As I have mentioned a few times in my last several posts, for the past eighteen months I have been touring the set of Britannica’s Great Books that a friend gave to me.  Among the many classic works of history and literature are included some of the classic works of science: Newton’s Principia, Darwin’s Origin of Species, and a score of others.

Reading and thinking over the greatest books of the Western world start to give one the insight that some of the greatest scientists of all time understood time itself in a fundamental way.  And they transformed whole fields of science by showing that the comprehension of time changes everything.  Newtonian mechanics is based on time as the independent variable.  Darwin saw mutation and selection working through the epochs.  Einstein saw that time changes with velocity.  And so forth.

So in the great books, one sees a greater and greater rift developing as field after field of science breaks free from the static, authoritative, bureaucratic thought of the Roman empire and the Roman church.  Throughout history, one can track the progress of the upstart scientists as they finally must turn away from the voice of authority, the voice of the scholastic, the hegemony of conservatism.

And so it is with Mises.  Mises’s fundamental comprehension of the role of time transforms economics.  Mises as the true liberal scientist finally must overthrow the narrow, static myths of the conservative authorities of both the right and the left.  From the regression theorem to the diachronic effects of inflation, from interest as the time preference for money to the Austrian theory of the business cycle, again and again Mises opens the eyes of his readers to the true nature of time in economics.

And what is capital, if not the storage of resources that can be moved
through time and space?  If the entrepreneur is not allowed to move
capital through time and space, to apply it at the exact point of
space-time where it has the most utility, then we all become that much
poorer.

Thus while lesser economists lounge on the beaches with their static analyses and graphs of the equilibrium between supply and demand, Mises launches into the ocean of a truly dynamic economics.  The evenly rotating economy that is the (unwitting) basis of all central planning is completely destroyed by Mises’s understanding of the nature of entrepreneurial action over time.  Static economics is worse than no economics at all, and Mises knows it.

 

I am always amazed at the massive difference between Keynes and Mises – one of the most important being that of their differing emphases on time.  Keynes is the great champion of the Present: “In the long run, we are all dead.”  Mises is the champion of the Future: “At the outset of every step forward on the road to a more plentiful existence is saving.”

Now one always weighs present satisfaction against future satisfaction when one makes decisions about what (and if) to consume.  So the Present is always battling against the Future.  The Future is always struggling to be born.

But when Keynesians cause massive deficit spending, fiat money, inflation, social insurance, medicare, rising college costs, government schools, lack of jobs, wars (in which the young die), etc., one gets the distinct impression that they are working hard to throw our children under the bus.

So it is Mises’s clear emphasis on capital and saving, his emphasis on the Future, that automatically makes him the great “Champion of Children.”  Mises emphasizes that stored capital makes for a “more plentiful existence” in the Future.

Everyone has great empathy for children that are developmentally disabled.  But when our children are shackled by massive Keynesian debt, who can argue that they have been economically disabled?  Capital is the freedom to grow, is the freedom for our children to grow in the future.

Obviously, not all capital consumption is caused by government; short-sighted corporations also consume massive amounts of capital, especially when they lay waste to our environment.  But there exist harsh market disincentives for this behavior.

Unfortunately the forced consumption caused by government is not so controllable.  Every day, a plebiscite occurs in the marketplace; one can change government only every few years.  And as the years tick by, the forced consumption becomes locked in.  Many times, at the point of a weapon.

Any baboon can emphasize the Present; in fact, all baboons do.  It takes a man, a leader, to envision a better future and to lead the masses to it.  Any animal can eat its young; it takes a man to build and to protect the future of our children.  It takes a champion.

As I said a couple blog entries ago, a friend of mine gave me the full set of Encyclopedia Brittanica’s Great Books last year.  The editors of the series mention that they did not allow any twentieth-century works, as the works were too recent (as of the 1950s) to evaluate as “Great Books.”

Over the last year, I have often thought that several of Mises’s works could be appended to the set as some of the greatest twentieth-century work; at first glance, Mises seems to be a culmination of twenty-five centuries of great writing.  Certainly Mises knows government better than Plato or Hobbes; Mises knows economics better than Smith and Marx, and so on.

But then I started reading Dante … and it hit me how Roman Dante is.  The two pillars that Dante stands on are obviously the empire (Virgil) and the church.  Every page is filled with Roman dogma, Roman poetry, the Roman worldview.

And then I started considering some of my favorites in the entire set of the Great Books: Plutarch, Gibbon, Milton, Cervantes, … they’re all Roman!  And even some of my least favorite: Ptolemy, Augustine, Aquinas, … they’re Roman, too!  Wow: the Great Books are profoundly, fundamentally Roman; the Great Books are Roman Books, Roman Thought.

Now the point about thinking like a Roman is that your worldview is dominated by (a static) hierarchy, with its peak at the center.  You have a fixed (static!) point of authority.  The Roman system is all about hierarchy – one looks to Father God, or the Founder (Aeneas), or il Papa for solutions.  (And certainly Father God doesn’t change!)

And even some of the Greeks are Roman in that way: in Plato’s Republic, Socrates himself looks to a king for solutions.  (Of course, that king is supposed to be Socrates himself – never mind looking to the center: Socrates though of himself as the center!)

So when one starts to blame Washington or some more local government for the allegedly poor state of education in America, one needs to take a huge step back and consider that all Western education is steeped in twenty-five hundred years of centralized, hierarchical thought.  For over two millenia, all solutions have been sought from “up the hierarchy,” from some central authority.  That’s important enough to repeat: no one thinks for himself; all solutions come from authority.

I would even argue that the US doesn’t have a central bank only because JP Morgan wanted one; the US has a central bank also because all Westerners have been taught to kowtow to centralized authority for millenia.  Literally millenia!

This is also why the national monuments are Roman temples – it is the highest praise to be deemed the center of the universe.

Thus how profoundly different Austrian thought is.  Mises dares to be decentralized, dynamic in his thought.  Mises dares to blaze a different trail, to defy convention and tradition.  Mises weaves a radically new worldview of changing prices, dynamic entrepreneurs, markets full of economic agents.  Everyone makes choices.

And so I hope that as technology progresses, the twenty-first century becomes a century of decentralized, Austrian thought.  There are signs of hope: everyone now knows that computer technology has hit the central processing wall; computers are now gaining speed only by becoming ever more decentralized.  The internet is decentralized.  The major media are no longer seen as authoritative.  Millions of participants in MMORPGs are starting to grapple with (simulated) economic problems.  Private industry is getting into space.  And so forth.

And of course, the growing presence of the Mises Institute itself argues for a changing worldview.  But the change will take time – one doesn’t overturn 2500 years of great writing overnight.

I started working at NVIDIA nine months ago, so Moore’s Law is a daily theme in my head of late.  And given my interest in economics, I sometimes wonder whether Moore’s Law will ever have a measurable impact on economics.  Certainly, if computers and robots start doing a majority of the “manual labor” in the world economy, then Moore’s Law may start to have an impact.

So I started thinking: what if productivity doubled every eighteen months?  Of course, this question is qualitatively different (massively so!) from the prior paragraph.  But what if?  What would economics look like?

Or to put it another way: What if the total of whatever you owed were cut in half every eighteen months?  How would you behave?  How would your actions change?

Probably most of us would borrow and spend like there were no tomorrow!  I.e., the rational choice would then to become Keynesians overnight.

I think that my point may be that the difference between an Austrian and a Keynesian gets pretty blurry near such a singularity.  Kind of like a black hole starts to make physics (Newtonian, quantum, whatever) pretty blurry.

You say: But that’s not the real world.

And I agree.

But again, this is just a thought experiment about the difference between an Austrian and a Keynesian.  The difference still seems to be with the creditor – if every creditor forgave half of all debts every eighteen months, everyone would be Keynesian.

 

(Aside: Congress and the Fed could “make this happen” by printing 35% (or so) more “money” every year.  (And, of course, spreading the “money” out much more evenly than just giving it to Wall Street!)  The results would be horrible, of course – everyone would flee the dollar, a crack-up boom would occur, etc.

Unless Moore’s Law starts to effect the economy.  Or something else occurs, like the efforts of Focus Fusion give everyone free, clean energy.

Or, suppose all creditors just take the new dollars because they’re happy enough – everyone has enough food, shelter, clothes, entertainment, etc.  Or the government is powerful enough to make all creditors take the new dollars.

Or some combination of all of the previous statements.

A combination of the previous statements just about results in what we have today – the Fed printing money, everyone getting Social Security, everyone starting to get health benefits, etc.)

 

What would Mises say about an exponential explosion of productivity?