The Human Action Podcast: The Coming Financial Repression

UK entrepreneur and founder of the Cobden Centre Toby Baxendale joins Bob to discuss meeting Hayek, the history of economists supporting 100% reserve banking, and the tools central banks and governments will use to enact “financial repression.

Click below to listen to the podcast:

Japan, an Opportunity Awaits Us

I have been in the fish business for just over 30 years. There is no place more idolised as the centre of the world for those of us in fish, than the Tsukiji Fish Market. It is reputed to be the largest in the world. 700,000 tons of fish pass though there each year. 500 odd species totalling about $5bn dollars in value. A Bluefin Tuna sold there at the new site, in 2019 for a staggering $3.1m. There is no doubt that the Japanese love their fish. In fact, in Japan they consume 48.6 kg of seafood per capita per year. This is over double our 20 odd kg’s per year in the UK. In Japan, certain fish mongers have the same status as a sommelier does for wine. This is unique to Japan. I trade with the only one, resident outside of Japan, Nick Sakagami, Osakana Meister number 109. With Tuna, his palate is so sensitive, he can, by the smell & taste, tell you what ocean it is from & how it has been treated since its capture. These are unique skills, skills only found in Japan as far as I am aware. The UK is a fishing nation. In 2019, UK exports of fish and shellfish to Japan totalled a miniscule £17.6 million, making up 0.2% of all UK goods exports to Japan. In 2019, Japan was the 14th largest destination for all UK fish and shellfish exports and the 5th largest non-EU destination. UK fish and shellfish exports to Japan made up 0.9% of all global UK fish and shellfish exports to the world in 2019. We can do better as a nation than that! Mackerel is the 5th most popular fish in Japan and salmon, the most popular. The UK has a world class fishery in the former and a world class aquaculture industry in the latter. Cod is also popular. So why has trade not been more lucrative? Well, there are tariffs between the UK and Japan. Tariffs protect the local producers at the expense of their consumers and generally make food more expensive. We still come under the EU trading bloc, whose governance we are under, until the end of the year. Once these barriers are removed, we will be able to trade more. Although Atlantic Salmon is now free, Cod still remains at 9.1% and Mackerel at 9.4%. There will be opportunities with other species as well. We export £1.3 bn of fish annually, nearly two thirds to Europe. The EU fleet catches nearly as much in UK territorial waters as the UK fleet does in its own waters, some 700,000 tons, the weight of all the fish sold in the top Japanese market I mentioned at the start of this article. With this injustice being corrected when we leave the final clutches of the EU at the end of the year, we will have a tremendous opportunity to a) catch more and b) sell more and c) more of that catch to new, or underserved markets. With a UK/Japan Free Trade Agreement shortly to be in place, with the prospect of zero tariffs into the largest fish consumers in the world, our industry may well start to see some of that prosperity denied to us since our incorporation into the EU and the surrender of our sovereign waters to a foreign power, come back to us. Toby Baxendale is an entrepreneur & investor see

Austrian Economics Podcast

Toby Baxendale – An Entrepreneur’s view of Austrian Economics Click here to read more

Economics for the Many

Economics for the Many by Ed John McDonnell, Verso Books 2018 Democratising Economics in a Post Truth World By Antonia Jennings She argues that economics as we know it is for the self-serving elite. All policies emanating out of economics self-reinforce that elite. The recommendations are:

  1. Create an army of “citizen economists.” They would hold institutions to account. Raising questions challenging bodies, challenging assumptions and so on and so forth to benefit working people.
  2. Make PSHE (personal, social, health and economic) statutory, so the level of economic literacy is raised.
  3. At university level, make the teaching more relevant and accessible to all if indeed it is about the real world.
  4. The underlying values and assumptions of papers and policy recommendations need to be exposed, it’s a social science after all.
  5. Needs to be more diverse i.e. more non-white males.
  6. The Left need to create a compelling narrative around their economics.

TB’s Comments Point 5 is clearly racist and very offensive and should be avoided like the plague. There is nothing stopping “citizen economists” doing what she wants in point 1. Point 2 can only be a helpful development. Point 3 for sure, maybe research grants should specifically stress one of the outputs of any research needs to be able to show and communicate in practical layman terms, what the research discovers. Point 6: Creating a left-wing narrative is something for the Left and can’t be a matter of public policy. Labour’s Fiscal Credibility Rule in Context By Simon Wren Lewis This is known as the FCR. The FCR is based on a target for the deficit. It does not say what this target is, but I assume it is not to have one in the positive stage of any macro cycle. At zero interest rates, where nothing can stimulate investment, it moves to allowing fiscal stimulation. This is referred to as the “knock out.” It does not matter how high the debt goes as the Govt can (issue it) buy it i.e. like QE. It also does not matter how high the deficit goes in this knockout period.

  1. Non-investment spending is to always be matched by tax rises.
  2. Investment spending is not part of the FCR so being Keynesian, the suggestion is spend, spend and spend. It can only be good! They don’t need to be matched by tax increases as they will self fund. Brilliant!
  3. Commenting on the Labour 2017 Manifesto and noting that if anyone said it “did not add up,” this, according to the author, is a good thing. Why? Because they should go on the front foot and say the FCR allows them precisely, at this very vulnerable moment, for the economy to let rip, with all this self-funding public spending. This should be a “welcome feature” of any manifesto.

TB’s Comments This re-hash of Keynesian economics of fiscal stimulation is astonishing in the 21st Century. Like a Zombie coming back from the dead, for all the reasons why Keynesian economics was discredited, this will have to be again. So, prepare to dust off your notes and old text books! What is most bizarre about this is that the Left (& Libertarian Right) quite rightly are up in arms about the unfairness of QE as it creates asset bubbles that transfer real wealth via Cantillon effects, from the poorest to the richest, and prop up the whole welfare state of credit we have in the banking system. Now, those bankers, on the welfare state of credit are not paid Universal Credit rates of benefit, but (by) via 6 and 7 figure salaries! As with most Left-Wing policies, for sure, this will do the exact opposite of what the intention of the author has in mind. Of all the chapters, this one is probably the most mad and dangerous and could lead to a Venezuela type economy, very quickly. The classic errors of all Keynesians can be summarised as follows;

  1. Govt spending to boost aggregate demand can only take place out of taxes and the new issue of money and or borrowing. a. If out of taxes, the Govt takes money from a group of people/entities, who would have spent it and gives it to a group of people/entities who can spend it. This assumes that the latter group, having a marginal propensity to consume that is more intense, will spend more, kicking off a recovery. What this ignores is that unless your money is horded under a mattress, by the very nature of the banking system, it is saved and then simultaneously invested. So, this extraction from one group of people/entities is at best a zero-sum game. At worst, the money is transferred from where it is being productive, to where it is just consumed. b. If out of minting new purchasing power, be it via the very fashionable QE, or via the more traditional Open Market Purchase, or by plain old-fashioned printing of new notes and or coins, then the only effects will be a wealth transfer from the poorest to the richest. This is always the case as money enters the system via the banking sector. This sector gets the benefit of new purchasing power. They spend their new purchasing power, as we have seen, in certain asset classes, notably housing. And: lo and behold! these prices skyrocket out of the reach of the common person and so on and so forth. c. If out of borrowing in the conventional sense where a Govt issues a bond that is subscribed to by people/entities, out of their savings (which of course are currently being invested) then the same effects of a) are realised. If borrowing is financed by the issue of new bonds, as suggested by McDonnell, and funded by the Govt issuing new reserves to create new money, then the same effects as seen in b) occur. With no understanding of the above, all of John McDonnell’s Marco plans for the economy are doomed to failure.
  2. Keynes never discusses how wealth is created, so I guess it is hard to expect his followers to know how wealth is created. But, in summary, for wealth to be created, entrepreneurs and business people need to project forward into the current needs of people and into their future needs with a mind to working out solutions to provide for those needs in a better, cheaper, faster, more convenient, more abundant way. Practically, this is done by refraining from consumption i.e. to generate savings, for example, or by using the savings of others to make or provide these better solutions, using the land, labour and capital, over time. There is no other way known to genuinely wealth create. McDonnell’s plans, in the absence of this understanding, are doomed to failure.
  3. In this book, you will see constant reference to the Multiplier. When Govt expenditure is done, it is assumed, that is say a train station is built, the builders who are now employed will go and spend money. So will suppliers, where they would not have before, and so on and so forth. Pause for a minute and think. If it was that easy, Govt should spend and spend and poverty would be eliminated overnight. Indeed, do this globally and, hey presto! Like magic, we have eradicated world poverty! Yipeee! (So,) But what is not being taken into consideration in this example is that this money was being spent somewhere before it was extracted to spend on building the train station, so at best it is zero sum, and at worst it will be destructive of wealth, if what is being spent on is less productive that what is being created.
  4. To the Keynesian, the circular flow of income is held as canonical. It’s a truism that says that all income is in fact derived from all of the expenditures in the economy. If, say, the Govt lowers and restricts, its expenditure, then it follows that the income of the economy will drop. Nice mathematical relations can be shown to demonstrate this. However, what is not taken into account is the quality of those expenditures and incomes. Especially under the Keynesian system, nothing concerning the profitability of these expenditures are taken into account. In the circular flow of income, a £1bn rev company is great supporting spending of £1bn PA, but what if it is loss making? When it runs out of cash, its ability to sustain itself and all the attendant jobs and supply lines ends. If it makes 1% net profit and a £0.5bn PA company makes 10% net profits, then the lower revenue company will be more effective at sustaining jobs and supply lines. So, it’s crucially the quality of that income that matters. Being smaller and more profitable may well sustain much more. The same is the case for the expenditure some of the economic actors. This is lost on Keynesians.

If anything, a Labour Party serious in its wish to address some of society’s needs should be focused on savings and the need to encourage them with strong support to entrepreneurs, so that investment can accelerate and compound over time, generating more jobs and prosperity. This takes time and no politician seems to have time to nurture wealth creation. Rising to the Challenge of Tax Avoidance By Prem Sikka To attack tax avoidance/evasion

  1. Common Consolidated Corporate Tax Base (CCCTB) a. This moves to tax based on where it is earned and not where the corporation is based. b. No matter how many entities the corporation has, it will only be viewed as one, to avoid the shifting and then evaporating of liabilities. c. In viewing some of the truly global concerns the group consolidated profits would be the key measure of tax, then this would be proportioned down to each nation based on number of employees, assets and sales activity.
  2. Tackle the UK tax avoidance industry. a. Make a complete ban on audit firms offering non-audit i.e. avoidance advise to clients. b. Large fines for both corporates and officers in the companies recommending these schemes. c. Barring the above from office and from being a corporation. d. Public fining of HNW & UHNW’s accounts. e. Public filing of large corporations tax returns.
  3. Abolish tax relief on Interest payments
  4. Introduce a Withholding Tax
  5. Investigate Tax Reliefs

TB’s Comments The CCCTB for sure seems to be a very good way forward. Concerning both 2 a & b, the separation of audit from other advice, this may well be a good avenue to pursue, but a more effective way might be to make them fiduciaries. They of course were always historically, fiduciaries. This meant they were fully open ended, not protected by a Limited Partnership or a company of Limited Liability, and therefore liable, for any bad advice they may give, on loss on any scheme they recommend. This would open them to being personally sued by the Revenue and clients, should schemes go wrong and or be declared illegal. I think concerning point c, if either an event in a or b happens, their professional services should just bar them, plainly and simply, from practise. It would be worth looking to see what teeth these professional service private regulators have before any specific legislation is done. Concerning d, this is obviously highly discriminatory and should be avoided. Like Switzerland, if we wanted to go down this route, it might be sensible to do this for everybody in a non-discriminatory way. This will also display, for all to see, those who pay no, or little tax, including benefit scroungers. I agree that abolishing tax relief on interest will be a good thing and encourage, for sure, a better balance between equity and debt for corporate finance. This will generally have a smoothing effect on booms and busts i.e. taking off the extremities of a boom and bust cycle, but not killing the cycle itself! A Withholding Tax at the basic rate for any foreign person/entity is very welcome, provided we can be sure there is a double tax treaty with the other jurisdiction, so tax can’t be double payed. If there are not suitable double taxation treatise, doing this on its own could seriously discourage investment in UK PLC. Clearing up the generous tax reliefs and making them a) simpler and b) measured by their effectiveness at rewarding the behaviour they are encouraged to do, would seem very sensible. Click below for the complete review: [prettyfilelist type=”pdf” ids=”912″ hidesort=”true” thispostonly=”true”]

What is Right Wing?

Last month on ConservativeHome, Tim Montgomerie asked “What is Right-wing?”. In this article I seek to answer the question, using small “c” and little “l” to denote the conservative and liberal systems of political-thought and Capital “C” and “L” for the respective political parties of those names. Click HERE to read the full article

The Protectionist Zombie Is Back

Every generation or so, like a zombie, the case against free trade rises from the grave. It’s doing so now. The jungle drums of protectionism are beating in America and Britain just as it prepares to escape the yoke of the EU. With my garlic, sharpened stake and the use of reason, I will now do my bit to stab this zombie in the heart and be done with it… until the next time. Individually, instinctively, we are all free traders. That may come as a surprise to some, but when a doctor chooses to employ a skilled receptionist – despite the fact that the doctor can answer the phones, file case notes, write referrals and set up hospital appointments, more accurately and faster than the receptionist – the surgery can be more productive, as the doctor can see more patients. In economic terms, the doctor has an absolute advantage over the skills of the receptionist. If our doctor used this absolute advantage, he or she would be faced with doing all the clerical tasks and neglecting medical duties. This would lower the productivity and effectiveness of the surgery. Contrast this with playing to the doctor’s comparative advantage: the doctor focuses on skills that the receptionist does not have, to advance the interests of as many patients she can. If we turn to the receptionist, this is of course a joyous outcome, as he or she does not have to compete with the better-educated doctor for work, only with people of similar talent. Free trade will always mean that the poorest members of society and the least skilled have a valid role that plays to their own comparative advantages. Human co-operation on this level is so obvious that it should not need any advocacy at all. On a countrywide level, you can replace “doctor” and “receptionist” with whatever combination of the same industries you want, but it will never pay for one nation to follow a policy of competing to its absolute advantage. It will always pay for that country’s industries to concentrate on growing its trade in areas where it has superiority. The doctor and the receptionist are not rivals in the economy, but co-operating individuals whose specialisation in their joint endeavours is to everyone’s advantage. The industries of nations are likewise not rivals, but gigantic webs of peaceful, competitive and extended human co-operation across the face of the earth. The more co-operation, the deeper the benefits. This is the natural outcome of the human condition. Faced with not living in a heaven of unlimited goods and services, we can only seek co-operation if we want to benefit from the maximum output of goods and services for all. The human condition is not about the survival of the fittest or the selfish gene: we are destined to work together. Protectionist bodies, such as the European Single Market, whilst seemingly great for all those who trade within its boundaries, actually diminish the pool of talent with which its participants can co-operate. By erecting tariffs, you exclude those who are now made less competitive by the tariff, and therefore displace any advantage the Single Market participants would have gained by playing to their comparative advantages. This increases the costs of the Single Market participants and discriminates against those against whom the tariffs are set. The people in the protectionist zone sacrifice, at the margin, their prosperity. Everyone loses. Even the participants in the protected zone, who think their local pig industry is saved, pay more for the commensurate goods and services. For the richest, this will make a smaller impact than on the poorest. Protectionism always hits the poor the hardest. The 19th-century entrepreneur and Liberal parliamentarian Richard Cobden knew this so well. With a small group of fellow entrepreneur manufacturers, he took on the might of the aristocracy, who had succeeded in establishing tariffs to protect their agricultural estates from cheap imports. Cobden made the case for abolishing the Corn Laws (the catch-all term for protective food tariffs) in favour of unilateral free trade. One of his finest orations was delivered in the House of Commons on March 13, 1845, and described by his biographer John Morley as probably the most powerful speech he ever made: Men on the Tory benches whispered to one another, “Peel [the Prime Minister of the day] must answer this”. But Peel crushed in his hand the notes he had made and remarked, “Those may answer him who can”. The establishment of universal free trade in the mid-nineteenth century created the greatest period of growth in our nation’s history. I truly hope that our political masters will not listen to the vested interest groups and will be brave enough to establish unilateral free trade now as Britain leaves the protectionist EU.

Brexit Podcast

Toby Baxendale on how free trade will thrive post Brexit Click here to read more

Liberty Me

Jeffery Tucker is a man of great many talents,  energy and vision . He has set up an on line pro liberty loving community—2 this will be one for all of us free market for peace and anti excessive state people to get involved with. [youtube height=”HEIGHT” width=”WIDTH”][/youtube]

You can find out more about Jeff via his Twitter feed. Also, here is a clip taken from his Wiki page. “Jeffrey Albert Tucker is the executive editor of Laissez Faire Books.[1] Tucker is also a Distinguished Fellow of the Foundation for Economic Education,[2] an adjunct scholar with theMackinac Center for Public Policy[3] and an Acton University faculty member.[4] He is past editorial vice president of the Ludwig von Mises Institute and past editor for the institute’s website, Tucker compiled an annotated bibliography of the works of Henry Hazlitt, entitled Henry Hazlitt: Giant For Liberty, which is now in print. AFoundation for Economic Education review described the book, which “includes citations of a novel, works on literary criticism, treatises on economics and moral philosophy, several edited volumes, some 16 other books and many chapters in books, plus articles, commentaries, and reviews,” as “an apt eulogy of Henry Hazlitt.”[6] As a writer, Tucker has contributed scholarly efforts and humorous essays to, the Ludwig von Mises Institute, and elsewhere. Examples of the latter essays include his defense of morning drinking,[7] his advice on “How to Dress Like a Man”,[8] his attack on shaving cream,[9] and his admiration for the speedy-service haircut.[10] He is a critic[11] of the Grameen Bank which, along with its founder Muhammad Yunus, was awarded the Nobel Peace Prize in 2006.[12] Tucker was editor of from 1997 until late 2011 when he was hired by Addison Wiggin as executive editor of Laissez Faire Books.[1]

My Time for Speakers for Schools

I thoroughly endorse this initiative and have been proud to contribute.

This is how it first came about.

In 2010 I was interviewed for a BBC programme about the financial crisis by Robert Peston.  By a strange quirk of fate, I realised that in my restaurant supply days I had served his sister, the likeable and very talented chef Juliet Peston, who was the force behind an even more famous chef – Alistair Little.

Robert and I got chatting, and to cut a long story short, it became apparent to me, when my two eldest children went to secondary school, that the state school system was woefully under-resourced in comparison with the fee paying sector, which attracts the best speakers for its students: people from all walks of life, who are able to inspire, help to mentor and give guidance on the basis of their successful experience.

I had in the back of my mind that Robert Peston had set something up to try to address this imbalance.  He essentially said to me: get involved with my charity ‘Speakers for Schools

As a result, the following week I had the great pleasure to tell my story to the Business Course students of Barnet and Southgate College .  We covered my journey of entrepreneurship and explored some of its key attributes, eg: who is suited to being an entrepreneur?  What role does the entrepreneur play in society? I talked about some of my failures – things for them to avoid – and much more.

The whole experience I felt was very worthwhile and I would urge anyone whose professional experience might spur on the lives of young people to give your time, no matter how you are pressed for time.  If you can change one life for the better, then it’s worth it.

The Selfish Gene, its Extended Phenotypic Effects and Human Cooperation

It took me until my 43rd year to read “The Selfish Gene,” written in 1976 by Richard Dawkins. In many respects, it is a testament to its success that I felt no compelling desire to read it. What I perceived to be its central message had been absorbed into the very fabric of our culture. In summary, briefly, I thought the message was simply put: we are driven to survive by our genes and via competitive and selfish natural selection; we follow our own self-interest in order to survive and procreate; genes that adapt more quickly and better to the competitive world survive at the expense of the others, and so forth. The state of nature is a Hobbesian nightmare of there being “no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.” [1] (1651: 62 ) Its is survival of the fittest for most, but armed with this knowledge, we could overcome some of these rough edges of life. This message became his new self christened “meme” that has seeped into our own cultural way of thinking. Also, armed with this knowledge, we should restrain our biological drive and build a more co-operative world. [1] Richard Dawkins vs Cardinal George Pell on Q&A (10-4-2012) In watching this very well balanced debate , I do recall hearing Dawkins describe this view as a Thatcherite nightmare and something he was diametrically opposed to , or sentiments of that sort, Needless to say, the book is rich with information on Darwinian evolution and easily communicated to the intelligent layperson. I consider I fall into that latter category and am grateful the new understanding it has given to my knowledge of the world. However, I think that he has got one point for sure, the wrong way around: we should not restrain our genes to build a more co-operative world, but embrace them and their phenotypic effects. As I will suggest, successful phenotypic effects are not as he assumes them to be when it comes to the catallactics of the market place. The view of Dawkins – that we need to put restraint on our genes to effect a more co-operative outcome for all – would imply that if we do not, what is called Social Darwinism is as natural as the selfish gene itself. In the closing lines of the Selfish Gene, Dawkins urges us rebel against this natural disposition:

It is possible that yet another unique quality of man is a capacity for genuine, disinterested, true altruism. I hope so, but I am not going to argue the case one way or the other, nor to speculate over its possible memic evolution. The point I am making now is that, even if we look on the dark side and assume that individual man is fundamentally selfish, our conscious foresight—our capacity to simulate the future in imagination—could save us from the worst selfish excesses of the blind replicators. We have at least the mental equipment to foster our long-term selfish interests rather than merely our short-term selfish interests. We can see the long-term benefits of participating in a ‘conspiracy of doves’, and we can sit down together to discuss ways of making the conspiracy work. We have the power to defy the selfish genes of our birth and, if necessary, the selfish memes of our indoctrination. We can even discuss ways of deliberately cultivating and nurturing pure, disinterested altruism— something that has no place in nature, something that has never existed before in the whole history of the world. We are built as gene machines and cultured as meme machines, but we have the power to turn against our creators. We, alone on earth, can rebel against the tyranny of the selfish replicators.” Dawkins (1976: 215).

Being new to biology (I believe my sum total of expertise is gaining an ‘O’ Level in it) , I thought I should read some Darwin to see if it really does follow that if you accept natural selection you must move, as night moves towards day, to the whole of human society running itself as a group of individualistic selfish replicators. Social Darwinism has nothing, seemingly, to do with Darwin himself. He never advocated a social policy of promotion of the natural tendency to the survival of the fittest. He thought that appropriation by others was the key in advancing man in society. ‘The Descent of Man’ is his book that touches most on these issues:

We may therefore conclude that primeval man, at a very remote period, was influenced by the praise and blame of his fellows. It is obvious, that the members of the same tribe would approve of conduct which appeared to them to be for the general good, and would reprobate that which appeared evil. To do good unto others- to do unto others as ye would they should do unto you- is the foundation-stone of morality. It is, therefore, hardly possible to exaggerate the importance during rude times of the love of praise and the dread of blame. A man who was not impelled by any deep, instinctive feeling, to sacrifice his life for the good of others, yet was roused to such actions by a sense of glory, would by his example excite the same wish for glory in other men, and would strengthen by exercise the noble feeling of admiration. He might thus do far more good to his tribe than by begetting offspring with a tendency to inherit his own high character.

With increased experience and reason, man perceives the more remote consequences of his actions, and the self-regarding virtues, such as temperance, chastity, &c., which during early times are, as we have before seen, utterly disregarded, come to be highly esteemed or even held sacred. I need not, however, repeat what I have said on this head in the fourth chapter. Ultimately our moral sense or conscience becomes a highly complex sentiment- originating in the social instincts, largely guided by the approbation of our fellow-men, ruled by reason, self-interest, and in later times by deep religious feelings, and confirmed by instruction and habit.

It must not be forgotten that although a high standard of morality gives but a slight or no advantage to each individual man and his children over the other men of the same tribe, yet that an increase in the number of well-endowed men and an advancement in the standard of morality will certainly give an immense advantage to one tribe over another. A tribe including many members who, from possessing in a high degree the spirit of patriotism, fidelity, obedience, courage, and sympathy, were always ready to aid one another, and to sacrifice themselves for the common good, would be victorious over most other tribes; and this would be natural selection. At all times throughout the world tribes have supplanted other tribes; and as morality is one important element in their success, the standard of morality and the number of well-endowed men will thus everywhere tend to rise and increase.” (1896:131/2).

When I first read this passage , I was taken aback at how similar this was to the approach of Adam Smith and also Immanuel Kant to this Darwinian categorical imperative . Concerning Darwin’s words about helping the weaker members of society or not in our struggle for survival , further on in the Descent we have:

I have hitherto only considered the advancement of man from a semi-human condition to that of the modern savage. But some remarks on the action of natural selection on civilised nations may be worth adding. This subject has been ably discussed by Mr. W. R. Greg,* and previously by Mr. Wallace and Mr. Galton. Most of my remarks are taken from these three authors. With savages, the weak in body or mind are soon eliminated; and those that survive commonly exhibit a vigorous state of health. We civilised men, on the other hand, do our utmost to check the process of elimination; we build asylums for the imbecile, the maimed, and the sick; we institute poor-laws; and our medical men exert their utmost skill to save the life of every one to the last moment. There is reason to believe that vaccination has preserved thousands, who from a weak constitution would formerly have succumbed to small-pox. Thus the weak members of civilised societies propagate their kind. No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man. It is surprising how soon a want of care, or care wrongly directed, leads to the degeneration of a domestic race; but excepting in the case of man himself, hardly any one is so ignorant as to allow his worst animals to breed. (1896:133/4)

It would appear that Darwin very much did not advocate anything that has come to be associated with the term ‘Social Darwinism’, if we mean by this that we should relish in the economic survival of the fittest at the expense of our fellow compatriots. Dawkins sits firmly in the same tradition as his great inspiration on these matters : Darwin no less. From this I conclude that Social Darwinism is more of a “straw-man” [2] style argument, by people unfamiliar with the works on Darwin and market catallactics. [2] For another straw-man attack, please see the unforgettable Mary Midgley who has a track record of attacking a more mythical Dawkins , here and here , At first blush it would seem that Darwinism has nothing to tell us about social policy of any particular interest – if, like me, you are a supporter of some of the basic tenets of liberalism. Ludwig von Mises, arguably one the greatest economists of all time in his magisterial ‘Human Action’ (1949), points to three reasons that don’t chime with Liberalism which are falsely grabbed hold of as tenets of Darwinism and used to advance either an anti-liberal right-wing or and an anti-liberal left-wing agenda. An initial point to observe is that reason itself, and the rational mind, is the first thing thrown out the window by the despot as he can conveniently argue he is only acting in accordance with his nature. War is thus good to weed out the weaklings, strengthen the strain, and purify the race for the betterment of all (his favoured types). Again, I cannot see this thought emanating from the mouth or pen of a Darwin or Dawkins! The Argument that men are unequal gives license to abuse, as Mises points out:

… the advocates of a biological philosophy of society, natural science has demonstrated in an irrefutable way that men are different. There is no room left in the framework of an experimental observation of natural phenomena for such a concept as natural rights. Nature is unfeeling and insensible with regard to any being’s life and happiness. Nature is iron necessity and regularity. It is metaphysical nonsense to link together the “slippery” and vague notion of liberty and the unchangeable absolute laws of cosmic order. Thus the fundamental idea of liberalism is unmasked as a fallacy. (1949:174)

Shorn from the natural law of the divine, and armed with what they saw as the biological implications of natural selection and the irrefutable non-creation of all being equal led to unspeakable totalitarian genocides and reigns of terror across the globe unparalled in our history. As Mises points out:

… the teachings of utilitarian philosophy and cIassical economics have nothing at all to do with the doctrine of natural right. With them the only point that matters is social utility. They recommend popular government, private property, tolerance, and freedom not because they are natural and just, but because they are beneficial. The core of Ricardo’s philosophy is the demonstration that social cooperation and division of labor between men who are in every regard superior and more efficient and men who are in every regard inferior and less efficient is beneficial to both groups. Bentham, the radical, shouted: “Natural rights is simple nonsense: natural and imprescriptible rights, rhetorical nonsense.” With him “the sole object of government ought to be the greatest happiness of the greatest possible number of the community……. The Utilitarians do not combat arbitrary government and privileges because they are against natural law but because they are detrimental to prosperity. They recommend equality under the civil law not because men are equal but because such a policy is beneficial to the commonweal. In rejecting the illusory notions of natural law and human equality modern biology only repeated what the utilitarian champions of liberalism and democracy long before had taught in a much more persuasive way. It is obvious that no biological doctrine can ever invalidate what utilitarian philosophy says about the social utility of democratic government, private property, freedom, and equality under the law. (1949:174)

Concerning the social implications of social Darwinism, liberalism plans for eternal peace, social Darwinism for a war of all against all and, as discussed, neither the great master Darwin and his most modern advocate, Dawkins, would agree with the former extrapolation from biology to social science. I am sure – and Mises is very clear – that what applies to relations between men and morbific microbes are very different indeed, as we have the power of reason and they don’t. Thus, he says:

It need not always be a war of extermination such as in the relations between men and morbific microbes. Reason has demonstrated that, for man, the most adequate means of improving his condition is social co-operation and division of labor. They are man’s foremost tool in his struggle for survival. But they can work only where there is peace. Wars, civil wars, and revolutions are detrimental to man’s success in the struggle for existence because they disintegrate the apparatus of social cooperation.” Mises (1949: 175)

In the Introduction to ‘The Wealth of Nations’ by Adam Smith, he establishes the fact that those nations who live in an autarkic way remain savage and are hunter-gatherer focused with small populations, and those that embrace the specialization of the division of labour grow to massive size , sustaining many more people in a better standard of living . The purpose of the book is to discover why and how this happens, as this is, indeed, the story of the wealth of our nation. It is interesting to note that in his exploration of why this division of labour emerges which does allow detailed specialization to employ more people to produce more things of use for more people, it is not a faculty of our reason , but some primordial urge to truck and barter. Naturally I cannot concur with the giant Smith on this point.

This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature, which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.

Whether this propensity be one of those original principles in human nature, of which no further account can be given, or whether, as seems more probable, it be the necessary consequence of the faculties of reason and speech, it belongs not to our present subject to inquire. It is common to all men, and to be found in no other race of animals, which seem to know neither this nor any other species of contracts. (1784: 20)

I hold this to be nonsense. Ancient man – maybe even Nick the Neanderthal – must have rationally had to think: “if I do X service(s) or provide Y good(s) to my fellow man – homo sapiens stone-age Sid – he will in return give me X service(s) or Y good(s) which he is doing/producing that I want that he can make/do better than me.” I don’t see a random propensity of blind chance kicking off the whole universal division of labour from which springs forth the spectacular material gains, medical gains, knowledge gains, artistic gains and so forth that is unmatched in the animal kingdom. The ability to reason for this is our key distinguishing feature from the rest. Dawkins talks of replicators within us blindly replicating and those that replicate with amendments to the antecedent copy that are more conducive to successful competition will survive and prosper. Now, although we can’t prove the mind and body are one on strict scientific falsificationist experimentation and the mystery of why/how consciousness is still with us, you cannot deny that the two are inextricably linked in the physical world we occupy . Take parts of my brain out and you will soon find my consciousness goes. Where it goes, I have no idea. Commenting on the development of the consciousness Dawkins says: “Why this should have happened is, to me, the most profound mystery facing modern biology.” (1976:63) Dawkins highlights reasons as allowing us to be able to simulate events in advance as being able to predict outcomes that are detrimental to survival so that they can be avoided, and conducive to survival so it is advantageous to participate in them. This evolutionary process culminates in what I suggest we call reason. I hold that if we follow Dawkins, we can see we have evolved to develop reason to be able to allow us to acquire control over the division of labour via vast swathes of the resources of world that to our ancestors were hitherto unimaginable. For our nourishment, our material benefit, and through procreation, is reason focused . Thus the genes within us – or I just prefer to say “us” as a unified whole gene-consciousness body – have phenotypic effects not only on our fellow man, but the entire world with which we interact. For all I know, we could even be starting to have phenotypic effects outside of our world. Dawkins alludes to the phenotypic effects of genes and how they effect the world in this passage:

The phenotypic effects of a gene are normally seen as all the effects that it has on the body in which it sits. This is the conventional definition. But we shall now see that the phenotypic effects of a gene need to be thought of as all the effects that it has on the world. (1989:238)

However , he only hints at modest effects and gives some very specific, mundane (from a human point of view) examples:

All that I am going to add is that the tools may reach outside the individual body wall. What might it mean in practice to speak of a gene as having an extended phenotypic effect on the world outside the body in which it sits? Examples that spring to mind are artefacts like beaver dams, bird nests and caddis houses. (1989:238)

Unknown to Dawkins, I think he has connected biology correctly with the social sciences, via the extended phenotypic effect of what he calls “simulation” and that I call the ability to reason. When you can reason, you can create and explore such disciplines as economics, which provides the intellectual justification for the liberal program and not the Hobbesian or Thatcherite nightmare hitherto thought to be the outcome of a biological understanding. As Dawkins says: “Victorian myth, nature red in tooth and claw” (1989:233) and I would specifically apply this description to those who see the competitive market as an extension of “nature red in tooth and claw” to also be a myth. These are the massed ranks of the left and rightist anti-liberals and the social Darwinists, who as we have discovered, actually have nothing to do with Darwin at all. I will now set out the case for reason and its phenotypic ability to overwhelmingly produce social co-operation. Once again, I will use Mises, as of all the Liberals, he seems, as always, to be much more precise. He hits the nail on the head all the time, unlike Smith who is more prone to vagaries. For Mises, the division of labour produces more output per unit of labour used. Mises posits three conditions that satisfy the need for the social co-operation entailed in the division of labour. Firstly, man is unequal; secondly the resources of the earth are unequally distributed over various geographies and climates. If neither of these distinctions existed, the division of labour would not offer any advantages to man. The third and most important point is that co-operation is needed for man to work with his fellow man to produce things more productively. A lasting society is built on permanent co-operation. A war of all against all or a violent competitive struggle is anti-societal. Mises concludes:

The increase in productivity brought about by the division of labor is obvious whenever the inequality of the participants is such that every individual or every piece of land is superior at least in one regard to the other individuals or pieces of land concerned. If A is fit to produce in 1 unit of time 6 p or 4 q and B only 2 p, but 8q, they both, when working in isolation, will produce together 4 p +6 q; when working under the division of labor, each of them producing only that commodity in whose production he is more efficient than his partner, they will produce 6 p +8 q.(1949:158)

David Ricardo applied the principles of the universal division of labour not only to all trading nations who were excellent at their particular trading advantage, but he ingeniously applied this to show how areas of trade between a nation that was more efficient in all areas of trade verses the other nations in a particular geographic area were still better off trading, as productivity will increase in both areas. This became know as the law of comparative advantage. Mises explains this in a wider application of what he uniquely calls the law of association:

If A is in such a way more efficient than B that he needs for the production of 1 unit of the commodity p 3 hours compared with B ’s 5, and for the production of 1 unit of q 2 hours compared with B ’s 4, then both will gain if A confines himself to producing q and leaves B to produce p. If each of them gives 60 hours to producing p and 60 hours to producing q, the result of A ’s labor is 20 p + 30 q ;of B ’s, 12 p + 15 q ; and for both together, 32 p + 45 q. If, however, A confines himself to producing q alone, he produces 60 q in 120 hours, while B, if he confines himself to producing p, produces in the same time 24 p. The result of their activities is then 24 p + 60 q, which, as p has for A a substitution ratio of 3/2q and for B one of 5/4q, signifies a larger output than 32 p 45 q. Therefore it is manifest that the division of labor brings advantages to all who take part in it. Collaboration of the more talented, more able, and more industrious with the less talented, less able, and less industrious results in benefit for both. The gains derived from the division of labor are always mutual.

The law of association makes us comprehend the tendencies which resulted in the progressive intensification of human cooperation. We conceive what incentive induced people not to consider themselves simply as rivals in a struggle for the appropriation of the limited supply of means of subsistence made available by nature. We realize what has impelled them and permanently impels them to consort with one another for the sake of cooperation.

In order to comprehend why man did not remain solitary, searching like the animals for food and shelter for himself only and at most also for his consort and his helpless infants, we do not need to have recourse to a miraculous interference of the Deity or to the empty hypostasis of an innate urge toward association. Neither are we forced to assume that the isolated individuals or primitive hordes one day pledged themselves by a contract to establish social bonds. The factor that brought about primitive society and daily works toward its progressive intensification is human action that is animated by the insight into the higher productivity of labor achieved under the division of labor.(1949:159/160)

Mises also reminds us in ‘Socialism’ (1936: 314) that the division of labour starts within small communities and extends to encompass large parts of the population. It will never be complete, as the needs and preferences of people change all the time. Day by day, more and more people across the globe are slotted into their most competitive position in the market economy. It is not perfect as it is a amalgamation of people who are not perfect, but it is undoubtedly the most successful wealth creation mechanism discovered by man and discovered via his reason alone. Its workings are predicated on free exchange, social co-operation and harmony . That said, the economy is dynamic and always changing . This is not to say people will not try to abuse this situation of social co-operation by political or regulatory capture in order to secure exclusive rights and privileges to “rent seek” at the expense of others. This is called “crony capitalism” if it is a private sector activity. We see this most recently with the bankers, where they have secured bail outs that keep them employed at vastly inflated remuneration packages compared to their marginal productivity of labour, when they should on the whole be bankrupted as failed management and new capital owners, more successful ones, put in the place of the old shareholders who employed these sub-optimal people, to replace them with better talent . This is the law of the market and we have the law of state intervention protecting these privileged people. In the public sector its often called trade union activity, where a trade union will attempt to collectively enforce (by threats of violence, civil disobedience, strikes etc) a pay rate over and above the marginal productivity of labour, and force consumers to pay higher prices for the goods and services thus produced . There are many more examples, all equally as deplorable as the others as they seek privilege at the expense of their fellow man, and thoroughly anti social . However, much as some say the market is not perfect , we should not throw the baby out with the bathwater! We must always remember that one of the phenotypic effects of our genes – to aid procreation and successful multiplication – is the undeniable fact that if you co-operate with others, satisfy their most urgent needs and seek the same in return you will prosper and multiply. Seventeen million people walk though the doors of Tesco Plc, voluntarily, each and every week in the UK because Tesco gives them better goods and services at more affordable prices, in formats that those 17 million people want, when they want it. The shareholders provide on going capital to the management to continue to try to do this in the most efficient manner in exchange for a return on their investment. Voluntary co-operation writ large and no coercion abound in this model. Their competition with the other multiples is peaceful and driven solely by the wishes of the consumers expressing their sovereign choices by spending their money where they do. From the consumer preferences down, the management shapes its offer to serve them. This effects how capital is allocated to satisfy the most urgent needs of the consumers for profit. Where ever you see disharmony, if you look carefully you will see a government intervention, or a strongman/bandit at work, to favour one party over another party, or a court ruling to do the same. All intervention is anti-social and thus anti-cooperative and we should be very wary of it as some one, or some class of persons, is usually being exploited at the expense of others. We should be wary of the cloven hoof of envy which drives social legislation allegedly for our interests. Whilst I detest that extra layer of sponging, free-loading, useless government that sits on top of us extracting tribute called the European Union, I watch our government today arguing about a €1 trillion budget, which will be 1% of a €100 trillion GDP economy over the same period and focusing on the 0.3% of it that relates to the 3,000 or so salaries that are much higher than our PM’s! The cloven hoof focuses its attention on this as opposed to the 40% of money we pay inefficient farmers to produce product that people don’t want in the volumes produced, and to pay massively higher prices for them, which is far more conducive to social disharmony than the said salaries , much as I deplore the latter as well. Reject social Darwinism, as it has nothing to do with Darwin or his modern apostle Dawkins. Dawkins has stimulated me to show how potentially the phenotypic effects of co-operation could coherently link biology with economics. This is a magnificent thing! I hope he and other Darwinists find this thesis of mine of interest. If we take it that our genes have produced our consciousness and our rationality, the phenotypic effects then result like night follows day. This allows us to lift ourselves out of autarkic or small hunter gatherer groupings in order to seek to co-operate, in peaceful social harmony with our fellow man. Then I say, in the language of Dawkins: embrace and glorify our genes – don’t rebel against them. Bibliography Darwin, Charles (1896), The Descent of Man, London , John Murray Dawkins, Richard (1976), The Selfish Gene , Oxford University Press Dawkins, Richard (1989), The Selfish Gene, Oxford University Press Hobbes, Thomas ( 1651), Leviathan , London, Andrew Crooke Mises, Ludwig von (1936), Socialism , London, Jonathan Cape Mises, Ludwig von (1949), Human Action , Yale Smith, Adam (1784), The Wealth of Nations, London, W.Strahan and T Cadell, in the Strand.