Leading Austrian Economist: Some Conspiracy Theories Are True

Many people are starting to appreciate the Austrian school of economics, and its recognition that unrestrained bubbles lead to economic crashes.

But many of those who respect Austrian economics dismiss all “conspiracy theories” as being crazy.

But in fact, leading Austrian school economist Professor Murray N. Rothbard wrote in 1965:

It is also important for the State to inculcate in its subjects an aversion to any “conspiracy theory of history”; for a search for “conspiracies” means a search for motives and an attribution of responsibility for historical misdeeds. If, however, any tyranny imposed by the State, or venality, or aggressive war, was caused not by the State rulers but by mysterious and arcane “social forces,” or by the imperfect state of the world or, if in some way, everyone was responsible (“We Are All Murderers,” proclaims one slogan), then there is no point to the people becoming indignant or rising up against such misdeeds. Furthermore, an attack on “conspiracy theories” means that the subjects will become more gullible in believing the “general welfare” reasons that are always put forth by the State for engaging in any of its despotic actions. A “conspiracy theory” can unsettle the system by causing the public to doubt the State’s ideological propaganda.

And in 1977, Rothbard wrote:

Anytime that a hard-nosed analysis is put forth of who our rulers are, of how their political and economic interests interlock, it is invariably denounced by Establishment liberals and conservatives (and even by many libertarians) as a “conspiracy theory of history,” “paranoid,” “economic determinist,” and even “Marxist.” These smear labels are applied across the board, even though such realistic analyses can be, and have been, made from any and all parts of the economic spectrum, from the John Birch Society to the Communist Party. The most common label is “conspiracy theorist,” almost always leveled as a hostile epithet rather than adopted by the “conspiracy theorist” himself.

It is no wonder that usually these realistic analyses are spelled out by various “extremists” who are outside the Establishment consensus. For it is vital to the continued rule of the State apparatus that it have legitimacy and even sanctity in the eyes of the public, and it is vital to that sanctity that our politicians and bureaucrats be deemed to be disembodied spirits solely devoted to the “public good.” Once let the cat out of the bag that these spirits are all too often grounded in the solid earth of advancing a set of economic interests through use of the State, and the basic mystique of government begins to collapse.

Let us take an easy example. Suppose we find that Congress has passed a law raising the steel tariff or imposing import quotas on steel? Surely only a moron will fail to realize that the tariff or quota was passed at the behest of lobbyists from the domestic steel industry, anxious to keep out efficient foreign competitors. No one would level a charge of “conspiracy theorist” against such a conclusion. But what the conspiracy theorist is doing is simply to extend his analysis to more complex measures of government: say, to public works projects, the establishment of the ICC, the creation of the Federal Reserve System, or the entry of the United States into a war. In each of these cases, the conspiracy theorist asks himself the question cui bono? Who benefits from this measure? If he finds that Measure A benefits X and Y, his next step is to investigate the hypothesis: did X and Y in fact lobby or exert pressure for the passage of Measure A? In short, did X and Y realize that they would benefit and act accordingly?

Far from being a paranoid or a determinist, the conspiracy analyst is a praxeologist; that is, he believes that people act purposively, that they make conscious choices to employ means in order to arrive at goals. Hence, if a steel tariff is passed, he assumes that the steel industry lobbied for it; if a public works project is created, he hypothesizes that it was promoted by an alliance of construction firms and unions who enjoyed public works contracts, and bureaucrats who expanded their jobs and incomes. It is the opponents of “conspiracy” analysis who profess to believe that all events — at least in government —are random and unplanned, and that therefore people do not engage in purposive choice and planning.

There are, of course, good conspiracy analysts and bad conspiracy analysts, just as there are good and bad historians or practitioners of any discipline. The bad conspiracy analyst tends to make two kinds of mistakes, which indeed leave him open to the Establishment charge of “paranoia.” First, he stops with the cui bono; if measure A benefits X and Y, he simply concludes that therefore X and Y were responsible. He fails to realize that this is just a hypothesis, and must be verified by finding out whether or not X and Y really did so. (Perhaps the wackiest example of this was the British journalist Douglas Reed who, seeing that the result of Hitler’s policies was the destruction of Germany, concluded, without further evidence, that therefore Hitler was a conscious agent of external forces who deliberately set out to ruin Germany.) Secondly, the bad conspiracy analyst seems to have a compulsion to wrap up all the conspiracies, all the bad guy power blocs, into one giant conspiracy. Instead of seeing that there are several power blocs trying to gain control of government, sometimes in conflict and sometimes in alliance, he has to assume — again without evidence — that a small group of men controls them all, and only seems to send them into conflict…

Rothbard’s points are well-taken: there are in fact conspiracies involving powerful people. But people that go off half-cocked with baseless allegations unsupported by the evidence do a disservice to everyone, and do nothing but muddy the waters.

We must treat conspiracy theories like judges are trained to do: as claims to be proven or disproven based on the evidence.

There are No Conspiracies Because Daddy Will Always Protect Us

ieshttp://georgewashington2.blogspot.com/2010/02/there-are-no-conspiracies-because-daddy.html

Yesterday, I wrote:

It is scary for people to admit that those who are supposed to be their “leaders” protecting them may in fact be human beings with complicated motives who may not always have their best interests in mind.

Indeed, long-term psychological studies show that approximately one-quarter of the American population has an “authoritarian personality“, where they look for a “strong leader” to protect them (that’s why even after his lies were exposed, Bush still stayed at approximately a 25% approval rating).

Authoritarians not only don’t want to hear that the most powerful people might be acting against their interest, they will aggressively defend against any such information.

But it’s not just the quarter of the population that can be said to clinically suffer from authoritarian personality disorder.

All of us – to one degree or another – have invested tremendous hope in the idea that our leaders and institutions will protect us.

As just one example, Americans have traditionally believed that the “invisible hand of the market” means that capitalism will benefit us all without requiring any oversight. However, as the New York Times notes, the real Adam Smith did not believe in a magically benevolent market which operates for the benefit of all without any checks and balances:

Smith railed against monopolies and the political influence that accompanies economic power …

Smith worried about the encroachment of government on economic activity, but his concerns were directed at least as much toward parish councils, church wardens, big corporations, guilds and religious institutions as to the national government; these institutions were part and parcel of 18th-century government…

Smith was sometimes tolerant of government intervention, ”especially when the object is to reduce poverty.” Smith passionately argued, ”When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favour of the masters.” He saw a tacit conspiracy on the part of employers ”always and everywhere” to keep wages as low as possible.

Similarly, many Americans have tended to naively believe that our leaders are selfless folks. They forget, of course, that the Founding Fathers loudly warned against relying on the charitable intentions of leaders, expressly set up a government based on the rule of law instead of the rule of men, and warned that the price of liberty is eternal vigilance in holding the feet of the powerful to the fire.

Networks of influence spanning governments and corporations are starting to be discussed by the left. See this, this, this, this and this.

But both the left and the right are still very timid about openly examining whether those in power in government and business are working to help us or to exploit us.

By understanding that everyone – to varying degrees – has psychological resistance to such an examination, based upon the need to assume that the “big people in charge” will protect them and would never hurt them, we can begin to break through their defenses.

With the authoritarians, be prepared for passionate defense of their world-views. But for the other 75% of the population, you may break through by challenging their beliefs in benevolent parental figures and institutions.

You might need to wake some people up by saying something like “Do you assume that Daddy will always protect you? Or do you think we may need to assume responsibility for helping to run things ourselves?”

But beware: you will be touching on very deep emotions, and may be met with a backlash. However, if done right, you might plant seeds for future reflection which will lead to real change.

Ridicule of Conspiracy Theories Focuses On Diffusing Criticism of the Powerful

Washington’s Blog
Thursday, February 11th, 2010

The label “conspiracy theory” is commonly used to try to discredit criticism of the powerful in government or business.

For example, just this week – after Tony Blair was confronted by theIraq Inquiry with evidence that he had used lies to sell the Iraq war –Blair dismissed the entire Iraq Inquiry as simply being part of Britain’s “obsession with conspiracy theories“. (Not only did Blair know that Saddam possessed no WMDs, but the French this week accused Blair of using of ‘Soviet-style’ propaganda in run-up to the Iraq war).

Of course, the American government has been busted in the lastcouple of years in numerous conspiracies. For example, William K. Black– professor of economics and law, and the senior regulator during the S& L crisis – says that that the government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are (”the entire strategy is to keep people from getting the facts”).Similarly , 7 out of the 8 giant, money center banks went bank rupt in the 1980’s during the “Latin American Crisis”, and the government’s response was to cover up their insolvency.

And the government spied on American citizens (even before 9/11 … confirmed here and here), while saying “we don’t spy”. The government tortured prisoners in Iraq, but said “we don’t torture”.

In other words, high-level government officials have conspired to cover up the truth.

And Tom Brokaw notes:

All wars on based on propaganda.

A concerted effort to produce propaganda is a conspiracy.

Bernie Madoff’s Ponzi scheme was a conspiracy. The heads of Enron were found guilty of conspiracy, as was the head of Adelphia. Numerous lower-level government officials and judges have been found guilty of conspiracy. See this, this, this, this and this.

Indeed, conspiracies are so common that judges are trained to look at conspiracy allegations as just another legal claim to be disproven or proven by the evidence.

But – while people might admit thatcorporate executives and low-level government officials might haveengaged in conspiracies – they may be strongly opposed to consideringthat the wealthiest or most powerful might possibly have done so.

Indeed, those who most loudly attempt to ridicule and discredit conspiracy theories tend to focus on defending against criticism involving the powerful.

This may be partly due to psychology: it isscary for people to admit that those who are supposed to be their“leaders” protecting them may in fact be human beings with complicatedmotives who may not always have their best interests in mind. And see this.

For example, Obama’s current head ofthe Office of Information and Regulatory Affairs – and a favored pickfor the Supreme Court (Cass Sunstein) – previously:

Defined a conspiracy theory as “an effort to explain some event or practice by reference to the machinations of powerful people, who have also managed to conceal their role.”

He has called for the use of state power to crush conspiracy allegations of state wrongdoing. See this, this and this.

Similarly:

In other words, prominent neocon writer Kelly believes that everyonewho is not a booster for government power and war is a crazy conspiracytheorist.

Similarly, psychologists who serve the government eagerly label anyone “taking a cynical stance toward politics, mistrusting authority, endorsing democratic practices, … and displaying an inquisitive, imaginative outlook” as crazy conspiracy theorists.

This is not really new. In Stalinist Russia, anyone who criticizedthe government was labeled crazy, and many were sent to insane asylums.

Using the Power of the State to Crush Criticism of the Government

The bottom line is that the power of the state is used to crushcriticism of major government policies and actions (or failures to act)and high-level government officials.

Pay attention, and you’ll notice that criticism of “conspiracytheories” is usually aimed at attempting to protect the state and keygovernment players. The power of the state is seldom used to crushconspiracy theories regarding people who are not powerful . . . atleast to the extent that they are not important to the government.

Michael Kelly, a Washington Post journalist andneoconservative critic of anti-war movements on both the left andright, coined the term “fusion paranoia” to refer to a politicalconvergence of left-wing and right-wing activists around anti-warissues and civil liberties, which he claimed were motivated by a sharedbelief in conspiracism or anti-government views.