As a rule, capitalism is blamed for the undesired effects of a policy directed at its elimination. The man who sips his morning coffee does not say, “Capitalism has brought this beverage to my breakfast table.” But when he reads in the papers that the government of Brazil has ordered part of the coffee crop destroyed, he does not say, “That is government for you”; he exclaims, “That is capitalism for you.”
—Ludwig von Mises
Our current global economic system isn’t free-market capitalism despite the fact that mouths of both detractors and proponents of current system are full of those words. Our economic system is Neo-mercantilism. It should be obvious given how many industries today are dependent upon state subsidies and monopoly grants.
Ever since the middle of 19th century enterprise is increasingly encroached upon (while on the other hand states still allow, supposedly for the sake of “efficiency”, the externalities that even libertarians oppose, such as as, for example, pollution and immigration), markets ever more chained, and finally with creation of central banks across the world in the beginning of the 20th century, in combination with fraudulent banking system, there are no more free markets to speak of (central banks distort the markets to such an extent that after that they couldn’t be called free even in absence of predatory taxation and insane amount of regulations). Producers are misled by easy money, meanwhile customers are incentivised to spend faster and faster, to consume right now, and everyone is incentivised to save ever less, and spend ever more and more (thus the consumerism arises as the time-preference of society is pushed ever higher and higher [1]). The result is a boom which must necessarily result in a bust, when the decisions are revealed to have been in error. This usually happens when the central bank reverses the ever-increasing flow of newly created currency that is required to delay the inevitable bust. But by delaying the bust, they make the bust that much more painful. The second problem is that inflation presents invisible taxation.[2] Not only is wealth confiscated, but this causes real wages to stagnate, or even fall. The worst thing is that, if done carefully, this state of affairs can last for a very, very long time without one of the collapsitarian dreams (e.g. hyperinflation) ever happening. Puffing the GDP and other statistical stunts do nothing for the man on the street fam.
Oh, but surely the global free trade regime is the great victory for the advocates of free markets! It would’ve been, but there’s no free trade to speak of anywhere in the world (Hong Kong comes closest). Free trade doesn’t require thousands upon thousands of pages of trade deals. It doesn’t require even one sentence long trade deals. Free trade doesn’t require deals, period. It is a unilateral policy. Trade policies of today’s countries too are mercantilist trade policies. As was the case with olden mercantilism, protectionism and tariffless trade are pursued in such a combination so as best to benefit the well connected:
[…]Adam Smith pointed to the fact that linen yarn could be imported into England duty free, whereas heavy import duties were levied on finished woven linen. The reason, as seen by Smith, was that the numerous English yarn spinners did not constitute a strong pressure group, whereas the master weavers were able to pressure the government to impose high duties on their product, while making sure that their raw material could be bought at as low a price as possible.
Hence the deals.[3] Donald Trump is right to oppose the deals. If a country is going to employ such protectionist methods in trade policy, then it’s far better to have the nationalist policy that favors the average Joe, than the mercantilist one that favors the cronies.[4] However, in the long run it is all degeneracy given the fact that it wasn’t Asians that made the Joe unemployed, but his own government (as was indeed historically the case).[5] Of course, it goes without saying that until the Restoration, the right should go for as much as political nepotism as possible. Indeed, it should become thrice more vicious and vindictive than the left if and when the opportunity presents itself.
Footnotes
[1] Keynes didn’t care about the process of decivilization that application of his theory was to set about, he famously wrote In the long run we are all dead. He didn’t care at all about the future.
[2] John Maynard Keynes: By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.
[3] One interesting thing about TPP for example, is that it brings a new layer of regulations and red tape on top of everything already there. In fact, Cathedral openly admits that it doesn’t have much to do with trade, but that, in addition to pandering to the special interests, it is supposed to represent a “check” on China, and as such that it will not do much to lighten anyone’s expenses.
[4] Ludwig von Mises: Permanent mass unemployment destroys the moral foundations of the social order. The young people, who, having finished their training for work, are forced to remain idle, are the ferment out of which the most radical political movements are formed. In their ranks the soldiers of the coming revolutions are recruited. One only need remember that third of the France’s (itself a premier mercantilist country) population were wandering beggars before the Revolution.
[5] Ludwig von Mises: Depression and mass unemployement are not caused by the free market but by government interference in the economy. It does society and country no good to have a bunch of backwards, stagnant and decadent “too-big-to-fail” companies that present simply a deluxe welfare for those employed there (and like all welfare is parasitic upon the rest of society). Those kinds of companies fairly quickly start holding the entire country hostage.
