economy

We are daily bombarded with variants of the “Consumption is 7/10 of the economy” argument. Governments constantly monitor spending, and they encourage people to spend rather than save or invest, because consumption spending is a necessity for debt-based currency. They know that the only way the system can continue is if people continue spending, mindlessly.

But that doesn’t make a people rich (OK, it might make some people rich, but you are not one of them), it makes them slaves to their possessions.

The only thing that can make people rich is production. An “economy” is not “spending”. An “economy” is a system of production and exchange in order to allocate scarce resources towards the alleviation of wants, needs and discomforts.

When he wrote the General Theory, did Keynes know what he was doing? Reading it, one gets the impression that maybe he did not, for example there are parts where he pretends to be a stalwart defender of free markets and other parts where he vilifies them. Certainly he could not have anticipated the destructive long-term effects of his system fully implemented. Or maybe he did, and he just didn’t care.

After all, in the long run we’re all dead.

Quoth the Faux Capitalist, on libertarianism and “Austrian” economists:

For me, a libertarian is someone who believes that limited government is the most likely to protect the liberties of the people whom it governs, and that shouldn’t necessitate an economic system based on a scarce resource such as gold.

Any economy (I do not prefer the term “economic system”) is not “based” on currency. It’s based on the exchange (often consisting in currency) of scarce resources. Some resources happen to be more scarce than others. Historically it is those resources, in particular the precious metals, that have been chosen as monetary commodities. This is so for a number of reasons I need not explain at present.

So it’s a gross misunderstanding, I think, to characterize the Austrians as gold-fetishists (although there are certainly some worthy of that). In fact, it’s not advocacy of an “economic system”, but rather a belief that in the absence of any coerced “system”, a free market settles upon a common medium (or perhaps, media) of exchange.

Anyone who advocates an “economic system” based on anything other than freedom and exchange is not a libertarian.

no third solution

Blogging about liberty, anarchy, economics and politics

Tag Archives: economy

Consumption Spending is NOT “The Economy”

What Does a Libertarian Economy Look Like?

no third solution

Blogging about liberty, anarchy, economics and politics