing the Modern Presidency.” Chapter 7 in Pragmatic Illusions: The Presidential Politics of John F. Kennedy. New York: David McKay & Co., 1976: 271–327.

John Kennedy's presidency exposes the myth that the modern presidency can serve as a progressive instrument of change if only the right liberal or reformer occupies the White House. Predictably, no liberal will use his office to create a thorough transformation of American politics. Only those who have a real interest in change can create such a transformation. In contrast, modern presidents will tend to impede progressive changes since they are products of the status quo order and subject to that order's strong institutional, ideological, and power pressures.

Kennedy's foreign and domestic politics deflate the illusions of the modern “pragmatic” presidency. Behind the apparent pragmatism we see the actual pursuit of power. In foreign affairs power appears in the guise of an interventionist imperial presidency pursuing American liberal-corporate interests. Kennedy's domestic politics revealed a willing partnership between government and business to make the American economy prosperous. His Keynesian program of the “New Economics” sought primarily to benefit—in wealth and power—the corporate community.

Even in liberal hands, the modern presidency functions as a stabilizing force to the existing order rather than a progressive, reformist force for change. The president's role is to maintain and expand the prevailing American domestic and foreign order. In this regard, Kennedy's presidential record belies his reputation as a true reformer. Behind his charismatic image of popular hero lies his actual promotion of establishment power and values.

Thus, Kennedy's foreign policy failed to be either very progressive or even pragmatic. Resurrecting a distorted notion of Soviet global aggression, Kennedy heated up the Cold War to dangerous levels. At the risk of nuclear war, he intensified the confrontations in Berlin and Cuba. Despite his test ban negotiations in 1963, he waged the Cold War in the Third World. His imperial presidency stands revealed in his policy of “democratic revolution” in Latin America and in his counterin-surgency policy in Vietnam. In sum, his foreign policy continued the nonprogressive agenda of earlier presidents: containment of communism and expansion of American power and interests. Every president since Roosevelt has followed the model of Woodrow Wilson and endeavored to bring American “order” to a changing world.

The modern presidency—regardless of officeholder—seems schizophrenic. In domestic goals it has tended to be modest; in foreign affairs it has been assertive and bellicose. This is understandable. Domestically, American political power is split up among the branches of government and various private interests through a complex bargaining system. In foreign policy, monopolized control and executive centralism are the rule.

The domestic reforms of Roosevelt, Truman, and Johnson either did not cut deep (since they sought political advantage rather than true reform) or modified existing power relationships only in order to preserve them. On their domestic agenda, presidents do not seek primarily to cure inflation or unemployment so much as to stabilize corporate capitalism. By contrast, progressivism historically sought to restrict corporate power and re-distribute wealth.

The nature and functions of the presidency sifts out any progressive candidates. All presidential candidates are minutely screened. They must pass muster and be acceptable to the established powers: corporate leaders for financial support, party leaders, and the dominant interest groups. The national media further molds candidates into conformists or else it destroys them by branding with an “extremist” label.

Once in the White House, additional forces confirm this orthdoxy and conformity. Again, Kennedy's administration exemplifies the interaction of political demands and personal ambitions in maintaining presidents as nonprogressives. Presidents seeking global activism are willing agents to those established advocates of American economic, political, and military expansion. Presidents are also politicians who must carefully calculate and bargain with the existing corporate powers if they seek reelection.

“Absolute Power” and Corruption

Ravenal, Earl C.

• Institute for Policy Studies

“Nixon's Challenge to Carter: No More Mr. Nice Guy.” Foreign Policy (USA), 29(1977): 27–42.

We need a critical analysis of the conventional liberal wisdom on the origins and implications of the “Watergate crisis” during President Nixon's administration. By personalizing and criminalizing Nixon's motives, liberal critics avoid confronting some of the deeper lessons offered by the Watergate crisis. These center around the necessary relationship that exists between an administration's foreign policy and the domestic policy which it pursues. In fact, many of Nixon's critics strongly supported the major foreign policy objectives of the Nixon-Kissinger administration (energetic diplomacy in the Middle East, the opening to China, detente with Russia, and extrication from Vietnam), decrying the administration's systematic violations of political and civil liberties at home.

A certain diplomatic and domestic political style is a necessary concomitant of foreign policies. It is at best inconsistent for Nixon's critics to support the basic outlines of the Nixon administration's foreign policies while focusing their criticism on its domestic policies. Nixon's pursuit of a global, interventionist foreign policy necessarily generated manipulative, repressive internal politics. In order to wage a tough, effective foreign policy, he had to maintain social discipline to pacify the silent majority and to suppress the articulate minority. As Nixon stated in his T.V. interview with David Frost:

The actions I took with great reluctance, but recognizing I had to do what was right, the actions that I took in Vietnam: one, to try to win an honorable peace abroad; and two, to keep the peace at home, because keeping the peace at home and keeping support for the war was essential in order to get the enemy to negotiate. And that was, of course, not easy to do in view of the dissent and so forth that we had.

We must challenge the fundamental liberal tenet that one can pursue the same substantive policies by replacing “bad” people with “good” people in an effort to avoid the same excesses in the domestic sphere. The underlying problem lies not with the moral rectitude of specific individuals chosen to lead America, but with the assumptions and objectives chosen to guide our foreign policy. As long as liberals refuse to systematically reevaluate these assumptions and objectives, it will be futile to oppose the fruits of such a policy. Therein lies Nixon's basic challenge to Carter: how long can Carter remain Mr. Nice Guy if he insists on pursuing essentially the same foreign policy objectives that the Nixon-Kissinger administration pursued?

A global, interventionist foreign policy necessarily results in a major expansion of state power domestically. Strenuously opposing interventionism in both the domestic and foreign spheres will banish future “Watergates.”