Dienstag, 24. Mai 2011


The Conservative has long been marked, whether he
knows it or not, by long-run pessimism: by the belief that
the long-run trend, and therefore time itself, is against
him. Hence, the inevitable trend runs toward left-wing statism
at home and communism abroad. It is this long-run despair
that accounts for the Conservative’s rather bizarre short-run
optimism, for since the long run is given up as hopeless, the
Conservative feels that his only hope of success rests in the
current moment. In foreign affairs, this point of view leads the
Conservative to call for desperate showdowns with communism,
for he feels that the longer he waits the worse things will
ineluctably become; at home, it leads him to total concentration
on the very next election, where he is always hoping for
victory and never achieving it. The quintessence of the practical
man, and beset by long-run despair, the Conservative
refuses to think or plan beyond the election of the day.
Pessimism, however, both short-run and long-run, is precisely
what the prognosis of conservatism deserves, for conservatism
is a dying remnant of the ancien régime of the preindustrial
era, and, as such, it has no future. In its contemporary
American form, the recent Conservative revival embodied the death throes of an ineluctably moribund, fundamentalist,
rural, small-town, white Anglo-Saxon America. What, however,
of the prospects for liberty? For too many libertarians
mistakenly link the prognosis for liberty with that of the
seemingly stronger and supposedly allied Conservative
movement; this linkage makes the characteristic long-run
pessimism of the modern Libertarian easy to understand. But
this chapter contends that, while the short-run prospects for
liberty at home and abroad may seem dim, the proper attitude
for the Libertarian to take is that of unquenchable longrun
The case for this assertion rests on a certain view of history
which holds, first, that before the eighteenth century in
Western Europe there existed (and still continues to exist outside
the West) an identifiable Old Order. Whether the Old
Order took the form of feudalism or Oriental despotism, it was
marked by tyranny, exploitation, stagnation, fixed caste, and
hopelessness and starvation for the bulk of the population. In
sum, life was “nasty, brutish, and short”; here was Maine’s
“society of status” and Spencer’s “military society.” The ruling
classes, or castes, governed by conquest and by getting the
masses to believe in the alleged divine imprimatur to their rule.
The Old Order was, and still remains, the great and
mighty enemy of liberty; and it was particularly mighty in the
past because there was then no inevitability about its overthrow.
When we consider that basically the Old Order had
existed since the dawn of history, in all civilizations, we can
appreciate even more the glory and the magnitude of the triumph
of the liberal revolution of and around the eighteenth
Part of the dimensions of this struggle has been obscured by
a great myth of the history of Western Europe implanted by
antiliberal German historians of the late nineteenth century. The myth held that the growth of absolute monarchies and
of mercantilism in the early modern era was necessary for the
development of capitalism, since these served to liberate the
merchants and the people from local feudal restrictions. In
actuality, this was not at all the case; the king and his
nation–State served rather as a super-feudal overlord reimposing
and reinforcing feudalism just as it was being dissolved
by the peaceful growth of the market economy. The
king superimposed his own restrictions and monopoly privileges
onto those of the feudal regime. The absolute monarchs
were the Old Order writ large and made even more despotic
than before. Capitalism, indeed, flourished earliest and most
actively precisely in those areas where the central State was
weak or nonexistent: the Italian cities, the Hanseatic League,
the confederation of seventeenth-century Holland. Finally,
the Old Order was overthrown or severely shaken in its grip in
two ways. One was by industry and the market expanding
through the interstices of the feudal order (for example, industry
in England developing in the countryside beyond the grip
of feudal, State and guild restrictions). More important was a
series of cataclysmic revolutions that blasted loose the Old
Order and the old ruling classes: the English Revolutions of
the seventeenth century, the American Revolution, and the
French Revolution, all of which were necessary for the ushering
in of the Industrial Revolution and of at least partial
victories for individual liberty, laissez-faire, separation of
church and state, and international peace. The society of status
gave way, at least partially, to the “society of contract”; the
military society gave way partially to the “industrial society.”
The mass of the population now achieved a mobility of labor
and place, and accelerating expansion of their living standards,
for which they had scarcely dared to hope. Liberalism
had indeed brought to the Western world not only liberty,industrial society, but above all, perhaps, it brought hope, a
hope in ever-greater progress that lifted the mass of mankind
out of its age-old sinkhole of stagnation and despair.
Soon there developed in Western Europe two great political
ideologies, centered around this new revolutionary phenomenon:
one was liberalism, the party of hope, of radicalism,
of liberty, of the Industrial Revolution, of progress, of
humanity; the other was conservatism, the party of reaction,
the party that longed to restore the hierarchy, statism, theocracy,
serfdom, and class exploitation of the Old Order. Since
liberalism admittedly had reason on its side, the Conservatives
darkened the ideological atmosphere with obscurantist
calls for romanticism, tradition, theocracy, and irrationalism.
Political ideologies were polarized, with liberalism on the
extreme “left,” and conservatism on the extreme “right,” of the
ideological spectrum. That genuine liberalism was essentially
radical and revolutionary was brilliantly perceived, in the twilight
of its impact, by the great Lord Acton (one of the few figures
in the history of thought who, charmingly, grew more radical
as he grew older). Acton wrote that “Liberalism wishes for
what ought to be, irrespective of what is.” In working out this
view, incidentally, it was Acton, not Trotsky, who first arrived at
the concept of the “permanent revolution.” As Gertrude Himmelfarb
wrote in her excellent study of Acton:
. . . his philosophy develop(ed) to the point where the future
was seen as the avowed enemy of the past, and where the
past was allowed no authority except as it happened to conform
to morality. To take seriously this Liberal theory of
history, to give precedence to “what ought to be” over
“what is,” was, he admitted, virtually to install a “revolution
in permanence.”
The “revolution in permanence,” as Acton hinted in the
inaugural lecture and admitted frankly in his notes, was the
culmination of his philosophy of history and theory of with them the knowledge of good and evil, is the very root
of revolution, for it destroys the sanctity of the past. . . .
“Liberalism is essentially revolutionary,” Acton observed.
“Facts must yield to ideas. Peaceably and patiently if possible.
Violently if not.”1
The Liberal, wrote Acton, far surpassed the Whig:
The Whig governed by compromise. The Liberal begins
the reign of ideas. . . . One is practical, gradual, ready for
compromise. The other works out a principle philosophically.
One is a policy aiming at a philosophy. The other is a
philosophy seeking a policy.2
What happened to liberalism? Why then did it decline
during the nineteenth century? This question has been pondered
many times, but perhaps the basic reason was an inner
rot within the vitals of liberalism itself. For, with the partial
success of the Liberal Revolution in the West, the Liberals
increasingly abandoned their radical fervor and, therefore,
their liberal goals, to rest content with a mere defense of the
uninspiring and defective status quo. Two philosophical roots
of this decay may be discerned. First is the abandonment of
natural rights and “higher law” theory for utilitarianism, for
only forms of natural or higher law theory can provide a radical
base outside the existing system from which to challenge
the status quo; and only such theory furnishes a sense of necessary
immediacy to the libertarian struggle by focusing on
the necessity of bringing existing criminal rulers to the bar of
justice. Utilitarians, on the other hand, in abandoning justice
for expediency, also abandon immediacy for quiet stagnation and inevitably end up as objective apologists for the existing
The second great philosophical influence on the decline
of liberalism was evolutionism, or Social Darwinism, which
put the finishing touches to liberalism as a radical force in
society. For the Social Darwinist erroneously saw history and
society through the peaceful, rose-colored glasses of infinitely
slow, infinitely gradual social evolution. Ignoring the
prime fact that no ruling caste in history has ever voluntarily
surrendered its power, and that, therefore, liberalism had to
break through by means of a series of revolutions, the Social
Darwinists looked forward peacefully and cheerfully to thousands
of years of infinitely gradual evolution to the next supposedly
inevitable stage of individualism.
An interesting illustration of a thinker who embodies
within himself the decline of liberalism in the nineteenth
century is Herbert Spencer. Spencer began as a magnificently
radical liberal, indeed virtually a pure libertarian. But, as the
virus of sociology and Social Darwinism took over in his soul,
Spencer abandoned libertarianism as a dynamic historical
movement, although at first without abandoning it in pure
theory. In short, while looking forward to an eventual ideal of
pure liberty, Spencer began to see its victory as inevitable, but
only after millennia of gradual evolution, and thus, in actual
fact, Spencer abandoned liberalism as a fighting, radical
creed and confined his liberalism in practice to a weary, rearguard
action against the growing collectivism of the late
nineteenth century. Interestingly enough, Spencer’s tired
shift “rightward” in strategy soon became a shift rightward in
theory as well, so that Spencer abandoned pure liberty even in
theory, for example, in repudiating his famous chapter in Social
Statics, “The Right to Ignore the State.” In England, the classical liberals began their shift from
radicalism to quasi-conservatism in the early nineteenth century;
a touchstone of this shift was the general British liberal
attitude toward the national liberation struggle in Ireland.
This struggle was twofold: against British political imperialism
and against feudal landlordism which had been imposed
by that imperialism. By their Tory blindness toward the Irish
drive for national independence, and especially for peasant
property against feudal oppression, the British Liberals
(including Spencer) symbolized their effective abandonment
of genuine liberalism, which had been virtually born in a
struggle against the feudal land system. Only in the United
States, the great home of radical liberalism (where feudalism
had never been able to take root outside the South), did natural
rights and higher-law theory, and consequent radical liberal
movements, continue in prominence until the mid-nineteenth
century. In their different ways, the Jacksonian and
Abolitionist movements were the last powerful radical libertarian
movements in American life.3
Thus, with liberalism abandoned from within, there was
no longer a party of hope in the Western world, no longer a
“Left” movement to lead a struggle against the state and
against the unbreached remainder of the Old Order. Into this
gap, into this void created by the drying up of radical liberalism,
there stepped a new movement: socialism. Libertarians
of the present day are accustomed to think of socialism as the
polar opposite of the libertarian creed. But this is a grave mistake,
responsible for a severe ideological disorientation of libertarians
in the present world. As we have seen, conservatism was the polar opposite of liberty; and socialism, while to the
“left” of conservatism, was essentially a confused, middle-ofthe-
road movement. It was, and still is, middle-of-the-road
because it tries to achieve liberal ends by the use of conservative
In short, Russell Kirk, who claims that socialism was the
heir of classical liberalism, and Ronald Hamowy, who sees
socialism as the heir of conservatism, are both right; for the
question is on what aspect of this confused centrist movement
we happen to be focusing. Socialism, like liberalism and
against conservatism, accepted the industrial system and the
liberal goals of freedom, reason, mobility, progress, higher
living standards for the masses, and an end to theocracy and
war; but it tried to achieve these ends by the use of incompatible,
conservative means: statism, central planning, communitarianism,
etc. Or rather, to be more precise, there were
from the beginning two different strands within socialism:
one was the right-wing, authoritarian strand, from Saint-
Simon down, which glorified statism, hierarchy, and collectivism
and which was thus a projection of conservatism trying
to accept and dominate the new industrial civilization.
The other was the left-wing, relatively libertarian strand,
exemplified in their different ways by Marx and Bakunin,
revolutionary and far more interested in achieving the libertarian
goals of liberalism and socialism; but especially the
smashing of the state apparatus to achieve the “withering
away of the State” and the “end of the exploitation of man by
man.” Interestingly enough, the very Marxian phrase, the
“replacement of the government by men by the administration
of things,” can be traced, by a circuitous route, from the
great French radical laissez-faire liberals of the early nineteenth
century, Charles Comte (no relation to Auguste
Comte) and Charles Dunoyer. And so, too, may the concept of the “class struggle”; except that for Dunoyer and Comte
the inherently antithetical classes were not businessmen versus
workers, but the producers in society (including free
businessmen, workers, peasants, etc.) versus the exploiting
classes constituting, and privileged by, the State apparatus.4
Saint-Simon at one time in his confused and chaotic life was
close to Comte and Dunoyer and picked up his class analysis
from them, in the process characteristically getting the whole
thing balled up and converting businessmen on the market, as
well as feudal landlords and others of the State privileged, into
“exploiters.” Marx and Bakunin picked this up from the
Saint-Simonians, and the result gravely misled the whole
left-socialist movement; for, then, in addition to smashing the
repressive State, it became supposedly necessary to smash
private capitalist ownership of the means of production.
Rejecting private property, especially of capital, the left
socialists were then trapped in a crucial inner contradiction:
if the State is to disappear after the revolution (immediately
for Bakunin, gradually “withering” for Marx), then how is the
“collective” to run its property without becoming an enormous
State itself in fact, even if not in name? This was a contradiction
which neither the Marxists nor the Bakuninists
were ever able to resolve.
Having replaced radical liberalism as the party of the
“left,” socialism, by the turn of the twentieth century, fell prey to this inner contradiction. Most socialists (Fabians,
Lassalleans, even Marxists) turned sharply rightward, completely
abandoned the old libertarian goals and ideals of revolution
and the withering away of the State and became cozy
conservatives permanently reconciled to the State, the status
quo, and the whole apparatus of neomercantilism, State
monopoly capitalism, imperialism, and war that was rapidly
being established and riveted on European society at the turn
of the twentieth century. For conservatism, too, had reformed
and regrouped to try to cope with a modern industrial
system and had become a refurbished mercantilism, a regime
of statism, marked by State monopoly privilege, in direct and
indirect forms, to favored capitalists and to quasi-feudal landlords.
The affinity between right socialism and the new conservatism
became very close, the former advocating similar
policies but with a demagogic populist veneer. Thus, the
other side of the coin of imperialism was “social imperialism,”
which Joseph Schumpeter trenchantly defined as “an
imperialism in which the entrepreneurs and other elements
woo the workers by means of social welfare concessions
which appear to depend on the success of export monopolism.”
Historians have long recognized the affinity, and the welding
together, of right-wing socialism with conservatism in
Italy and Germany, where the fusion was embodied first in
Bismarckism and then in fascism and national socialism—the latter fulfilling the Conservative program of nationalism,
imperialism, militarism, theocracy, and a right-wing collectivism
that retained and even cemented the rule of the old
privileged classes. But only recently have historians begun to
realize that a similar pattern occurred in England and the
United States. Thus, Bernard Semmel, in his brilliant history
of the social-imperialist movement in England at the turn of
the twentieth century, shows how the Fabian Society welcomed
the rise of the imperialists in England.6 When, in the
mid-1890s, the Liberal Party in England split into the radicals
on the left and the liberal-imperialists on the right, Beatrice
Webb, co-leader of the Fabians, denounced the radicals
as “laissez-faire and anti-imperialists,” while hailing the latter
as “collectivists and imperialists.” An official Fabian manifesto,
Fabianism and the Empire (1900), drawn up by George
Bernard Shaw (who was later, with perfect consistency, to
praise the domestic policies of Stalin and Mussolini and Sir
Oswald Mosley), lauded imperialism and attacked the radicals,
who “still cling to the fixed-frontier ideals of individualist
republicanism (and) noninterference.” In contrast, “a
Great Power . . . must govern (a world empire) in the interests
of civilization as a whole.” After this, the Fabians collaborated
closely with Tories and liberal-imperialists. Indeed, in
late 1902, Sidney and Beatrice Webb established a small,
secret group of brain-trusters, called The Coefficients; as one
of the leading members of this club, the Tory imperialist,
Leopold S. Amery, revealingly wrote:
Sidney and Beatrice Webb were much more concerned
with getting their ideas of the welfare state put into practice
by anyone who might be prepared to help, even on the most modest scale, than with the early triumph of an avowedly
Socialist Party. . . . There was, after all, nothing so very
unnatural, as [Joseph] Chamberlain’s own career had
shown, in a combination of Imperialism in external affairs
with municipal socialism or semi-socialism at home.7
Other members of The Coefficients, who, as Amery wrote,
were to function as “Brain Trusts or General Staff” for the
movement, were: the liberal-imperialist Richard B. Haldane;
the geopolitician Halford J. Mackinder; the Imperialist and
Germanophobe Leopold Maxse, publisher of the National
Review; the Tory socialist and imperialist Viscount Milner;
the naval imperialist Carlyon Bellairs; the famous journalist
J.L. Garvin; Bernard Shaw; Sir Clinton Dawkins, partner of
the Morgan Bank; and Sir Edward Grey, who, at a meeting
of the club first adumbrated the policy of Entente with
France and Russia that was to eventuate in World War I.8
The famous betrayal during World War I of the old ideals of
revolutionary pacifism by the European Socialists, and even
by the Marxists, should have come as no surprise; that each
Socialist Party supported its “own” national government in
the war (with the honorable exception of Eugene Victor Debs’s
Socialist Party in the United States) was the final embodiment
of the collapse of the classic Socialist Left. From then on,
Socialists and quasi-Socialists joined Conservatives in a basic
amalgam, accepting the state and the mixed economy (= neomercantilism
= the welfare state = interventionism = state
monopoly capitalism, merely synonyms for the same essential reality). It was in reaction to this collapse that Lenin broke out
of the Second International to reestablish classic revolutionary
Marxism in a revival of left socialism.
In fact, Lenin, almost without knowing it, accomplished
more than this. It is common knowledge that “purifying”
movements, eager to return to a classic purity shorn of recent
corruptions, generally purify further than what had held true
among the original classic sources. There were, indeed,
marked “conservative” strains in the writings of Marx and
Engels themselves which often justified the State, Western
imperialism, and aggressive nationalism, and it was these
motifs, in the ambivalent views of the masters on this subject,
that provided the fodder for the later shift of the majority
Marxists into the “social imperialist” camp.9 Lenin’s camp
turned more “left” than had Marx and Engels themselves.
Lenin had a decidedly more revolutionary stance toward the
State and consistently defended and supported movements of
national liberation against imperialism. The Leninist shift
was more “leftist” in other important senses as well. For
while Marx had centered his attack on market capitalism per
se, the major focus of Lenin’s concerns was on what he conceived
to be the highest stages of capitalism: imperialism and
monopoly. Hence Lenin’s focus, centering as it did in practice
on State monopoly and imperialism rather than on laissezfaire
capitalism, was in that way far more congenial to the
Libertarian than that of Karl Marx.
Fascism and Nazism were the local culmination in domestic
affairs of the modern drift toward right-wing collectivism. It
has become customary among libertarians, as indeed among the Establishment of the West, to regard fascism and communism
as fundamentally identical. But while both systems
were indubitably collectivist, they differed greatly in their
socioeconomic content. Communism was a genuine revolutionary
movement that ruthlessly displaced and overthrew
the old ruling elites, while fascism, on the contrary, cemented
into power the old ruling classes. Hence, fascism was a counterrevolutionary
movement that froze a set of monopoly privileges
upon society; in short, fascism was the apotheosis of
modern State monopoly capitalism.10 Here was the reason that fascism proved so attractive (which communism, of
course, never did) to big business interests in the West—
openly and unabashedly so in the 1920s and early 1930s.11
We are now in a position to apply our analysis to the
American scene. Here we encounter a contrasting myth
about recent American history which has been propagated by
current conservatives and adopted by most American libertarians.
The myth goes approximately as follows: America
was, more or less, a haven of laissez-faire until the New Deal;
then Roosevelt, influenced by Felix Frankfurter, the Intercollegiate
Socialist Society, and other “Fabian” and communist
“conspirators,” engineered a revolution which set America
on the path to socialism, and further on beyond the horizon,
to communism. The present-day libertarian who adopts
this or a similar view of the American experience, tends to
think of himself as an “extreme right-winger”; slightly to the
left of him, then, stands the conservative, to the left of that
the middle-of-the-road, and then leftward to socialism and
communism. Hence, the enormous temptation for some libertarians to red-bait; for, since they see America as drifting
inexorably leftward to socialism and, therefore, to communism,
the great temptation is for them to overlook the intermediary
stages and tar all of their opposition with the hated
Red brush.
One would think that the “right-wing Libertarian” would
quickly be able to see some drastic flaws in this conception.
For one thing, the income tax amendment, which he
deplores as the beginning of socialism in America, was put
through Congress in 1909 by an overwhelming majority of
both parties. To look at this event as a sharp leftward move
toward socialism would require treating President William
Howard Taft, who put through the Sixteenth Amendment, as
a Leftist, and surely few would have the temerity to do that.
Indeed, the New Deal was not a revolution in any sense; its
entire collectivist program was anticipated: proximately by
Herbert Hoover during the depression, and, beyond that, by
the war-collectivism and central planning that governed
America during World War I. Every element in the New
Deal program: central planning, creation of a network of
compulsory cartels for industry and agriculture, inflation
and credit expansion, artificial raising of wage rates and promotion
of unions within the overall monopoly structure,
government regulation and ownership, all this had been
anticipated and adumbrated during the previous two
decades.12 And this program, with its privileging of various
big business interests at the top of the collectivist heap, was
in no sense reminiscent of socialism or leftism; there was
nothing smacking of the egalitarian or the proletarian here.
No, the kinship of this burgeoning collectivism was not at all with socialism–communism but with fascism, or socialism-ofthe-
right, a kinship which many big businessmen of the twenties
expressed openly in their yearning for abandonment of a
quasi-laissez-faire system for a collectivism which they could
control. And, surely, William Howard Taft, Woodrow Wilson,
and Herbert Clark Hoover make far more recognizable
figures as proto-Fascists than they do as crypto-communists.
The essence of the New Deal was seen, far more clearly
than in the Conservative mythology, by the Leninist movement
in the early 1930s; that is, until the mid-thirties, when
the exigencies of Soviet foreign relations caused a sharp shift
of the world communist line to “Popular Front” approval of
the New Deal. Thus, in 1934, the British Leninist theoretician
R. Palme Dutt published a brief but scathing analysis of
the New Deal as “social fascism”—as the reality of fascism
cloaked with a thin veneer of populist demagogy. No Conservative
opponent has ever delivered a more vigorous or
trenchant denunciation of the New Deal. The Roosevelt policy,
wrote Dutt, was to “move to a form of dictatorship of a
war-type”; the essential policies were to impose a State
monopoly capitalism through the NRA, to subsidize business,
banking, and agriculture through inflation and the partial
expropriation of the mass of the people through lower
real-wage rates and to the regulation and exploitation of labor
by means of government-fixed wages and compulsory arbitration.
When the New Deal, wrote Dutt, is stripped of its “socialreformist
‘progressive’ camouflage,” “the reality of the new
Fascist type of system of concentrated State capitalism and
industrial servitude remains,” including an implicit “advance to
war.” Dutt effectively concluded with a quote from an editor of
the highly respected Current History Magazine: American fascism, embodying the experience, the traditions,
and the hopes of a great middle-class nation.13
Thus, the New Deal was not a qualitative break from the
American past; on the contrary, it was merely a quantitative
extension of the web of State privilege that had been proposed
and acted upon before: in Hoover’s administration, in
the war collectivism of World War I, and in the Progressive
Era. The most thorough exposition of the origins of State
monopoly capitalism, or what he calls “political capitalism,”
in the United States is found in the brilliant work of Dr.
Gabriel Kolko. In The Triumph of Conservatism, Kolko traces
the origins of political capitalism in the “reforms” of the Progressive
Era. Orthodox historians have always treated the
Progressive period (roughly 1900–1916) as a time when freemarket
capitalism was becoming increasingly “monopolistic”;
in reaction to this reign of monopoly and big business,
so the story runs, altruistic intellectuals and far-seeing politicians
turned to intervention by the government to reform
and to regulate these evils. Kolko’s great work demonstrates
that the reality was almost precisely the opposite of this
myth. Despite the wave of mergers and trusts formed around
the turn of the century, Kolko reveals, the forces of competition
on the free market rapidly vitiated and dissolved these
attempts at stabilizing and perpetuating the economic power
of big business interests. It was precisely in reaction to their
impending defeat at the hands of the competitive storms of
the market that big business turned, increasingly after the
1900s, to the federal government for aid and protection. In
short, the intervention by the federal government was designed, not to curb big business monopoly for the sake of
the public weal, but to create monopolies that big business
(as well as trade associations of smaller business) had not
been able to establish amidst the competitive gales of the free
market. Both left and right have been persistently misled by
the notion that intervention by the government is ipso facto
leftish and antibusiness. Hence the mythology of the New-
Fair Deal-as-Red that is endemic on the right. Both the big
businessmen, led by the Morgan interests, and Professor
Kolko, almost uniquely in the academic world, have realized
that monopoly privilege can only be created by the State and
not as a result of free-market operations.
Thus, Kolko shows that, beginning with Theodore Roosevelt’s
New Nationalism and culminating in Wilson’s New
Freedom, in industry after industry, for example, insurance,
banking, meat, exports and business generally, regulations
that present-day rightists think of as “socialistic” were not
only uniformly hailed, but conceived and brought about by
big businessmen. This was a conscious effort to fasten upon
the economy a cement of subsidy, stabilization, and monopoly
privilege. A typical view was that of Andrew Carnegie;
deeply concerned about competition in the steel industry,
which neither the formation of U.S. Steel nor the famous
“Gary Dinners” sponsored by that Morgan company could
dampen, Carnegie declared in 1908 that “it always comes
back to me that government control, and that alone, will
properly solve the problem.” There is nothing alarming
about government regulation per se, announced Carnegie,
“capital is perfectly safe in the gas company, although it is
under court control. So will all capital be, although under
government control. The Progressive Party, Kolko shows, was basically a Morgan-
created party to reelect Roosevelt and punish President
Taft, who had been overzealous in prosecuting Morgan enterprises,
the leftish social workers often unwittingly provided a
demagogic veneer for a conservative–statist movement. Wilson’s
New Freedom, culminating in the creation of the Federal
Trade Commission, far from being considered dangerously
socialistic by big business, was welcomed enthusiastically
as putting their long-cherished program of support,
privilege, and regulation of competition into effect (and Wilson’s
war collectivism was welcomed even more exuberantly).
Edward N. Hurley, chairman of the Federal Trade Commission
and formerly president of the Illinois Manufacturers
Association, happily announced in late 1915, that the Federal
Trade Commission was designed “to do for general business”
what the ICC had been eagerly doing for the railroads and
shippers, what the Federal Reserve was doing for the nation’s
bankers, and what the Department of Agriculture was
accomplishing for the farmers.15 As would happen more dramatically
in European fascism, each economic interest group
was being cartelized and monopolized and fitted into its
privileged niche in a hierarchically-ordered socioeconomic structure. Particularly influential were the views of Arthur
Jerome Eddy, an eminent corporation lawyer who specialized
in forming trade associations and who helped to father the
Federal Trade Commission. In his magnum opus fiercely
denouncing competition in business and calling for governmentally-
controlled and protected industrial “cooperation,”
Eddy trumpeted that “Competition is War, and ‘War is
What of the intellectuals of the Progressive period,
damned by the present-day Right as “socialistic”? Socialistic
in a sense they were, but what kind of “socialism”? The conservative
state socialism of Bismarck’s Germany, the prototype
for so much of modern European—and American—
political forms, and under which the bulk of American intellectuals
of the late nineteenth century received their higher
education. As Kolko puts it:
The conservatism of the contemporary intellectuals . . . the
idealization of the state by Lester Ward, Richard T. Ely, or
Simon N. Patten . . . was also the result of the peculiar
training of many of the American academics of this period.
At the end of the nineteenth century the primary influence
in American academic social and economic theory was
exerted by the universities. The Bismarckian idealization of
the state, with its centralized welfare functions . . . was suitably
revised by the thousands of key academics who studied
in German universities in the 1880s and 1890s.17
The ideal of the leading ultraconservative German professors,
moreover, who were also called “socialists of the chair,” was consciously to form themselves into the “intellectual
bodyguard of the House of Hohenzollern”—and that they
surely were.
As an exemplar of the Progressive intellectual, Kolko aptly
cites Herbert Croly, editor of the Morgan-financed New
Republic. Systematizing Theodore Roosevelt’s New Nationalism,
Croly hailed this new Hamiltonianism as a system for
collectivist federal control and integration of society into a
hierarchical structure. Looking forward from the Progressive
Era, Gabriel Kolko concludes that:
a synthesis of business and politics on the federal level was
created during the war, in various administrative and emergency
agencies, that continued throughout the following
decade. Indeed, the war period represents the triumph of
business in the most emphatic manner possible . . . big business
gained total support from the various regulatory agencies
and the Executive. It was during the war that effective,
working oligopoly and price and market agreements
became operational in the dominant sectors of the American
economy. The rapid diffusion of power in the economy
and relatively easy entry virtually ceased. Despite the cessation
of important new legislative enactments, the unity of
business and the federal government continued throughout
the 1920s and thereafter, using the foundations laid in the
Progressive Era to stabilize and consolidate conditions
within various industries. . . . The principle of utilizing the
federal government to stabilize the economy, established in
the context of modern industrialism during the Progressive
Era, became the basis of political capitalism in its many
later ramifications.
In this sense progressivism did not die in the 1920s, but
became a part of the basic fabric of American society.18
Thus the New Deal. After a bit of leftish wavering in the
middle of the late thirties, the Roosevelt administration recemented
its alliance with big business in the national defense and war contract economy that began in 1940. This is an
economy and a polity that has been ruling America ever
since, embodied in the permanent war economy, the fullfledged
State monopoly capitalism and neomercantilism, the
military–industrial complex of the present era. The essential
features of American society have not changed since it was
thoroughly militarized and politicized in World War II—
except that the trends intensify, and even in everyday life men
have been increasingly molded into conforming organization
men serving the State and its military–industrial complex.
William H. Whyte, Jr., in his justly famous book, The Organization
Man, made clear that this molding took place amidst
the adoption by business of the collectivist views of “enlightened”
sociologists and other social engineers. It is also clear
that this harmony of views is not simply the result of naïveté
by big businessmen—not when such “naïveté” coincides with
the requirements of compressing the worker and manager
into the mold of willing servitor in the great bureaucracy of
the military–industrial machine. And, under the guise of
“democracy,” education has become mere mass drilling in the
techniques of adjustment to the task of becoming a cog in the
vast bureaucratic machine.
Meanwhile, the Republicans and Democrats remain as
bipartisan in forming and supporting this establishment as they
were in the first two decades of the twentieth century. “Metooism”—
bipartisan support of the status quo that underlies
the superficial differences between the parties—did not begin
in 1940.
How did the corporal’s guard of remaining libertarians
react to these shifts of the ideological spectrum in America?
An instructive answer may be found by looking at the career
of one of the great libertarians of twentieth-century America—
Albert Jay Nock. In the 1920s, when Nock had formulated his radical libertarian philosophy, he was universally regarded as
a member of the extreme Left, and he so regarded himself as
well. It is always the tendency, in ideological and political life,
to center one’s attention on the main enemy of the day, and
the main enemy of that day was the conservative statism of
the Coolidge-Hoover administration; it was natural, therefore,
for Nock, his friend and fellow-libertarian H.L.
Mencken and other radicals to join quasi-Socialists in battle
against the common foe. When the New Deal succeeded
Hoover, on the other hand, the milk-and-water socialists and
vaguely leftish Interventionists hopped on the New Deal
bandwagon; on the Left only the Libertarians such as Nock
and Mencken and the Leninists (before the Popular Front
period) realized that Roosevelt was only a continuation of
Hoover in other rhetoric. It was perfectly natural for the radicals
to form a united front against Roosevelt with the older
Hoover and Al Smith conservatives who either believed Roosevelt
had gone too far or disliked his flamboyant populistic
rhetoric. But the problem was that Nock and his fellow radicals,
at first properly scornful of their newfound allies, soon
began to accept them and even don cheerfully the formerly
despised label of “Conservative.” With the rank-and-file radicals,
this shift took place, as have so many transformations of
ideology in history, unwittingly and in default of proper ideological
leadership; for Nock, and to some extent for
Mencken, on the other hand, the problem cut far deeper.
For there had always been one grave flaw in the brilliant
and finely-honed libertarian doctrine hammered out in their
very different ways by Nock and Mencken; both had long
adopted the great error of pessimism. Both saw no hope for
the human race ever adopting the system of liberty; despairing
of the radical doctrine of liberty ever being applied in
practice, each in his own personal way retreated from the responsibility of ideological leadership, Mencken joyously
and hedonically, Nock haughtily and secretively. Despite the
massive contribution of both men to the cause of liberty,
therefore, neither could ever become the conscious leader of
a libertarian movement, for neither could ever envision the
party of liberty as the party of hope, the party of revolution,
or a fortiori, the party of secular messianism. The error of
pessimism is the first step down the slippery slope that leads
to conservatism; and hence it was all too easy for the pessimistic
radical Nock, even though still basically a Libertarian,
to accept the conservative label and even come to croak
the old platitude that there is an a priori presumption against
any social change.
It is fascinating that Albert Jay Nock thus followed the
ideological path of his beloved spiritual ancestor Herbert
Spencer, both began as pure radical Libertarians, both
quickly abandoned radical or revolutionary tactics as embodied
in the will to put their theories into practice through mass
action, and both eventually glided from Tory tactics to at
least a partial toryism of content.
And so the Libertarians, especially in their sense of where
they stood in the ideological spectrum, fused with the older
Conservatives who were forced to adopt libertarian phraseology
(but with no real libertarian content) in opposing a Roosevelt
administration that had become too collectivistic for
them, either in content or in rhetoric. World War II reinforced
and cemented this alliance; for, in contrast to all the
previous American wars of the century, the pro-peace and
“isolationist” forces were all identified, by their enemies and
subsequently by themselves, as men of the “Right.” By the
end of World War II, it was second nature for libertarians to
consider themselves at an “extreme right-wing” pole with the
Conservatives immediately to the left of them; and hence the great error of the spectrum that persists to this day. In particular,
the modern libertarians forgot or never realized that
opposition to war and militarism had always been a “leftwing”
tradition which had included Libertarians; and hence
when the historical aberration of the New Deal period corrected
itself and the “right-wing” was once again the great
partisan of total war, the Libertarians were unprepared to
understand what was happening and tailed along in the wake
of their supposed conservative “allies.” The liberals had completely
lost their old ideological markings and guidelines.
Given a proper reorientation of the ideological spectrum,
what then would be the prospects for liberty? It is no wonder
that the contemporary Libertarian, seeing the world going
socialistic and communistic, and believing himself virtually
isolated and cut off from any prospect of united mass action,
tends to be steeped in long-run pessimism. But the scene
immediately brightens when we realize that that indispensable
requisite of modern civilization—the overthrow of the
Old Order—was accomplished by mass libertarian action
erupting in such great revolutions of the West as the French
and American Revolutions, and bringing about the glories of
the Industrial Revolution and the advances of liberty, mobility,
and rising living standards that we still retain today.
Despite the reactionary swings backward to statism, the
modern world stands towering above the world of the past.
When we consider also that, in one form or another, the Old
Order of despotism, feudalism, theocracy, and militarism
dominated every human civilization until the West of the
eighteenth century, optimism over what man has and can
achieve must mount still higher.
It might be retorted, however, that this bleak historical
record of despotism and stagnation only reinforces pessimism,
for it shows the persistence and durability of the Old Order and the seeming frailty and evanescence of the New—
especially in view of the retrogression of the past century. But
such superficial analysis neglects the great change that
occurred with the revolution of the New Order, a change
that is clearly irreversible. For the Old Order was able to
persist in its slave system for centuries precisely because it
awoke no expectations and no hopes in the minds of the submerged
masses; their lot was to live and eke out their brutish
subsistence in slavery while obeying unquestioningly the
commands of their divinely appointed rulers. But the liberal
revolution implanted indelibly in the minds of the masses—
not only in the West but in the still feudally-dominated undeveloped
world—the burning desire for liberty, for land to the
peasantry, for peace between the nations, and, perhaps above
all, for the mobility and rising standards of living that can only
be brought to them by an industrial civilization. The masses
will never again accept the mindless serfdom of the Old
Order; and given these demands that have been awakened by
liberalism and the Industrial Revolution, long-run victory for
liberty is inevitable.
For only liberty, only a free market, can organize and
maintain an industrial system, and the more that population
expands and explodes, the more necessary is the unfettered
working of such an industrial economy. Laissez-faire and the
free market become more and more evidently necessary as an
industrial system develops; radical deviations cause breakdowns
and economic crises. This crisis of statism becomes
particularly dramatic and acute in a fully socialist society; and
hence the inevitable breakdown of statism has first become
strikingly apparent in the countries of the socialist (that is,
communist) camp. For socialism confronts its inner contradiction
most starkly. Desperately, it tries to fulfill its proclaimed
goals of industrial growth, higher standards of living
for the masses, and eventual withering away of the State and Hence the inevitable breakdown of socialism. This progressive
breakdown of socialist planning was at first partially
obscured. For, in every instance, the Leninists took power
not in a developed capitalist country as Marx had wrongly
predicted, but in a country suffering from the oppression of
feudalism. Second, the Communists did not attempt to impose
socialism upon the economy for many years after taking
power; in Soviet Russia until Stalin’s forced collectivization
of the early 1930s reversed the wisdom of Lenin’s New Economic
Policy, which Lenin’s favorite theoretician, Bukharin,
would have extended onward towards a free market. Even the
supposedly rabid Communist leaders of China did not
impose a socialist economy on that country until the late
1950s. In every case, growing industrialization has imposed a
series of economic breakdowns so severe that the communist
countries, against their ideological principles, have had to
retreat step by step from central planning and return to various
degrees and forms of a free market. The Liberman Plan
for the Soviet Union has gained a great deal of publicity; but
the inevitable process of desocialization has proceeded much
further in Poland, Hungary, and Czechoslovakia. Most
advanced of all is Yugoslavia, which, freed from Stalinist
rigidity earlier than its fellows, in only a dozen years has desocialized
so fast and so far that its economy is now hardly
more socialistic than that of France. The fact that people calling
themselves “communists” are still governing the country is
irrelevant to the basic social and economic facts. Central planning
in Yugoslavia has virtually disappeared. The private sector
not only predominates in agriculture but is even strong in
industry, and the public sector itself has been so radically
decentralized and placed under free pricing, profit-and-loss
tests and a cooperative worker–ownership of each plant that
true socialism hardly exists any longer. Only the final step of
converting workers’ syndical control to individual shares of Communist China and the able Marxist theoreticians of
Monthly Review have clearly discerned the situation and have
raised the alarm that Yugoslavia is no longer a socialist country.
One would think that free-market economists would hail
the confirmation and increasing relevance of the notable
insight of Professor Ludwig von Mises a half-century ago:
that socialist states, being necessarily devoid of a genuine
price system, could not calculate economically and, therefore,
could not plan their economies with any success.
Indeed, one follower of Mises, in effect, predicted this
process of desocialization in a novel some years ago. Yet neither
this author nor other free-market economists have given
the slightest indication of even recognizing, let alone saluting,
this process in the communist countries—perhaps
because their almost hysterical view of the alleged threat of
communism prevents them from acknowledging any dissolution
in the supposed monolith of menace.19
Communist countries, therefore, are increasingly and
ineradicably forced to desocialize and will, therefore, eventually
reach the free market. The state of the undeveloped
countries is also cause for sustained libertarian optimism. For all over the world, the peoples of the undeveloped nations are
engaged in revolution to throw off their feudal Old Order. It
is true that the United States is doing its mightiest to suppress
the very revolutionary process that once brought it and
Western Europe out of the shackles of the Old Order; but it
is increasingly clear that even overwhelming armed might
cannot suppress the desire of the masses to break through
into the modern world.
We are left with the United States and the countries of
Western Europe. Here, the case for optimism is less clear, for
the quasi-collectivist system does not present as stark a crisis
of self-contradiction as does socialism. And yet, here, too,
economic crisis looms in the future and gnaws away at the
complacency of the Keynesian economic managers: creeping
inflation, reflected in the aggravating balance-of-payments
breakdown of the once almighty dollar; creeping secular
unemployment brought about by minimum wage scales; and
the deeper and long-run accumulation of the uneconomic distortions
of the permanent war economy. Moreover, potential
crises in the United States are not merely economic; there is a
burgeoning and inspiring moral ferment among the youth of
America against the fetters of centralized bureaucracy, of mass
education in uniformity, and of brutality and oppression exercised
by the minions of the State.
Furthermore, the maintenance of a substantial degree of
free speech and democratic forms facilitates, at least in the
short run, the possible growth of a libertarian movement. The
United States is also fortunate in possessing, even if half-forgotten
beneath the statist and tyrannical overlay of the last
half-century, a great tradition of libertarian thought and
action. The very fact that much of this heritage is still reflected
in popular rhetoric, even though stripped of its significance in
practice, provides a substantial ideological groundwork for a
future party of liberty. What the Marxists would call the “objective conditions”
for the triumph of liberty exist, then, everywhere in the
world and more so than in any past age; for everywhere the
masses have opted for higher living standards and the promise
of freedom and everywhere the various regimes of statism and
collectivism cannot fulfill these goals. What is needed, then, is
simply the “subjective conditions” for victory; that is, a growing
body of informed libertarians who will spread the message
to the peoples of the world that liberty and the purely free
market provide the way out of their problems and crises. Liberty
cannot be fully achieved unless libertarians exist in number
to guide the peoples to the proper path. But perhaps the
greatest stumbling block to the creation of such a movement
is the despair and pessimism typical of the Libertarian in
today’s world. Much of that pessimism is due to his misreading
of history and his thinking of himself and his handful of
confreres as irredeemably isolated from the masses and,
therefore, from the winds of history. Hence he becomes a
lone critic of historical events rather than a person who considers
himself as part of a potential movement which can and
will make history. The modern Libertarian has forgotten that
the Liberal of the seventeenth and eighteenth centuries faced
odds much more overwhelming than those which face the
Liberal of today; for in that era before the Industrial Revolution,
the victory of liberalism was far from inevitable. And yet
the liberalism of that day was not content to remain a gloomy
little sect; instead, it unified theory and action. Liberalism
grew and developed as an ideology and, leading and guiding
the masses, made the revolution which changed the fate of the
world. By its monumental breakthrough, this revolution of the
eighteenth century transformed history from a chronicle of
stagnation and despotism to an ongoing movement advancing
toward a veritable secular utopia of liberty and rationality and
abundance. The Old Order is dead or moribund; and the reactionary attempts to run a modern society and economy
by various throwbacks to the Old Order are doomed to total
failure. The Liberals of the past have left to modern Libertarians
a glorious heritage, not only of ideology but of victories
against far more devastating odds. The Liberals of the
past have also left a heritage of the proper strategy and tactics
for libertarians to follow, not only by leading rather than
remaining aloof from the masses, but also by not falling prey
to short-run optimism. For short-run optimism, being unrealistic,
leads straightway to disillusion and then to long-run
pessimism; just as, on the other side of the coin, long-run
pessimism leads to exclusive and self-defeating concentration
on immediate and short-run issues. Short-run optimism
stems, for one thing, from a naive and simplistic view of strategy:
that liberty will win merely by educating more intellectuals,
who in turn will educate opinion-molders, who in turn
will convince the masses, after which the State will somehow
fold its tent and silently steal away. Matters are not that easy.
For libertarians face not only a problem of education but also
a problem of power, and it is a law of history that a ruling
caste has never voluntarily given up its power.
But the problem of power is, certainly in the United
States, far in the future. For the Libertarian, the main task of
the present epoch is to cast off his needless and debilitating
pessimism, to set his sights on long-run victory and to set out
on the road to its attainment. To do this, he must, perhaps
first of all, drastically realign his mistaken view of the ideological
spectrum; he must discover who his friends and natural
allies are, and above all perhaps, who his enemies are.
Armed with this knowledge, let him proceed in the spirit of
radical long-run optimism that one of the great figures in the
history of libertarian thought, Randolph Bourne, correctly
identified as the spirit of youth. Let Bourne’s stirring words
serve also as the guidepost for the spirit of liberty: [Y]outh is the incarnation of reason pitted against the rigidity
of tradition; youth puts the remorseless questions to
everything that is old and established—Why? What is this
thing good for? And when it gets the mumbled, evasive
answers of the defenders it applies its own fresh, clean spirit
of reason to institutions, customs and ideas and finding
them stupid, inane or poisonous, turns instinctively to overthrow
them and build in their place the things with which
its visions teem. . . .
Youth is the leaven that keeps all these questioning, testing
attitudes fermenting in the world. If it were not for this
troublesome activity of youth, with its hatred of sophisms
and glosses, its insistence on things as they are, society
would die from sheer decay. It is the policy of the older generation
as it gets adjusted to the world to hide away the
unpleasant things where it can, or preserve a conspiracy of
silence and an elaborate pretense that they do not exist. But
meanwhile the sores go on festering just the same. Youth is
the drastic antiseptic. . . . It drags skeletons from closets and
insists that they be explained. No wonder the older generation
fears and distrusts the younger. Youth is the avenging
Nemesis on its trail. . . .
Our elders are always optimistic in their views of the
present, pessimistic in their views of the future; youth is
pessimistic toward the present and gloriously hopeful for
the future. And it is this hope which is the lever of
progress—one might say, the only lever of progress. . . .
The secret of life is then that this fine youthful spirit shall
never be lost. Out of the turbulence of youth should come
this fine precipitate—a sane, strong, aggressive spirit of daring
and doing. It must be a flexible, growing spirit, with a
hospitality to new ideas and a keen insight into experience.
To keep one’s reactions warm and true is to have found the
secret of perpetual youth, and perpetual youth is salvation.

- Murray N. Rothbard

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