Thursday, January 31, 2013

#19.1 The Austrian School, agreements and divergences – Part 1

This series is going to be a gloss on a glyph of the Austrian School of Economics. The purpose is to make clear the agreements and disagreements between (the or an) VEN and ideas proposed and discussed by the Austrian economists. The glyph is the standard encyclopedia article presumed to be among the most official that appeared on the official von Mises Institute website. Words from the article will be in blue, mine in black as usual. I'm also including, at the end, all the notes that appeared in the original for those who would like to do further research.

The Austrian School of Economics is a school of economic thought that derives its name from its Austrian founders and early supporters, including Carl Menger, Eugen von Böhm-Bawerk and Ludwig von Mises. Other significant Austrian writers and economists include Murray Rothbard, Nobel Laureate Friedrich Hayek and journalist Henry Hazlitt. Current research is produced by, among many others, scholars from the Ludwig von Mises Institute, and "Austrian" economists can now come from any part of the world. They are identified with the School through their shared views on the nature of economic science and its proper methodology.

The Nobel Laureate reference is duly noted and discarded, as the entire integrity of the Nobel prize and its claims to authority or infallibility are disclaimed: the Nobel prizes have always been nothing but to showcase those whose efforts are blessed by the elites and nothing more. We aren't impressed and we don't care what rewards anyone has won, all we care about is the truth. As was the case with Ayn Rand, we aren't going to be following anyone's particular lead if it does not prove accurate or truthful. We will cherry pick as we go along.

The [Austrian] school emphasizes the spontaneous organizing power of the price mechanism and holds that the complexity of subjective human choices makes mathematical modeling of the evolving market practically impossible and therefore its scholars eschew what they consider "naïve" and pointless mathematical modeling of the economy, considering much of mainstream economics a form of economic charlatanism.[1]

We agree, so much so that several examples could well prove the point, but again we will need another post to discuss this. E. C. Riegel recognized the spontaneous organizing power of the price mechanism as “price relativity.” However, Riegel maintained that price relativity had nothing to do with the stability of the money, his “value unit” the actual yardstick we are at present forbidden by trademark to use his name for [Thanks, Laurence!], certainly would have maintained that price wobbles should not be affected by known causes of inflation.

Its [the spontaneous organizing power of the price mechanism] proponents tend to advocate the strong protection of private property rights and the strict enforcement of voluntary contractual agreements between economic agents, 

We will also. They will all be called credit contracts and their terms and types will also be described in a future post.

but otherwise advocate a laissez-faire approach to the economy and hold that the smallest imposition of coercive FORCE (especially government-imposed FORCE) on commercial transactions is the most effective way to secure [sic] [impair] long-run economic stability and well-being.

We agree with this too. This is actually the way it reads on the website. I have corrected it here. Someone at the von Mises Institute should really get around to changing this as it leaves the wrong impression.

In particular, they [the Austrian school economists] voice serious concerns about the distorting and damaging effects of government involvement in commerce, arguing that few government regulations in this area are necessary or desirable and often trigger a "ratchet effect" as problems associated with existing regulations are often blamed on the free market, thereby justifying further damaging, coercive incursions into the market.

We recognize the phenomenon and have seen the cause, which the Austrian school fails to notice; the costs of regulation are meant to set up an artificial barrier to competition from below the level of the huge multinational limited liability corporations, supported by the too big to fail banks. The (or an) VEN would never allow the so called “public” corporation as a member, because we do not recognize or accept absentee ownership of any business as legitimate. And limited liability is likewise discarded as recognized as nothing more than a desire to get away with any damages the enterprise might cause. Neither of these will be allowed in (the or an) VEN to any of its members.

They are particularly critical of long-standing governmental incursions into the area of private money production, advocating instead the immediate abolition of all coercive legal tender laws and the return to full reserve - or free - banking, where the financial system is decentralized and not dominated or controlled by coercive monopoly government or a monopoly central bank.

Breaking it down: by long-standing governmental incursions into the area of private money production this could not equate better to E. C. Riegel's understanding of watering down legitimate money with illegitimate money created as we all know by government borrowing from a central bank at interest and then becoming the largest buyer in an economy purchasing what seems necessary to itself with secondary reference to the needs of the people. This practice will not happen in (the or an) VEN. All the money will be legitimate [despite whatever certain people like Laurence Gilbert might suppose to the contrary.].

We also very clearly advocate the immediate abolition of all coercive legal tender laws. If parties to an VEN accepted credit contract involving the sale of any major capital item, a car, house, boat, farm, etc. they will all assume that all such legal tender laws are unlawful and not binding on them. In fact such language would be included in every legitimate credit contract to pass through an IE.

We would accept only
full reserve financing. The word banking itself is misleading, since one usually imagines one's money in a bank is always there, when under fractional reserve banking, it might not always be there. The control sites of (the or an) VEN will be known as exchanges, not banks. Each member will have an account and the money they have, also called exchange notes rather than bank notes, will always be there, there will not be any need to wait to make a simple transaction, nor will there be any need whatever for deposit insurance. The money in any account will always be there and belong to the member, not the exchange.

The VEN financial system will be decentralized and not dominated or controlled by coercive monopoly government or a monopoly central bank.


While the Austrian School of Economics has connections as far back as the 15th century, it began with notable 19th century economists of Austrian origin. It is recognized to have emerged after the publication in 1871 of a trilogy of works (by Jevons, Walras, and Menger) which introduced the idea of the subjective theory of value and began what has been called “the marginal revolution” in economic thought.[2]

Other early theorists of the Austrian School were Eugen von Böhm-Bawerk, Ludwig von Mises, Friedrich Hayek, and Friedrich von Wieser. Austrian economists no longer need be from Austria, and the term describes a particular school of economic thought rather than the nationality of its practitioners.

Pre-Austrian Economists

With noted contributions of earlier thinkers, like Nicole Oresme, the Austrian school traces its roots to the followers of St. Thomas Aquinas, writing and teaching at the University of Salamanca in Spain.

These Late scholastics established the first modern economic theories and argued, in current terms, for free trade and property rights. Over the course of several generations, they discovered and explained the laws of supply and demand, the cause of inflation, the operation of foreign exchange rates, and the subjective nature of economic value. They were advocates of property rights and the freedom to contract and trade.

We too are advocates of property rights and the freedom to contract and trade. We again wish to point out here that the so called legal tender laws stand directly against the freedom to contract and trade and are thus unlawful, only applicable under cover of law.

"Austrians share the scholastic belief that there is no such thing as an economic science dealing with autonomous variables. Economic problems are aspects of larger social phenomena; and it is most expedient to deal with them as such, rather than to analyze them in some twisted separation."[3]

We too would be relatively unimpressed by such mathematical modelling as proving nothing concrete about how real economies would behave.

The first general treatise on economics, Essay on the Nature of Commerce, was written in 1730 by Richard Cantillon, a man schooled in the scholastic tradition. Born in Ireland, he emigrated to France. He saw economics as an independent area of investigation, and explained the formation of prices using the "thought experiment." He understood the market as an entrepreneurial process, and held to an Austrian theory of money creation: that it enters the economy in a step-by-step fashion, disrupting prices along the way.

This is a simple theoretical idea that starts from observed phenomena, the prices of everyday items relative to how much money one has committed to buying, and extends the ideas in both directions; back to the issuance of the first legitimate money and forward into the future of prices and their relative stability in a properly functioning market.

Cantillon was followed by Anne Robert Jacques Turgot, the pro-market French aristocrat and finance minister under the ancien regime, one of the Physiocrats. His economic writings were few but profound. His paper "Value and Money" spelled out the origins of money, and the nature of economic choice: that it reflects the subjective rankings of an individual's preferences. Turgot solved the famous diamond-water paradox that baffled later classical economists, articulated the law of diminishing returns, and criticized usury laws (a sticking point with the Late Scholastics). He favored a classical liberal approach to economic policy, recommending a repeal of all special privileges granted to government-connected industries.

The diamond-water paradox is the idea that water being plentiful costs less than diamonds, being rare, therefore costs cannot be related to value since water is infinitely more valuable than diamonds. The paradox is supposedly solved by defining marginal and total utility and ranking them. This invites more probably pointless mathematical modelling. But there is another reason why we would approach this subject from a different perspective; (the or an) VEN seeks to discourage as far as possible, opportunities to speculate on future prices. We consider this as market manipulation by those who either have more at stake than anyone else in the market due to scale or have no direct interest in the market but to make money on money without providing value. We wont be having it.

Turgot was the intellectual father of a long line of great French economists of the eighteenth and nineteenth century, most prominently Jean-Baptiste Say and Claude Frédéric Bastiat. Say was the first economist to think deeply about economic method. He realized that economics is not about the amassing of data, but rather about the verbal elucidation of universal facts (for example, wants are unlimited, means are scarce) and their logical implications.

We will all be more concerned with the verbal elucidation of universal facts as participation in a truly free economy develops. But by the way, wants are unlimited, means are scarce tends to support the perception that everything is scarce and scarcity gives something its value. This only can apply at any given moment in time, not over the long run, someone's lifetime, etc. Certainly at any given moment in time, this statement tends to be true, but of what relevance is it to anyone in a local area at a particular time choosing between a dozen eggs or a hunk of cheese with the limited money allocated for spending? The world of everything that can or would be bought or sold is a world of information that simply cannot be gathered together for any useful purpose. The internet comes about as close to this as it is possible to get and yet maybe the best deals for similar items are in local free newspapers. Saying something obvious like wants are unlimited, means are scarce does not necessarily mean that it has any relevance to normal day to day economic activity.

Say discovered the productivity theory of resource pricing, the role of capital in the division of labour, and "Say's Law": there can never be sustained "overproduction" or "underconsumption" on the free market if prices are allowed to adjust.

Yes, we agree.

He [Jean-Baptiste Say] was a defender of laissez-faire and the industrial revolution, as was Bastiat. As a free-market journalist, Bastiat also argued that non-material services are subject to the same economic laws as material goods.

We also agree with all of this.

In one of his many economic allegories, Bastiat spelled out the "broken-window fallacy" later popularized by Henry Hazlitt. 

Here's a link for this. 

Despite the theoretical sophistication of this developing pre-Austrian tradition, the British school of the late eighteenth and early nineteenth centuries won the day, mostly for political reasons. This British tradition (based on the objective-cost and labour-productivity theory of value) ultimately led to the rise of the Marxist doctrine of capitalist exploitation. 

We agree with this analysis too. The political reasons all involve power, empire, hegemony, etc. and have nothing to do with the needs of the indigent or the aspirations of the middle classes. I remind you all that the level of civilization in any country, in any region of the world, is directly proportional with the success of the middle classes and nobody else. Where the middle classes are weak or few, the level of civilization falls accordingly. As the numbers of the middle class grow, civilization improves. The rich, those above the level of the John Galts, are usually destructive of civilization and the poor are ... poor. We have identified (in the #18 John Galt series) a difference between the “pillar of the community,” the John Galt, who may be wealthy and the plutocrats of the gloabalist elites and their minions. We offer a solution for the poor. We have a solution for the pillars of their communities too. We have a solution for the middle classes. The plutocrats both in and out of government, are on their own.  

The First Austrians

The dominant British tradition received its first serious challenge in many years when Carl Menger's Principles of Economics was published in 1871. Menger, the founder of the Austrian School proper, resurrected the Scholastic-French approach to economics, and put it on firmer ground.

Together with the contemporaneous writings of Leon Walras and Stanley Jevons, Menger spelled out the subjective basis of economic value, and fully explained, for the first time, the theory of marginal utility (the greater the number of units of a good that an individual possesses, the less he will value any given unit).

... solving the diamond-water paradox.

In addition, Menger showed how money originates in a free market when the most marketable commodity is desired, not for consumption, but for use in trading for other goods.

Here is where we diverge from the Austrians. Do you see where this is going? What would become the most MARKETABLE commodity desired emphasis mine, not for consumption, but for use in trading for other goods? It could only be precious metals; gold and silver. We therefore say of these people directly, all the Austrian economists, that they have not understood the basic demonstrable and obvious nature and purpose of money AT ALL. Money exists to split barter and it is backed ONLY by what it buys. It does not require ANY intrinsic value to fulfil this function, period! Money must be a yardstick of value for everything else and be independent of any value in and of itself, otherwise it ceases to function as a reliable yardstick of value because it's value is determined ... by bullion brokers in London or New York.

You cannot get around this. By accepting ANY commodity as a vehicle for trade (money to close split barter trades), one accepts that there will be fluctuations created by those who have enough of the commodity to rig the market. The prices for precious metals are set in the major national currencies in London or New York (they used to be set in Babylon and Jerusalem).

We said in an earlier post that there was no reason why a farmer selling a dozen eggs need concern himself with the price of an oz. of gold or silver and we meant it. There is only one suitable purpose for the precious metals at this late date in the history of economic systems; as a means of exchange between the emerging Value Unit world and the crumbling worlds of the major currencies.

If you were buying an oz. of gold with Value Units, its price would be affected by two things, 1) the price of gold at the inception of the Value Unit, which we said was 1,000 Value Units to the oz. and 2) whatever the manipulators of gold or silver prices had been doing since then and might be doing in the future (we said they needed to try and force the metals prices down, because if not, their paper system would look less attractive to investors; it will anyway).

At the date this is written (30 January, 2013), an oz. of gold is cheaper in Value Units than at inception. How much cheaper? Around 3% cheaper; 971.82 Value Units instead of 1,000. You'd be interested to know that since the proposed inception of the Value Unit (on 2 November, 2011), this value has changed less than 5% and has usually remained within 3%, and usually in favour of the Value Unit; from a dollar perspective it takes more dollars to buy Value Units than at inception. If the Value Unit holds its value this well when assessing gold and silver, it can certainly be counted upon as sturdy enough to measure the value of a dozen eggs or anything else for that matter.

Menger's book was a pillar of the "marginalist revolution" in the history of economic science. When Mises said it "made an economist" out of him, he was not only referring to Menger's theory of money and prices, but also his approach to the discipline itself. Like his predecessors in the tradition, Menger was a classical liberal and methodological individualist, viewing economics as the science of individual choice. His Investigations, which came out twelve years later, battled the German Historical School, which rejected theory and saw economics as the accumulation of data in service of the state.  

We believe that the German Historical School, which rejected theory and saw economics as the accumulation of data in service of the state is for the most part what academic economics has become and still is. 

They took great exception to his defence of "theory" and gave the work of Menger and his followers the derogatory name "Austrian school" because of their faculty positions at the University of Vienna. The term stuck.[4]

As professor of economics at the University of Vienna, and then tutor to the young but ill-fated Crown Prince Rudolf of the House of Habsburg, Menger restored economics as the science of human action based on deductive logic, and prepared the way for later theorists to counter the influence of socialist thought. Indeed, his student Friederich von Wieser strongly influenced Friedrich von Hayek's later writings. Menger's work remains an excellent introduction to the economic way of thinking.

Menger's admirer and follower at the University of Innsbruck, Eugen von Böhm-Bawerk, took Menger's exposition, reformulated it, and applied it to a host of new problems involving value, price, capital, and interest.

Yes, interest. Anyone who views prices as having anything to do with interest, obviously accepts and believes in the present monetary system including usury. Identity is A = A. If one takes out a loan for A and must pay back A+X%(A), clearly A is no longer A. The extra was not created, therefore it must be taken from someone else. (Some refer to this as the eleventh marble.) No matter how much of this debt based money is issued, the end results are just the same, eventually the debt service starves the legitimate economy in a monetary environment where actual units of money are kept artificially scarce because there are fewer units loaned out then are demanded back. We do not quibble about any laws restricting interest rates, we view ANY interest on loans as usury.

Yes, there are different prices for the same thing on the same day at a particular place and there are reasons for this that will be discussed, but E. C. Riegel contended that this simple mathematical fact (the eleventh marble that was not created that must be repaid) was the reason that any system built on usury would ultimately fail, every time, and history has shown that it has many times before this and will likely fail once again. In fact, there is no reason why continuing any monetary system allowing usury wouldn't assuredly cause the collapses to become more frequent.

There IS a workable solution that will be covered in a future post too. So, unlike the Austrians, who you will see view usury laws as mistaken because they interfere with a right to set terms of contracts based on risk, the E. C. Riegel camp would see that differences in price reflect the buyer's ability to pay with available money. The Austrians have a fancy name for this. They call it “time preference.”

His History and Critique of Interest Theories, appearing in 1884, is a sweeping account of fallacies in the history of thought and a firm defense of the idea that the interest rate is not an artificial construct but an inherent part of the market. It reflects the universal fact of "time preference," the tendency of people to prefer satisfaction of wants sooner rather than later (a theory later expanded and defended by Frank Fetter[5]).

Böhm-Bawerk's Positive Theory of Capital demonstrated that the normal rate of business profit is the interest rate. Capitalists save money, pay laborers, and wait until the final product is sold to receive profit.

This concept, that the normal rate of business profit is the interest rate can be expressed differently in terms that remain true to A = A while dismissing the concept of interest entirely. Price differentials are related to time of course, but they are principally related to money available to the buyer at the time of sale. Elements of risk as well as savings rates are influenced by choices involving buying on credit vs. saving for later purchases. 

In addition, he [Böhm-Bawerk] demonstrated that capital is not homogeneous but an intricate and diverse structure that has a time dimension. A growing economy is not just a consequence of increased capital investment, but also of longer and longer processes of production.

Böhm-Bawerk engaged in a prolonged battle with the Marxists over the exploitation theory of capital, and refuted the socialist doctrine of capital and wages long before the communists came to power in Russia. Böhm-Bawerk also conducted a seminar that would later become the model for Mises's own Vienna seminar.

We may look into this.

Böhm-Bawerk favored policies that deferred to the ever-present reality of economic law. He regarded interventionism as an attack on market economic forces that cannot succeed in the long run. 

If the goals are price stability, or full employment, interventionism by FORCE does not work, produces unforeseen consequences, etc. But the entire cavalcade of problems including governments being principle buyers in most societies, the debt basis of money everywhere, fractional reserve banking, central banking, all of it, make prospects for anything better quite dismal.

In the last years of the Habsburg monarchy, he [Böhm-Bawerk] three times served as finance minister, fighting for balanced budgets, sound money and the gold standard, free trade, and the repeal of export subsidies and other monopoly privileges.

Balanced budgets are possible only when governments are not allowed to go into debt to pay for their excesses and must face the electorate for taxes directly.  

Sound money is a loaded concept refuted by E. C. Riegel and others. The only backing money has is what it buys, period, end of story. Any other proposition is a LIE. The gold standard as we have also indicated only benefits those who control the gold and the same goes for silver. We do not plan on making use of precious metals for anything beyond getting people with capital out of the crumbling debt based currencies and into Value Units.

We are probably the only people on earth who have a genuine idea about how to foster genuine free trade, and we'd certainly support repeal of export subsidies and other monopoly privileges. 

Mises and Hayek

It was Böhm-Bawerk's research and writing that solidified the status of the Austrian School as a unified way of looking at economic problems, and set the stage for the School to make huge inroads in the English-speaking world. But one area where Böhm-Bawerk had not elaborated on the analysis of Menger was money, the institutional intersection of the "micro" and "macro" approach. The young Ludwig von Mises[6], economic adviser to the Austrian Chamber of Commerce, took on the challenge.

The result of Mises's research was The Theory of Money and Credit, published in 1912. He spelled out how the theory of marginal utility applies to money, and laid out his "regression theorem," showing that money not only originates in the market, but must always do so.

Let's read that again; money not only originates in the market, but must always do so. This is almost exactly what E. C. Riegel would say. He expresses it as being issued by those who need to trade with others with the understanding that they will accept the same money in payment for their goods or services.

Drawing on the British Currency School, Knut Wicksell's theory of interest rates, and Böhm-Bawerk's theory of the structure of production, Mises presented the broad outline of the Austrian theory of the business cycle. A year later, Mises was appointed to the faculty of the University of Vienna, and Böhm-Bawerk's seminar spent a full two semesters debating Mises's book.

Mises's career was interrupted for four years by World War I. He spent three of those years as an artillery officer, and one as a staff officer in economic intelligence. 1919, at war's end, he published Nation, State, and Economy, arguing on behalf of the economic and cultural freedoms of minorities in the now-shattered [Austria-Hungarian] empire, and spelling out a theory of the economics of war. Meanwhile, Mises's monetary theory received attention in the U.S. through the work of Benjamin M. Anderson, Jr.[7], an economist at Chase National Bank. (Mises's book was panned by John Maynard Keynes, who later admitted he could not read German.[citation needed]) 

Which probably means Keynes didn't even read it.

In the political chaos after the war, the main theoretician of the now-socialist Austrian government was Marxist Otto Bauer. Knowing Bauer from the Böhm-Bawerk seminar, Mises explained economics to him night after night, eventually convincing him to back away from Bolshevik-style policies.[citation needed] The Austrian socialists never forgave Mises for this, waging war against him in academic politics and successfully preventing him from getting a paid professorship at the university.

Socialism was the brain child of certain people who had in mind exactly what Rand claimed for them; a successor to the failed spiritual mysticism of the past, which demanded of its adherents the same kind and degree of fanatical belief. This is also a fundamental trait of ideologists. They begin with a mystical idealized view of the world -an idealism- and then there are just two camps of people; those who support it and those that oppose the belief. Socialism was also being propagated and paid for by the banking elites from behind the scenes and many of the journalists involved in selling socialism to the masses were their agents. This is all by this time very well documented.

Undeterred, Mises turned to the problem of socialism itself, writing a blockbuster essay in 1921, which he turned into the book Socialism over the next two years. Socialism permits no private property or exchange in capital goods, and thus no way for resources to find their most highly valued use. Socialism, Mises predicted, would result in utter chaos and the end of civilization.

It did in certain places end civilization, killed a lot of people too, but the key words here concerning socialism are that it permits no private property or exchange in capital goods thus making these economies inherently stagnant or non functioning. As we will see in a future post, the key to it all concerns finance, as without finance, much that falls under private property and capital goods could not trade.

There are doubtless some out there who right now are going to jump to the conclusion that interest rates are necessary. We can show how differences in price for the same thing on the same day are really reflected differently based solely on how much money one has to make the purchase. To the Austrians, “time preference” is the buyers and determines how much he is willing to pay over what period of time to secure private property or capital goods. To be continued .

David Burton

Monday, January 21, 2013

#18.17 Gleanings from the John Galt Speech – Part 17

John Galt continues discussing physical vs. mental labour,

This is mutual trade to mutual advantage; the interests of the mind are one, no matter what the degree of intelligence, among men who desire to work and don’t seek or expect the unearned.

This too is a LIE, the elites definitely do seek and expect the unearned, else they wouldn't have risen without effort and figured out how to stay there.

In proportion to the mental energy he spent, the man who creates a new invention receives but a small percentage of his value in terms of material payment, no matter what fortune he makes, no matter what millions he earns.

We just said this, so we agree except that Rand never ever bothers to disclose the role of the banker / financier in all of it.

But the man who works as a janitor in the factory producing that invention, receives an enormous payment in proportion to the mental effort that his job requires of him.

Note this fallacy as well, deliberately created out of imposed scarcity; Galt's (the elites') message is that the common labouring man should be damn glad to get whatever he gets from participation in whatever enterprise he serves because he receives an enormous payment in proportion to the mental effort that his job requires of him. Labouring men of the world, you've just been shit on!

And the same is true of all men between, on all levels of ambition and ability. The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time.

Oh yes he does if he's even half smart, they're called royalties and it's how many out of work actors and actresses earn lots of extra money from cameos on ads, etc.

The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the ‘competition’ between the strong and the weak of the intellect. Such is the pattern of ‘exploitation’ for which you have damned the strong.

Actually the strong of mind would have NOTHING without those strong of body doing all the heavy lifting, so let's get that one perfectly straight. But we are further instructed to believe that the weak of body and strong of mind somehow deserve more payment than the even meagre remunerations given the physically strong. We believe the market, unfettered by all the ways it has been warped, should decide and in most cases physical work will have to be paid more than it is today across the board. We also have good reasons to doubt the real value of much that the physically weak and so called intellectually strong really produce. That too should ultimately be decided within a genuinely free market.

Such was the service we had given you and were glad and willing to give. What did we ask in return? Nothing but freedom. We required that you leave us free to function-free to think and to work as we choose-free to take our own risks and to bear our own losses-free to earn our own profits and to make our own fortunes-free to gamble on your rationality, to submit our products to your judgement for the purpose of a voluntary trade, to rely on the objective value of our work and on your mind’s ability to see it-free to count on your intelligence and honesty, and to deal with nothing but your mind.

But to suppose that any of this really works as advertised is a delusion. The reality is that all this is true until one gets to incorporation as a “limited liability” entity, which may then grow much larger than economic realities would normally permit and then becomes “too big to fail” as when becoming the only employer in a particular geographic area, etc. It doesn't matter then whether the enterprise is profitable or not, all that is a matter of accounting, which can be tweaked any number of ways to either show great profits or great losses, simply by reporting or not reporting actual expenses of doing business. Should the business have injured someone with their product, they can use their limited liability status to get around it. Otherwise they might have to close down or sell to someone else.

Such was the price we asked, which you chose to reject as too high. You decided to call it unfair that we, who had dragged you out of your hovels and provided you with modern apartments, with radios, movies and cars, should own our palaces and yachts-you decided that you had a right to your wages, but we had no right to our profits, that you did not want us to deal with your mind, but to deal, instead, with your gun. Our answer to that, was: ‘May you be damned!’ Our answer came true. You are [damned].

It's really important to point out here that only very occasionally did any inventor or potentate of business live in a palace, though they might have lived better than most, nor did most of them maintain yachts. But of course the elitists of whom we have spoken throughout this series, very often live in palaces and may even have several around the globe and might own fleets of yachts if they wished. We aren't here discussing the upper middle class John Galts of farming and industry. Rand would like them to think their enemies are those beggars with nothing and their political supporters in the “Robin Hood government” which does seek to take what belongs to you. No, your natural enemies are the robber barons above your heads with financial resources you could only dream of. Those are the sharks and you are their prey, since you have things they want to steal.

You did not care to compete in terms of intelligence-you are now competing in terms of brutality.

It's not that simple and never was. Everything is paid for one way or another, brutality included. Those who were brutal after the 1917 Bolshevik takeover of Czarist Russia were paid by the same banking interests that saw to it that the red experiment survived the inevitable white backlash, which was starved of funding until it crumbled away. In that period 60 million people were wiped out. Those who run the media would of course like the world to forget that this massive crime ever happened, but every ethnic Russian family knows damn well what went down there and if Americans are ever foolish enough to disarm, the same fate is planned for them too. We especially want the world to know how much the elitists HATE you and want you all dead.

You did not care to allow rewards to be won by successful production-you are now running a race in which rewards are won by successful plunder.

Your projection upon others is laid bare for all to see. It is the elitists who are the plunderers of any successful production.

You called it selfish and cruel that men should trade value for value-

We don't.

you have now established an unselfish society where they trade extortion for extortion. Your system is a legal civil war, where men gang up on one another and struggle for possession of the law, which they use as a club over rivals, till another gang wrests it from their clutch and clubs them with it in their turn, all of them clamouring protestations of service to an unnamed public’s unspecified good.

Which is why we cannot advocate any idea that any government anywhere deserves the role of issuing money. The “public interest” is at least as wide as what the two political parties decide it is in the American democracy sense. Sorry Bill Still and others. In order to get the government back into operating as a republic, its powers must be severely limited, which among other things would mean a non-debtor status for all governments and the end to central banking everywhere.

You had said that you saw no difference between economic and political power, between the power of money and the power of guns-no difference between reward and punishment, no difference between purchase and plunder, no difference between pleasure and fear, no difference between life and death. You are learning the difference now.

People would learn pretty damn quick if the John Galts just got together and decided they had had enough of the lies, cheating and swindling of the elites and their minions and just walked out on them.

Some of you might plead the excuse of your ignorance, of a limited mind and a limited range. But the damned and the guiltiest among you are the men who had the capacity to know, yet chose to blank out reality, the men who were willing to steel their intelligence into cynical servitude to FORCE: the contemptible breed of those mystics of science who profess a devotion to some sort of ‘pure knowledge’-the purity consisting of their claim that such knowledge has no practical purpose on this earth-who reserve their logic for inanimate matter, but believe that the subject of dealing with men requires and deserves no rationality, who scorn money and sell their souls in exchange for a laboratory supplied by loot.

Ah well, there is much of this. A certain government agency set up to study oceans and the atmosphere might certainly be counted among them as well as anyone who had anything to do with that massive mad scientist project up in Alaska known as HAARP.

And since there is no such thing as ‘non-practical knowledge’ or any sort of ‘disinterested’ action, since they scorn the use of their science for the purpose and profit of life, they deliver their science to the service of death, to the only practical purpose it can ever have for looters: to inventing weapons of coercion and destruction. They, the intellects who seek escape from moral values, they are the damned on their earth, theirs is the guilt beyond forgiveness. Do you hear me, Dr. Robert Stadler?

Another character was invented to represent the “scientist” who sided with those seeking more FORCE with which to coerce “the masses.” Wikipedia has this to say about him:

“Dr. Robert Stadler - A former professor at Patrick Henry University, mentor to Francisco d'Anconia, John Galt and Ragnar Danneskjöld. He has since become a sell-out, one who had great promise but squandered it for social approval, to the detriment of the free. He works at the State Science Institute where all his inventions are perverted for use by the military, including the instrument of his demise: Project X (Xylophone). The character was, in part, modelled on J. Robert Oppenheimer, whom Rand had interviewed for an earlier project, and his part in the creation of nuclear weapons. To his former student Galt, Stadler represents the epitome of human evil, as the "man who knew better" but chose not to act for the good.”

There are many ways in which “men of science” are coerced into serving evil. The results are just the same as they were in Rand's fiction.

But it is not to him that I wish to speak. I am speaking to those among you who have retained some sovereign shred of their soul, unsold and unstamped: ‘-to the order of others.’ If, in the chaos of the motives that have made you listen to the radio tonight, there was an honest, rational desire to learn what is wrong with the world, you are the man whom I wished to address. By the rules and terms of my code, one owes a rational statement to those whom it does concern and who’re making an effort to know. Those who’re making an effort to fall to understand me, are not a concern of mine.

We proclaim the same about our open criticisms of their institutions and their practices and as you will see, the enemies identified below can only possibly fit the elites and their supporters in and out of the governments they have turned into their debtors.

I am speaking to those who desire to live and to recapture the honour of their soul. Now that you know the truth about your world stop supporting your own destroyers. The evil of the world is made possible by nothing but the sanction to give it. Withdraw your sanction. Withdraw your support. Do not try to live on your enemies’ terms or to win at a game where they’re setting the rules. Do not seek the favour of those who enslaved you, do not beg for alms from those who have robbed you, be it subsidies, loans or jobs, do not join their team to recoup what they’ve taken by helping them rob your neighbours. One cannot hope to maintain one’s life by accepting bribes to condone one’s destruction. Do not straggle for profit, success or security at the price of a lien on your right to exist. Such a lien is not to be paid off; the more you pay them, the more they will demand; the greater the values you seek or achieve, the more vulnerably helpless you become. Theirs is a system of white blackmail devised to bleed you, not by means of your sins, but by means of your love for existence.


Do not attempt to rise on the looters’ terms or to climb a ladder while they’re holding the ropes. Do not allow their hands to touch the only power that keeps them in power: your living ambition. Go on strike-in the manner I did. Use your mind and skill in private, extend your knowledge, develop your ability, but do not share your achievements with others. Do not try to produce a fortune, with a looter riding on your back. Stay on the lowest rung of their ladder, earn no more than your barest survival, do not make an extra penny to support the looters’ state. Since you’re captive, act as a captive, do not help them pretend that you’re free. Be the silent, incorruptible enemy they dread. When they force you, obey-but do not volunteer. Never volunteer a step in their direction, or a wish, or a plea, or a purpose. Do not help a holdup man to claim that he acts as your friend and benefactor. Do not help your jailers to pretend that their jail is your natural state of existence. Do not help them to fake reality. That fake is the only dam holding off their secret terror, the terror of knowing they’re unfit to exist; remove it and let them drown; your sanction is their only life belt.

Agreed, again “come out of her, my people” is always the correct response. We might point out incidentally that in every totalitarian nation that has ever risen, there were refugees created who voted with their feet. We also appeal to all the thugs out there that have been hired to keep “the masses” in order; you'll have more friends among us than any payment you receive from them is worth, and no matter how well you serve them, they will never allow you to join them. Therefore walk away from them, do not participate in their secretly concocted evil plans for world domination and destruction of humanity. They care not for you. As soon as they have you liquidate some inconveniently located population, they will liquidate you. They do not care about you, after all to them, all you do is physical labour that's only worth whatever it takes to feed you.

If you find a chance to vanish into some wilderness out of their reach, do so, but not to exist as a bandit or to create a gang competing with their racket; build a productive life of your own with those who accept your moral code and are willing to struggle for a human existence. You have no chance to win on the Morality of Death or by the code of faith and FORCE; raise a standard to which the honest will repair: the standard of Life and Reason.

That's what we and many others are doing right now.

Act as a rational being and aim at becoming a rallying point for all those who are starved for a voice of integrity-act on your rational values, whether alone in the midst of your enemies, or with a few of your chosen friends, or as the founder of a modest community on the frontier of mankind’s rebirth.

Amazing that Galt / Rand saw this as necessary; a modest community on the frontier of mankind’s rebirth fits the present situation fairly well.

When the looters’ state collapses, deprived of the best of its slaves, when it falls to a level of impotent chaos, like the mystic-ridden nations of the Orient, and dissolves into starving robber gangs fighting to rob one another-when the advocates of the morality of sacrifice perish with their final ideal-then and on that day we will return.

We will return long before that happens which is why taking seriously the prospect of starting a new monetary system (the or an) VEN makes the most sense right now.

We will open the gates of our city to those who deserve to enter, a city of smokestacks, pipe lines, orchards, markets and inviolate homes. We will act as the rallying centre for such hidden outposts as you’ll build. With the sign of the dollar as our symbol-the sign of free trade and free minds-we will move to reclaim this country once more from the impotent savages who never discovered its nature, its meaning, its splendour. Those who choose to join us, will join us; those who don’t, will not have the power to stop us; hordes of savages have never been an obstacle to men who carried the banner of the mind.

If you are beginning to think this is all in Rand's mind, with her emphasis on the importance of thinking rather than doing, etc. you aren't alone. With the sign of the dollar as our symbol for one thing should ring hollow as should the sign of the euro, the yen, the whatever central bank issued “bad notes” are used in the exchange process.

Then this country will once more become a sanctuary for a vanishing species: the rational being.

I beg your pardon? Every country in the world has rational beings living in it, the one's that are the most chaotic have the most irrational beings living there, places like Somalia perhaps. As we said, what keeps a place civilized is that just about everyone acts in accordance with rational decisions and doesn't give the merest thought about some distant or unseen government demanding social order from them. People remain sane by being sane. There isn't any other reason. When a regime becomes totalitarian and starts bullying and killing its people, then people usually flee it and become refugees.

The political system we will build is contained in a single moral premise: no man may obtain any values from others by resorting to physical FORCE.

This is the first principle.

Every man will stand or fall, live or die by his rational judgement. If he fails to use it and falls, he will be his only victim. If he fears that his judgement is inadequate, he will not be given a gun to improve it. If he chooses to correct his errors in time, he will have the unobstructed example of his betters, for guidance in learning to think; but an end will be put to the infamy of paying with one life for the errors of another.

With the exception of the word betters, we are in general agreement, but it sounds more harsh than it needs to be and under a Value Unit system it will be anything but harsh. So, why is Rand and those who back her so angry about the poor?

In that world, you’ll be able to rise in the morning with the spirit you have known in your childhood: that spirit of eagerness, adventure and certainty which comes from dealing with a rational universe. No child is afraid of nature; it is your fear of men that will vanish, the fear that has stunted your soul, the fear you acquired in your early encounters with the incomprehensible, the unpredictable, the contradictory, the arbitrary, the hidden, the faked, the irrational in men.

Now that we know about it, and from whence most of it comes, perhaps we can.

You will live in a world of responsible beings, who will be as consistent and reliable as facts; the guarantee of their character will be a system of existence where objective reality is the standard of the judge.

Is this a hope, or an idealism? We will in future attempt to present some simple rules that make things a lot easier to understand from a money standpoint.

Your virtues will be given protection, your vices and weaknesses will not. Every chance will be open to your good, none will be provided for your evil. What you’ll receive from men will not be alms, or pity, or mercy, or forgiveness of sins, but a single value: justice. And when you’ll look at men or at yourself, you will feel, not disgust, suspicion and guilt, but a single constant: respect.

Respect is the most basic and fundamental emotion, part of that rational glue that for the most part keeps societies civilized.

Such is the future you are capable of winning.

It requires a struggle; so does any human value.

In leftist political literature going back almost 200 years one comes across the word struggle. We do not aim to struggle for anything against anyone. We believe that struggling against oppressors is pointless, one wins by demonstrating the facts of oppression and getting people who would not be oppressors themselves, but who are in their pay, to pull away from the real oppressors so that they are isolated. Then we go about building our own thing. If they resort to FORCE against us, why bother after all with the thugs that are paid to oppress us, why not challenge the very people at the top themselves and make matters personal? Those who pay have the say, so with what are the oppressors being paid? Follow the money, it will lead to the guilty every time.

All life is a purposeful struggle,

Rand is justifying this word. Life need not be a struggle of any sort, it can nevertheless be purposeful and active.

and your only choice is the choice of a goal.

No one needs to live by having some outrageous goal either. Games have goals and life is not a game to be won, it is to be lived, loved and experienced, etc.

Do you wish to continue the battle of your present
or do you wish to fight for my world?

We don't wish to fight for anything, but if our inalienable rights are stepped on, you better believe there will be a reaction.

Do you wish to continue a struggle that consists of clinging to precarious ledges in a sliding descent to the abyss, a struggle where the hardships you endure are irreversible and the victories you win bring you closer to destruction?

This pretty much describes the positions of the John Galts remaining in the system.

Or do you wish to undertake a struggle that consists of rising from ledge to ledge in a steady ascent to the top,

Here too, are we now open to someone's judgement that unless we're all mountain climbers of material success, we're nothing? Sounds like Galt / Rand are off to a grand start to resurrect something new to replace that which is old, without even guessing that most in this world don't need this kind of materialist ascension madness to be happy.

a struggle where the hardships are investments in your future,

and the victories bring you irreversibly closer to the world of your moral ideal, and should you die without reaching full sunlight, you will die on a level touched by its rays? Such is the choice before you. Let your mind and your love of existence decide.

I always cringe when the word ideal shows up as there has been so much evil done in the name of this or that ideal. Note here also the goal to ascend like Icarus to the loftiness of the sun as a goal. Fine for some maybe, but why prod everyone to become like this? Try running before you can fly, and walking before you can run. As it is, there are people who are still crawling, who the Rands of this world and their elitist patrons care nothing about. But E. C. Riegel had a different vision, one that makes far more sense for the poor than any collectivist nonsense devised by man in his inane attempt to preserve the world of scarcity to keep certain people in power longer.

The last of my words will be addressed to those heroes who might still be hidden in the world, those who are held prisoner, not by their evasions, but by their virtues and their desperate courage.

My brothers in spirit, check on your virtues and on the nature of the enemies you’re serving. Your destroyers hold you by means of your endurance, your generosity, your innocence, your love- the endurance that carries their burdens-

Our message to you is the same, though who your real enemies and destroyers are has been shown to be other than Rand says they are.

the generosity that responds to their cries of despair- the innocence that is unable to conceive of their evil and gives them the benefit of every doubt, refusing to condemn them without understanding and incapable of understanding such motives as theirs- the love, your love of life, which makes you believe that they are men and that they love it, too.

Their motives are not what Rand supposes because she has branded the wrong people. The motives of those who paid her are clear; they want to rule the world with an iron fist, they want to take from everyone without giving anything of value in return, to lie, cheat and steal as often as possible as if it is their right and instinct, the right of a shark among prey.

But the world of today is the world they wanted; life is the object of their hatred. Leave them to the death they worship. In the name of your magnificent devotion to this earth, leave them, don’t exhaust the greatness of your soul on achieving the triumph of the evil of theirs. Do you hear me … my love?

Spoken by a male character, words and emotions of a woman.

In the name of the best within you, do not sacrifice this word to those who are its worst. In the name of the values that keep you alive, do not let your vision of man be distorted by the ugly, the cowardly, the mindless in those who have never achieved his title. Do not lose your knowledge that man’s proper estate is an upright posture, an intransigent mind and a step that travels unlimited roads. Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it’s yours. 

What flowery rhetoric! But this is all fiction. The reality it parodies is quite different as we all know. But if this exercise has exposed anything, it is how well the true nature of the elites and the kind of world they would like to see develop is infused in Rand's words. You are all now put on notice that these people are out there, have devised devious plans that go back centuries, have been behind every war in the last thousand years -at least- and have profited from every single one by backing both sides, etc. They have an insatiable itch for starting another war to keep us from finding them out and overthrowing their cursed rotten financial system.

But to win it requires your total dedication and a total break with the world of your past, with the doctrine that man is a sacrificial animal who exists for the pleasure of others.

Agreed, except who the others happen to be. The others are clearly the elites who live and plot way above our heads, not the poor who are in any case too poor to be able to do much of anything except try and figure out a way to stay alive.

Fight for the value of your person. Fight for the virtue of your pride. Fight for the essence of that which is man: for his sovereign rational mind. Fight with the radiant certainty and the absolute rectitude of knowing that yours is the Morality of Life and that yours is the battle for any achievement, any value, any grandeur, any goodness, any joy that has ever existed on this earth.

Lofty words, but what we intend is much simpler, more humble and practical; we start where each of us lives, in our own communities, dealing with our own people, determining among ourselves what to do, how to trade and how to build and grow what we want and need. We will all need something other than the usual money, that is for certain.

You will win when you are ready to pronounce the oath I have taken

at the start of my battle- and for those who wish to know the day of my return, I shall now repeat it to the hearing of the world:

I swear-by my life and my love of it- that I will never live for the sake of another man, nor ask another man to live for mine.

That another man is not someone who is poor or destitute but the man or woman who represents the elites who intend on using you with the promises of their money. You need your own money with which to make decisions, not theirs.

This brings our discussion of the ideas in the John Galt Speech to a close. Thank-you for your participation in this adventure by reading. Your comments are welcome. 


David Burton


Sunday, January 20, 2013

#18.16 Gleanings from the John Galt Speech – Part 16

John Galt continues,

Neither he nor the rest of us will return until the road is clear to rebuild this country-until the wreckage of the morality of sacrifice has been wiped out of our way.

Could we get rid of this bourgeois morality of sacrifice? Would it make any difference? We think not. We suspect that the answers lie elsewhere, like setting up an alternative to the present monetary system that disallows limited liability from the outset, that forbids the practices of usury, that limits the terms of indebtedness, that solves the issue of poverty once and for all and that maximizes the freedom for those who would be hero industrialists and farmers, to rise once again to the prominence they deserve.

A country’s political system is based on its code of morality.
We will rebuild America’s system on the moral premise which had been its foundation, but which you treated as a guilty underground,
in your frantic evasion of the conflict between that premise and your mystic morality: the premise that man is an end in himself,
not the means to the ends of others, that man’s life, his freedom, his happiness are his by inalienable right.

... also his right to issue his own money, with which to settle split barter trades with others who agree to accept it. We declare that we also have the right to reject someone else's money as a means of payment, that someone else being a private central bank that has interjected itself into the affairs of every nation. It's time to declare independence.

You who’ve lost the concept of a right, you who swing in impotent evasiveness between the claim that rights are a gift of God, a supernatural gift to be taken on faith, or the claim that rights are a gift of society, to be broken at its arbitrary whim-the source of man’s rights is not divine law or congressional law, but the law of identity. A is A-and Man is Man.

Rights are conditions of existence required by man’s nature for his proper survival. If man is to live on earth, it is right for him to use his mind, his right to act on his own free judgement, it is right to work for his values and to keep the product of his work. If life on earth is his purpose, he has a right to live as a rational being: nature forbids him the irrational. Any group, any gang, any nation that attempts to negate man’s rights, is wrong, which means: is evil, which means: is anti-life.

... which means is illegitimate and the proper response is and should be ... “come out of her, my people.” If rights are conditions of existence required by man’s nature for his proper survival and we accept the validity of this simple statement, then that includes the right to issue money for his subsistence.

Rights are a moral concept-and morality is a matter of choice.

That is one chooses to do good or to do evil whether one wants to hide from the consequences or not. The good in Rand's morality promotes man's life, the evil, man's death.

Men are free not to choose man’s survival as the standard of their morals and their laws, but not free to escape from the fact that the alternative is a cannibal society, which exists for a while by devouring its best and collapses like a cancerous body, when the healthy have been eaten by the diseased, when the rational have been consumed by the irrational.

As we've attempted to show throughout, the diseased and irrational are most likely to be found among the elites rather than the poor and the John Galts stand somewhere in the middle as paid well enough to stay in place but discarded as soon as a structural technical change takes place.

Such has been the fate of your societies in history, but you’ve evaded the knowledge of the cause. I am here to state it: the agent of retribution was the law of identity, which you cannot escape. Just as man cannot live by means of the irrational, so two men cannot, or two thousand, or two billion. Just as man can’t succeed by defying reality, so a nation can’t, or a country, or a globe. A is A. The rest is a matter of time, provided by the generosity of victims.

The generosity of victims being that value surrendered without adequate compensation of value.

Just as man can’t exist without his body, so no rights can exist without the right to translate one’s rights into reality-to think, to work and to keep the results-which means: the right of poverty.
No, the right of property, and make that private property too as responsibility is always far less when anything is deemed public.

The modern mystics of muscle [collectivists] who offer you the fraudulent alternative of ‘human rights’ versus ‘property rights,’ as if one could exist without the other, are making a last, grotesque attempt to revive the doctrine of soul versus body. Only a ghost can exist without material property; only a slave can work with no right to the product of his effort.

Yes, but I'm sure many can see clearly the great lengths Rand is going, to shoehorn her philosophy around basic common sense. These matters of soul vs. body are immaterial to someone forced to live at the edge of starvation and are likewise more the playthings of those with too much money and time on their hands.

The doctrine that ‘human rights’ are superior to ‘property rights’ simply means that some human beings have the right to make property out of others; since the competent have nothing to gain from the incompetent, it means the right of the incompetent to own their betters and to use them as productive cattle.

Who exactly is using whom as productive cattle? The first sentence presumes a scarcity that may not exist or is being used as a red herring. Anything they can get to make you believe that someone, the poor aided by those evil mystic collectivists, is after your stuff and deflect your attention away from the people who have always had an eye on your stuff, that eye at the top of that pyramid on their money, certainly not the eyes of the hungry and poor or those the system maimed during one of their wars and has now discarded.

Whoever regards this [transfer of wealth] as human and right, has no right to the title of ‘human.’

We do not accept the reality that a usurer can acquire someone else's property as just, we regard it as a crime. Likewise we regard all the other aspects of the current banking and financial system as criminal. We likewise regard anyone who has aided and abetted this criminality to be as guilty as the chief perpetrators, it's called misprision of felony. If you know that someone has committed treason against your country, which is against your people, your community, your family and yourself, and you know of any who have helped him, they are all guilty and deserve the same justice. But let's be perfectly honest, shall we? We will never see justice in this system for those who deserve it, the way it has been taken over and made to serve their interests. The only recourse is Galt's; walk out and never return and encourage everyone as far as possible to do the same.

The source of property rights is the law of causality.
All property and all forms of wealth are produced by man’s mind and labour. As you cannot have effects without causes,
so you cannot have wealth without its source: without intelligence.

Wealth, is that which produces a stream of income. Wealth is the outcome of accumulated value, itself the result of a string of virtuous actions. Rand is correct, you cannot really have any wealth without someone bothering to figure it all out. That is intelligence.

You cannot force intelligence to work:
those who’re able to think, will not work under compulsion:
those who will, won’t produce much more than the price of the whip needed to keep them enslaved.

But they have us where they want us. They don't need or want anything more form us as the production problem has been solved by cheap labour from overseas. They don't care about the quality and workmanship because even that sooner or later they'll get right with their value added new technologies, etc. Here is the modern world's answers to Rand:

You cannot force intelligence to work: So we'll obsolesce intelligence replacing one John Galt with the next one to roll off the university assembly line. He'll speak three or four languages as well too, and cost half what the first John Galt cost. Next-

those who’re able to think, will not work under compulsion: Sure they will, as their travel will be restricted, we may take hostages from among their family too and in any event what choice do they have? They either work for us or starve. Next-

those who will, won’t produce much more than the price of the whip needed to keep them enslaved. Oh, these people are conditioned by hundreds of years of servitude to do everything exactly as ordered, we have better product at less cost than ever.

Don't think for a minute that the elites are completely stupid. Yes, among them are those who are supremely crazy and irrational and have some pretty weird personal habits and fantasies, but they know every possible aspect of buying cheap and selling dear at every last turn, they know how to lie, cheat and steal to make it all happen and they have endless pools of liquidity with which to operate. Who can endure the beast! Our message remains, “come out of her, my people” and plan to do it for yourselves, your families, your communities, your peoples and nations. There is another way that's better and some of us who have stumbled upon it after it nearly fell through the sands of obscurity, want to let as many people know about it as possible. We care about standing on the side of man's life and against his death. We champion the work of E. C. Riegel, the autodidact economist, who dared tell us the truth and was nearly forgotten.  [Alas, though we owe a fathomless debt of gratitude to Spencer H. MacCallum for saving Riegel's works, we are at present forbidden to use Riegel's name for the new money that must replace the old, due to the misguided, selfish and frankly quite stupid actions of Lawrence Gilbert!]   

You cannot obtain the products of a mind except on the owner’s terms,
by trade and by volitional consent.

They get around this by buying the patent and often times cheating the inventors, so Galt can complain all he wants about the owner’s terms knowing full well that the owners are usually not the inventors.  [We still wonder who is standing in the wings ready to buy out Laurence's patents?]

Any other policy of men toward man’s poverty is the policy of criminals, no matter what their numbers.

They are the policy of criminals, no matter what their riches. As for a man's poverty, what chance has one made poor by circumstances beyond his control, where the intention of the “masters of the universe” is to enforce an artificial scarcity guaranteed to produce failures and those whom the system would rather ... just go away somewhere and die quietly?

Criminals are savages who play in short-range and starve when their prey runs out-just as you’re starving today, you who believed that crime could be ‘practical’ if your government decreed that robbery was legal and resistance to robbery illegal.

Pish-posh, Mr. Galt! The robbery you speak of is of the rich preying on everyone else. Rand's automatic equation of the rich with the intellectually gifted is a stupendous oversight, which wouldn't be made less laughable were it not for the fact that they paid her to write all this stuff.

The only proper purpose of a government is to protect man’s rights, which means: to protect him from physical violence.

How good does a government have to be to accomplish that, Mr. Galt? There are no guarantees these days. But there really never were. Because you see, all the civility we enjoy anywhere in the civilized world is the result of masses of people acting rationally, and nothing else. It didn't take any government FORCE to keep people from behaving irrationally and just going berserk everywhere. The very thought of that happening if there weren't governments is itself pretty laughable too. What really keeps people sane is being sane and everyone knows what that is.

A proper government is only a policeman, acting as an agent of man’s self-defence, and, as such, may resort to FORCE only against those who start the use of FORCE.

OK, Mr. Galt. But what happens when the government itself starts by initiating FORCE on others? What then, Mr. Galt?

The only proper functions of a government are: the police, to protect you from criminals; the army, to protect you from foreign invaders; and the courts, to protect your property and contracts from breach or fraud by others, to settle disputes by rational rules, according to objective law.

It's actually the last part of this with which most people have the most trouble. We consider that property protection is the primary responsibility of the property owner and secondly of the owners of the property adjacent. As far as contracts, breach or fraud have to be specified by rules which forbid them. In the case of all forms of usurious contracts, there is never any attempt to establish whether they are fraudulent or ever to call any of their well known formulas into criticism. Objective law means something to a usurer and another to most everyone else.

But a government that initiates the employment of FORCE against men who had FORCED no one, the employment of armed compulsion against disarmed victims, is a nightmare infernal machine designed to annihilate morality: such a government reverses its only moral purpose and switches from the role of protector to the role of man’s deadliest enemy, from the role of policeman to the role of a criminal vested with the right to the wielding of violence against victims deprived of the right of self-defence.

Sure sounds like what we have right now.

Such a government substitutes for morality the following rule of social conduct: you may do whatever you please to your neighbour, provided your gang is bigger than his.

That's majority rule democracy isn't it? Three foxes and a hen deciding what's for dinner.

Only a brute, a fool or an evader can agree to exist on such terms or agree to give his fellow men a blank check on his life and his mind, to accept the belief that others have the right to dispose of his person at their whim, that the will of the majority is Omnipotent, that the physical FORCE of muscles and numbers is a substitute for justice, reality and truth.

Yeah, but that's what it is, Mr. Galt. There are no other terms but theirs and theirs are getting fewer by the day.

We, the men of the mind, we who are traders, not masters or slaves, do not deal in blank checks or grant them. We do not live or work with any form of the non-objective.

Then ask yourselves these questions, all you men of the mind? With what money are you being paid? Whose is it? Are you aware that you are paying for its use? What makes you so sure that they will keep their promises to you? Are you any more special than those whose lives have been ruined, snatched from them by broken promises? Do you even know whether anything you think you own is really yours? How do you know? To what extent do you own any real property? We could go on. You men of the mind had best do some real thinking for a change.

So long as men, in the era of savagery, had no concept of objective reality and believed that physical nature was ruled by the whim of unknowable demons-no thought, no science, no production were possible. Only when men discovered that nature was a firm, predictable absolute were they able to rely on their knowledge, to choose their course, to plan their future and, slowly, to rise from the cave.

This is the "progressive" supposition of history in a nutshell.

Now you have placed modern industry, with its immense complexity of scientific precision, back into the power of unknowable demons-the unpredictable power of the arbitrary whims of hidden, ugly little bureaucrats. A farmer will not invest the effort of one summer if he’s unable to calculate his chances of a harvest. But you expect industrial giants-who plan in terms of decades, invest in terms of generations and undertake ninety-nine-year contracts-to continue to function and produce, not knowing what random caprice in the skull of what random official will descend upon them at what moment to demolish the whole of their effort.

Oh, but who manipulates these ugly bureaucrats, her word not mine, and from whence do their directives come? They come from more powerful interests intent on taking what that farmer or industrialist has managed to scrape together. If compliance isn't forthcoming, these same forces connive to get the farmer's or industrialist's property. It's a buy out, you take it or you get ruined. We know plenty about this as it is happening right now across America and elsewhere in foreign countries that have fallen behind on their debt payments to them.

Drifters and physical labourers live and plan by the range of a day. The better the mind, the longer the range. A man whose vision extends to a shanty, might continue to build on your quicksands, to grab a fast profit and run. A man who envisions skyscrapers, will not. Nor will he give ten years of unswerving devotion to the task of inventing a new product, when he knows the gangs of entrenched mediocrity are juggling the laws against him, to tie him, restrict him and force him to fail, but should he fight them and struggle and succeed, they will seize his rewards and his invention.

That is the current way of things, but it isn't the governments, Mr. Galt, it's the people behind the governments, people that set policies, people that fund campaigns, people who seek to ruin others and steal their properties, Mr. Galt. These people think of themselves as businessmen too, just of a higher order. They don't believe they need you anymore, Mr. Galt, so what are you going to do about it? They'll say something like this with a certain smirk on their face, that sad sad smile or false regret. You have just been consigned to their concentration camp.

Look past the range of the moment, you who cry that you fear to compete with men of superior intelligence, that their mind is a threat to your livelihood, that the strong leave no chance to the weak in a market of voluntary trade.

Let's set a few things straight: The only real markets of voluntary trade are tiny and not regulated, all the rest are rigged. We'll get into this more on a paper on markets. Intelligence, superior or otherwise, has nothing to do with it, superior money power has everything to do with it.

What determines the material value of your work? Nothing but the productive effort of your mind-if you lived on a desert island. The less efficient the thinking of your brain, the less your physical labour would bring you-and you could spend your life on a single routine, collecting a precarious harvest or hunting with bow and arrows, unable to think any further.

Notice the direct connection Galt / Rand make between desert island and unable to think any further.

But when you live in a rational society [as opposed to a desert island], where men are free to trade, you receive an incalculable bonus: the material value of your work is determined not only by your effort, but by the effort of the best productive minds who exist in the world around you.

Actually the difference between one and the other is the presence of money. Money is used to split the barter for everything therefore allowing maximum exchange of value for whatever is offered for sale to be purchased with that money.

When you work in a modern factory, you are paid, not only for your labour, but for all the productive genius which has made that factory possible: for the work of the industrialist who built it, for the work of the investor who saved the money to risk on the untried and the new, for the work of the engineer who designed the machines of which you are pushing the levers, for the work of the inventor who created the product which you spend your time on making, for the work of the scientist who discovered the laws that went into the making of that product, for the work of the philosopher who taught men how to think and whom your spend your time denouncing.

That's only because there have been so many bad philosophers. But how much work in America is factory work these days? And what factors went into making that labour structurally obsolete? I also note that one type of person is omitted from her list, the banker who lent the manufacturer the money to build the factory, at compound interest of course, such that it is up to the bank to call in the loan, because the factory has become obsolete before its time, due to competition from abroad, in which that same banker has an interest.

The machine, the frozen form of a living intelligence, is the power that expands the potential of your life by raising the productivity of your time. If you worked as a blacksmith in the mystics’ Middle Ages, the whole of your earning capacity would consist of an iron bar produced by your hands in days and days of effort. How many tons of rail do you produce per day if you work for Hank Rearden? Would you dare to claim that the size of your pay check was created solely by your physical labour and that those rails were the product of your muscles? The standard of living of that blacksmith is all that your muscles are worth; the rest is a gift from Hank Rearden.

... and a gift from Hank's banker, according to the story they want the average guy to get. But the average guy's place as a cog in the machinery is far from guaranteed, though they certainly don't want average guy to quit before they're done with him. Maybe average guy had a few bad habits, maybe he's overweight, maybe his people were prone to heart disease, whatever. Everyone will feel great if they can get off paying for average guy's retirement, hope he dies the day after he's retired. That's what really goes on, and it will go on in places like China just the same as it ever did in any other industrialized country until the factory workers worldwide know what the market for their skills happens to be and what they are worth. Obviously (the or an) VEN would eventually supply this kind of data to its members.

Every man is free to rise as far as he’s able or willing, but it’s only the degree to which he thinks that determines the degree to which he’ll rise. Physical labour as such can extend no further than the range of the moment. The man who does no more than physical labour, consumes the material value-equivalent of his own contribution to the process of production, and leaves no further value, neither for himself nor others. But the man who produces an idea in any field of rational endeavor-the man who discovers new knowledge-is the permanent benefactor of humanity. Material products can’t be shared, they belong to some ultimate consumer; it Is only the value of an idea that can be shared with unlimited numbers of men, making all sharers richer at no one’s sacrifice or loss, raising the productive capacity of whatever labour they perform.

This is all by this time, garden variety claptrap to any informed anybody anywhere in the world. We're just going to strike down each of these Horatio Alger like statements:

Every man is free to rise as far as he’s able or willing, No he isn't. Only those on the inside track are ever free to rise in the present economy and on into the future if it is allowed to morph into full blown totalitarian tyranny, so this is a LIE.

But it’s only the degree to which he thinks that determines the degree to which he’ll rise. This too is a LIE because even if you have enough brains to be inventive enough to catch the attention of the elites, all they'll do is let you live as well as you can for a while until they gain control over your work and then they owe you precisely NOTHING as they have stolen your very birthright from you. They say they will honour their agreements to pay your retirement, but as is the case with many microbiologists, accidents do happen. So don't count on anything from the elites. As I said earlier, any meeting between them and you is like that between a shark and its prey.

Physical labour as such can extend no further than the range of the moment. If that were the case, then all the buildings we still use for anything that were built even several hundred years ago, would have no value and of course they do have value, so this too is primarily false and seeks to denigrate physical labour and hence get away with saying that physical labour should cost them less than non physical labour. The question for you to answer is who indeed wants to see the world this way and why?

The man who does no more than physical labour, consumes the material value-equivalent of his own contribution to the process of production, and leaves no further value, neither for himself nor others.  

This of course is a key statement which discloses much about the elites and how they view things. They seek a way to feed off the efforts and resources of others, without themselves doing any physical work. Therefore their view of things is that physical labour should never be paid more than the food they consume. I would very much like that thought to sink in really deep too, because any of you out there, the John Galts who put up buildings, who work with anything heavy that requires you to do physical work, need to recognize exactly how these people see you. Since you're no better than the food you eat and presumed to do no serious thinking about what you do, which is also a LIE, then you can be replaced with those who would eat for less money. Get that? Understood? We will definitely express ourselves on this theme in a future paper, believe me. It is very important for any stable future and pertains directly to (the or an) VEN.

But the man who produces an idea in any field of rational endeavour- the man who discovers new knowledge- is the permanent benefactor of humanity. I sense here an appeal to the pride of the John Galt out there, who thinks he's discovered something and thinks the highest aspiration is to become famous enough that one's name becomes immortal, remembered long after one has passed. OK, but who does the thinker's idea chiefly benefit, but the financier, the elitist who owns his patents through the corporation the John Galt signed up to work for, etc.? So this too is at the very least a figment of the imagination.[Are you getting this, Laurence?  By securing a copyright over that to which you were not entitled, you have made your patent a point of leverage for the elites who would certainly like nothing better than to secure the rights to the Riegel name, etc.  You may try and convince us that you'd never sell out, but every man has his price. You assumed no doubt that a copyright would protect you (from what exactly?), when it only serves to create a means to buy you out. Good luck, Mr. Founder, happy foundering.]  

Material products can’t be shared, they belong to some ultimate consumer; What is sharing and why is it important to the elites? We know that in the securities business a share is a piece of some business that can be bought or sold in a securities market. So a share of anything is an important concept to an elitist. It is here asserted that it Is only the value of an idea that can be shared with unlimited numbers of men, unlike a building which can be used only by a limited number of people. Let's consider a recording of a pop hit song. It can be sold to potentially millions of people whereas a share in a building to very few. Obviously there will be a corresponding cost differential between the price of a single recording and the share of the use of a building. The elites obviously prefer the former business situation if they can make it happen, which is called “making a market” and that too will be discussed further on the forthcoming paper on markets.

The final statement is also misleading, making all sharers richer at no one’s sacrifice or loss, actually as all recording artists know from hard experience and many great composers knew as well in their times, those who obtained the patents or copyrights got far more than the original artists did, so in fact the artists were forced to compromise their birthrights away; sacrificed, or starve or go unknown. Then casually it is averred raising the productive capacity of whatever labour they perform as if to suggest that as long as this excess above the cost of food is shared, that it benefits all. Well, in countless industrial shops across the world, we can observe that those using more advanced tools can greatly increase production even beyond the point the business can remain profitable. But how much did the inventor receive from everyone using his invention? How much as a percentage did the financier get? That's right, the John Galt inventor got screwed.  [That goes for you too, Laurence!]

It is the value of his own time that the strong of the intellect transfers to the weak, letting them work on the jobs he discovered, while devoting his time to further discoveries.

This is the grand illusion of Plato's Republic, that certain people should do all the hard labour while others were allowed freedom to think and to RULE. What did they think in their spare time? New ways to enslave others, cause wars, lie, cheat and steal to earn their daily bread? To be continued.

David Burton