Collectivism's Creed: The Revolt Against Biological Reality

Escape mechanism is defined by Merriam Webster as a way of behaving or thinking that is used to avoid unpleasant facts or problems

Applied to the world of politics, popular solutions to every known social ill have almost always been framed by the establishment in the context of some sort of utopian requisite conditions.

Think for example corruption, the idea of ‘good governance’ has always been associated with angelic or immaculate virtues that should be espoused by the political leader/s. But when shortcomings or the unfulfillment of expectations emerge, culpability will mostly be blamed on the leader’s individualistic flaws. Legal and or political institutional barriers and or knowledge limitations and or even incentives of political leaders (as human being) operating under the current political economic system itself will hardly ever been questioned.

Hence, the never ending circus of personality based politics; sell "change" by changing leaders.

Yet this penchant to solve society’s imperfections really represents the nirvana fallacy or perfect solution fallacy—the informal fallacy of comparing actual things with unrealistic, idealized alternatives.

And because popular politics signifies the politics of the economically uniformed, it’s easier to connect with the populace’s grievances by matching utopianism as remedy

Thus the escape mechanism-Nirvana fallacy approach serving as the foundations of the creed of collectivism 

At the Mises Blog Ryan McMaken explains:

From Egalitarianism as a Revolt Against Nature and Other Essays by Murray Rothbard: 

“The egalitarian revolt against biological reality, as significant as it is, is only a subset of a deeper revolt: against the ontological structure of reality itself, against the “very organization of nature”; against the universe as such. At the heart of the egalitarian left is the pathological belief that there is no structure of reality; that all the world is a tabula rasa that can be changed at any moment in any desired direction by the mere exercise of human will—in short, that reality can be instantly transformed by the mere wish or whim of human beings. Surely this sort of infantile thinking is at the heart of Herbert Marcuse’s passionate call for the comprehensive negation of the existing structure of reality and for its transformation into what he divines to be its true potential.

Nowhere is the Left Wing attack on ontological reality more apparent than in the Utopian dreams of what the future socialist society will look like. In the socialist future of Charles Fourier, according to Ludwig von Mises:

“all harmful beasts will have disappeared, and in their places will be animals which will assist man in his labors—or even do his work for him. An antibeaver will see to the fishing; an antiwhale will move sailing ships in a calm; an antihippopotamus will tow the river boats. Instead of the lion there will be an antilion, a steed of wonderful swiftness, upon whose back the rider will sit as comfortably as in a well-sprung carriage. “It will be a pleasure to live in a world with such servants.”

Furthermore, according to Fourier, the very oceans would contain lemonade rather than salt water.

Similarly absurd fantasies are at the root of the Marxian utopia of communism. Freed from the supposed confines of specialization and the division of labor (the heart of any production above the most primitive level and hence of any civilized society), each person in the communist utopia would fully develop all of his powers in every direction.17 As Engels wrote in his Anti-Dühring, communism would give “each individual the opportunity to develop and exercise all his faculties, physical and mental, in all directions.” And Lenin looked forward in 1920 to the “abolition of the division of labor among people . . . the education, schooling, and training of people with an all-around development and an all-around training, people able to do everything. Communism is marching and must march toward this goal, and will reach it.”

In his trenchant critique of the communist vision, Alexander Gray charges:

“That each individual should have the opportunity of developing all his faculties, physical and mental, in all directions, is a dream which will cheer the vision only of the simpleminded, oblivious of the restrictions imposed by the narrow limits of human life. For life is a series of acts of choice, and each choice is at the same time a renunciation.

“Even the inhabitant of Engels’s future fairyland will have to decide sooner or later whether he wishes to be Archbishop of Canterbury or First Sea Lord, whether he should seek to excel as a violinist or as a pugilist, whether he should elect to know all about Chinese literature or about the hidden pages in the life of a mackerel.

Of course one way to try to resolve this dilemma is to fantasize that the New Communist Man of the future will be a superman, superhuman in his abilities to transcend nature. William Godwin thought that, once private property was abolished, man would become immortal. The Marxist theoretician Karl Kautsky asserted that in the future communist society, “a new type of man will arise . . . a superman . . . an exalted man.” And Leon Trotsky prophesied that under communism:

“man will become incomparably stronger, wiser, finer. His body more harmonious, his movements more rhythmical, his voice more musical. . . . The human average will rise to the level of an Aristotle, a Goethe, a Marx. Above these other heights new peaks will arise.

Greece Crisis: Does Fiscal Austerity Mean a Deflationary Policy?

The same principle leads to the conclusion, that the encouragement of mere consumption is no benefit to commerce; for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone, furnishes those means. Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption.-Say, Jean-Baptiste

For some it is held the current actions by Eurozone government represent as “deflationary policies”.

Such notion has been premised from the economic ideology which sees the economy as driven by aggregate demand.

Demand side economics see spending as the ultimate driver of any economy. Where private spending has been reckoned as insufficient or inadequate, government has been prescribed to takeover the spending process or through “socialization of investment”; otherwise the lack of spending, which supposedly impairs the aggregate demand, would result to people hoarding money, an outcome which this camp morbidly dread most: deflation.

This is why this camp argues for the “euthanasia of the rentier” which is to keep interest rates at perpetually low levels (if only they can abolish interest rates!).

Also, because spending is seen as the only driver of the economy, it doesn’t matter if spending is financed by unsustainable debt loads or by money printing “parting with liquidity”[1]. For them, spending is spending period.

This is an example of what I would call as analysis blinded by the Nirvana fallacy or “the logical error of comparing actual things with unrealistic, idealized alternatives. It can also refer to the tendency to assume that there is a perfect solution to a particular problem[2]” where mathematical models based on aggregate assumptions have substituted for real life activities. Statistical aggregates assume that people think and act homogeneously.

This also serves as another example where this mainstream economic pedagogy leads to a lack of common sense and self-discipline[3] because this camp basically advocates that people should borrow and spend to prosperity even when reality says that this would be impossible (see Jean Baptiste Say quote above).

How true has deflation been the problem of the PIIGS or the crisis affected nations of peripheral Europe?

At present, NONE of the PIIGS has shown DEFLATION as an economic condition as exhibited by the charts from tradingeconomics.com.

Instead, PIIGS have shown symptoms of mild stagflation (high unemployment and high inflation).

Of the five, only Ireland encountered consumer price deflation for over a year in 2009-2010.

Others like Spain and Portugal experienced very limited bouts of deflation in 2009.

Thus, little of what the demand side economics have feared has ever been true since the 2008 Lehman crisis began to unravel.

Theoretically, fiscal austerity means transferring of non-productive resources to productive resources.

Yet because of the dependency/entitlement culture which had been inbred from too much of “socialized investment”, as in the case of Greece, Greeks have taken to the streets[4]

As Takis Michas, staff writer for the Greek national daily, Eleftherotypia in a Cato Forum accounting for the seeds of the crisis[5]

The largest part of public expenditure was directed, not to public works or infrastructure, but to the wages of public service workers and civil servants.

The grounds for the rent-seeking struggles of the future were thus firmly laid.

As resources are freed for productive use, deflation then should be seen as positive because the productive private sector should be able to use these freed resources to produce goods and services, which would fuel a genuine recovery. With more output than than the growth of supply of money this is known “growth deflation” similar to the dynamics of falling prices of mobile phones, appliances and computers.

And that’s why a major part of Greece’s crisis ‘austerity plan’ resolution has been to undertake mass privatization[6].

However theoretical isn’t actual.

The unfolding Greece crisis isn’t being resolved entirely to free resources for productive means, instead the bailouts have been intended to use these resources to protect the banking system from a collapse[7]. Resources are merely being transferred from government welfare programs to the politically privileged banking sector.

Thus, the Greece bailout has been and will continue to be financed by European Central Bank’s inflationism.

Since the end of 2009, just as the Greece Debt Crisis surfaced[8], ECB’s M3 annual growth rate continues to climb, as shown by the chart from Bloomberg[9] (upper window). Such rate of increase in the money supply has shadowed the growth rate of the Euro’s inflation (chart from trading economics.com[10]).

For as long as the ECB and EU governments will continue to finance these serial bailouts by inflationism, then we should see more inflation and not deflation.

At the end of day, false economics leads to misdiagnosis and wrong predictions/conclusions.

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[1] what-when-how.com SOCIALIZATION OF INVESTMENT

[2] Wikipedia.org Nirvana Fallacy

[3] See Financial Success is a Function of Common Sense and Self Discipline June 23, 2011

[4] See The Anatomy of False Economics as Revealed by the Greece Crisis, June 28,2011

[5] Michas Takis , Policy Forum: A Greek Tragedy, Cato Policy Report Cato.org, July/August 2011

[6] ca.reuters.com Greek sovereignty to be massively limited: Juncker, July 3, 2011

[7] See Greece Crisis: The Lehman Moment Hobgoblin, June 19, 2011

[8] News.bbc.co.uk Greece timeline June 16, 2011

[9] Bloomberg.com ECB M3 Annual Growth Rate SA (ECMAM3YY:IND)

[10] Tradingeconomics.com Euro Area Inflation Rate