Thursday, July 23, 2009

LBJ and Another Day of Infamy

Being involved in the appraisal field means I spend a significant amount of time scouring the Internet for economic data and forecasts. But as a slightly loose[1] subscriber to the “Austrian School” of economics, I’m also on the look-out for historical information that corroborates Austrian theory regarding business cycles and money.

This morning I stumbled upon this jewel from UC Santa Barbara’s American Presidency Project. It is the transcript of a speech given by President Lyndon B. Johnson at the signing of the Coinage Act of July 23, 1965 – another day that lives in infamy, though the great majority of Americans doesn’t know why.

The Coinage Act of ’65 effectively brought a halt to the striking of 90% silver coins. From that time forward the U.S. has minted alloy coins for the 10, 25, and 50 cent pieces. Currency debasement is older than the Roman Empire. States find it increasingly difficult to pay for “public goods” – i.e., pay off the politically-connected and thus remain in power – with a finite money stock. In the old days corrupt kings would call in gold and silver coins, shave off some (or all) of the content, replace the missing precious metal with alloy, and re-circulate a devalued currency.

The American way is to print money out of thin air. The agent for this State-sanctioned counterfeiting is the Federal Reserve. The problem was one of getting real money – a naturally arising commodity used for indirect exchange – taken out of favor. The public had to be conned. Thus spake LBJ,

Now, all of you know these changes are necessary for a very simple reason--silver is a scarce material. Our uses of silver are growing as our population and our economy grows. The hard fact is that silver consumption is now more than double new silver production each year. So, in the face of this worldwide shortage of silver, and our rapidly growing need for coins, the only really prudent course was to reduce our dependence upon silver for making our coins.

The “rapidly growing need” included such wonderful projects as the “Great Society,” the Vietnam War, and endless corporate welfare programs. In a word, payola.

Johnson was at his brow-beating best (after all, the man started out as a public school teacher) when he preemptively chided the little remnant of the population that would wise up to the implications of the Coinage Act:

If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.
This is where IM chatters would type, “LOL,” or “ROFL,” or more profane acronyms denoting incredulity.

Lest there be any confusion (the then “Commander-in-chief’s” words notwithstanding), the purchasing power of silver coins has remained remarkably stable relative to goods and services since – you guessed it – 1965. A silver quarter struck before the Beatles recorded “Baby, You’re a Rich Man” is worth the same amount of cash presently required to buy a loaf of premium grain bread, or about $3.25.

In other words, there has been no inflation in the prices of goods and services in terms of silver (or gold); general price levels rise and buying power erodes due to currency devaluation, with local oscillations attributable to changes in supply and demand. A loaf of bread (or two loaves of cheap white bread) should cost a typical household no more than around 25 cents in real money.

My dad voted for Goldwater.

[1] I’ve touched upon this before. In the main, I believe Austrian theory offers a thoroughly convincing explanation of economic phenomena. I diverge from those in the camp who tend toward what Kevin Carson calls “vulgar libertarianism.” Without a lengthy explanation, “vulgar libertarian” refers to supporters of massive corporations like Wal-Mart. I agree with the “Libertarian Left” that in a truly free market, void of tax advantages and subsidies, such monstrous entities could not exist (for the record, I don’t agree with the Libertarian Left on certain social issues).

Thursday, July 16, 2009

Sad, So Sad

I have to admit: this old wayfaring Baptist fell in love with the Episcopal church. I fell in love with her the way a man might fall for a beautiful woman – one that is beautiful on the outside but proves unfaithful...a heartbreaker.

With a broken heart I’ve watched from afar this week as the Episcopal church commits the greatest act of mass suicide since Jonestown. But my sorrow pales in comparison to that shared by those who grew up in the church, invested their lives in it, and sought to remain faithful Christians, first and foremost, within it. My prayers are with them especially. And in the midst of her demise, it is particularly poignant to see faithful men like these continue to declare the truth with gentle firmness.

I need to admit something else: there’s little comfort in watching her go down from a distance. Being involved with an Anglican splinter group has its advantages, but there are other sets of quirks and challenges, as well.

Lord, have mercy.

Tuesday, July 14, 2009

Hillbillies were Hobbits

I have long suspected that the early settlers of Southern Appalachia desired nothing more than to live in a natural order. Certainly, their Cherokee neighbors were already doing so. The essay that follows explains what that means, and more. (~ed.)

Tales of Titans and Hobbits


Literature can exert a powerful influence on our ideological views.[1]

Ayn Rand, after all, was primarily a novelist. Many people were converted to liberalism (or at least some variety of it) after experiencing in person her unquestionable charisma and magnetism, but the significance of her novels, most notably Atlas Shrugged,[2] can hardly be overlooked.

Indeed, it is only having read that expressive story that many future libertarians — among them Walter Block[3] — once and for all denounced socialism along with all the physical and mental bondage which it ineluctably imposes upon people. Hence, it was a narrative — a novel or, if you want, a fairy tale — that had managed to shape and contextualize the readers' notion of such abstract matters as freedom, l'étatism, or egalitarianism.

Another novelist who also managed to gain an exceptionally wide circle of readers and admirers was John Ronald Reuel Tolkien, the author of a worldwide bestseller The Lord of the Rings.[4] Even though Tolkien's style of writing was much less obtrusive than Rand's — he never forced upon his readers any particular reading of his book, and he overtly disliked conscious and intentional allegories — the English novelist never denied that his work concerns something more than just elves or dwarves, or that it deals with certain ideas. As he wrote to Michael Straight, the editor of New Republic, The Lord of the Rings was meant to succeed first of all as an exciting and moving tale — but a tale addressed primarily to adults, involving something more than mere chase and escape, namely some reflection of the writer's own views and values.[5]

Since Tolkien considered himself a conservative anarchist,[6] it should come as no surprise that while trying to answer his publisher's questions regarding the symbolism hidden in his magnum opus, he suggested to "…make the Ring into an allegory of our own time… an allegory of the inevitable fate that waits for all attempts to defeat evil power by power."[7]

Therefore, even though Tolkien's saga is all too often interpreted as an apolitical "road novel" or "picaresque novel for children," The Lord of the Rings could very well be the source of unending inspiration for libertarians as a belletristic dramatization of Lord Acton's famous statement that power tends to corrupt and absolute power corrupts absolutely.

Both Rand and Tolkien, then, passionately tell their tales about freedom, but they resort to completely different aesthetics, and, in consequence, paint two entirely different pictures of the world, with different heroes and different challenges. Are those differences important? How do they affect the "moral" of the respective tales? Given that it is of utmost importance just what kind of story one tells, it is perhaps worthwhile to reflect upon the different world images depicted in Atlas Shrugged and The Lord of the Rings, comparing the characters of both narratives along with the predicaments they face, and asking the fundamental question, which of the two novels constitutes a better context, a better literary frame of reference for freedom and Hans-Hermann Hoppe's idea of natural order?[8]

The Titans

Atlas Shrugged is, shortly put, a story of a strike, although not an ordinary one.[9] Rand does not write about labor unions or working masses, but about titans whose irreplaceable work, like that of their Greek predecessor Atlas, keeps the world alive. Titans are big capitalists, owners of ironworks and mines, men of genius, people who are creative and in every respect outstanding. Such is also the main character of the novel, Dagny Taggart, the heiress to the huge railroad company Taggart Transcontinental, which she desperately strives to save against ever more impudent government attempts to lay hands on her fortune. The society in which the heroine lives is dull, envious, lazy, essentially quite helpless, and were it not for the handful of Atlases, it would have definitely plunged into despair.

Dagny loves what she does for a living. She is an extremely talented railroad executive, and directing the whole enterprise seems not to tire her at all. The real burden for her is not work itself, but the necessity — the legal obligation — to share its plentiful fruits with the rest of society — the ungrateful mob of losers. Initially, the situation, though harsh, seems bearable, mainly because the heroine carries on with all her everyday duties with the relieving thought in mind that she is not alone, that other great achievers feel and think similarly, and though they may be outnumbered, they constitute the real engine of the world.

Gradually, however, Dagny realizes that the very engine of which she considered herself a part has been abruptly turned off and the titans, one after another, seem to be disappearing. The kidnapper turns out to be John Galt — a mysterious, legendary hero, whose name elicits expressions of helplessness among the losers:

"How should I deal with it?" asks one frightfully mediocre worker.

"How should I know?" is the invariable, dull reply. "Who is John Galt?"

Galt used to be one of the titans, but greed, collectivist bias, and ingratitude from the society to which he had given so much in the past have induced him to go on strike — not to fight with the oppressive system, not even to try to change it, but simply to leave, taking others along. And so they go, one by one: the great composers, innovators, creators, directors, owners… As a result, the engine of the world stops, and the economy plunges into chaos, for when there is no one to prey upon, the society of insatiable vultures no longer knows what to do.

The Übermenschen find refuge in an extraordinary valley hidden somewhere in Colorado, where the dollar sign does not stand — as on the "other side" — for greed, bribery, and sneakiness, but instead symbolizes success, skillfulness, and creative powers. The one and only unforgivable sin there is altruism. So they live, far from the dying world, bound by a promise that never again will they let unproductive loafers gain from their work.

They await the end of history, the moment when

the creed of self-immolation has run, for once, its undisguised course — when men find no victims ready to obstruct the path of justice and to deflect the fall of retribution on themselves, when the preachers of self-sacrifice discover that those who are willing to practice it, have nothing to sacrifice, and those who have, are not willing any longer — when men see that neither their hearts nor their muscles can save them, but the mind they damned is not there to answer their screams for help… when they have no pretense of authority left, no remnant of law, no trace of morality, no hope, no food and no way to obtain it — when they collapse and the road is clear….[10]

Then the titans will once more lift the Earth — all the superior individuals will come back to rebuild the world.

The Hobbits

Tolkien's novel also ends with a theme of rebuilding the world, a promise of setting things straight, bringing back the right order of things. It begins, however, in an entirely different way: not on the platform of a huge railway station, nor in a big factory, nor in a beautiful palace. The Lord of the Rings begins in the Shire — more precisely in Hobbiton, a small village peopled by hobbits, unobtrusive, somewhat clumsy, little creatures, whose straightforward and rather friendly nature makes them very similar to humans.

One day a great magician, Gandalf the Grey, pays a visit to the village. He is concerned by the fact that one of the hobbits, a certain Mr. Bilbo Baggins, keeps there hidden a precious artifact — a mysterious ring. Forged many years ago by Sauron, the Lord of Darkness, the Ring of Power is one of many rings of power, the one, however, that controls all the others. It has apparently found its way to Hobbiton by mere chance, as Bilbo brought it with him from one his journeys, hoping to hide it there from the rest of the world, adoring its gleam and magnificence.

The ring would give Bilbo strength and vitality, unusual in his advanced age, but it would also make him dependent on the ring itself. Before he knew it, the old hobbit became a serf of the Ring of Power, never daring to part with it, he would always keep it in a pocket of his ornamental waistcoat. This state of affairs would have probably gone on for many long years had Gandalf not learned the mysterious history of the ring, and recognized its true dark nature. Gandalf understood that Sauron knew very well where to look for his long lost precious treasure, and would inevitably claim it.

The ring cannot, however, go back to its creator, since it would mean the destruction of the whole Middle-earth and slavery of all peoples inhabiting it — darkness would fall over the once wonderful world, covering the horizon with a veil of smoke. Unfortunately, that mighty source of power cannot simply be buried or hidden, since the ring itself tries to return to its master who surely will not spare strength or efforts to regain rule over the world.

Thus, the only way to save Middle-earth seems to be to destroy the damned ring. Easy as it may seem, the task is in fact extremely difficult, for being a magic artifact, it will not yield to ordinary flames or any smith's hammer — it can only be thrown into the fire of Mordor in the Cracks of Doom. First, however, somebody must take it there. This will not be easy, since the road is guarded by Sauron's soldiers, the ugly, ruthless orcs.

It might seem that only Gandalf himself or one of the great and noble knights of Middle-earth could undertake such a dangerous quest. Unfortunately, to the extent that the Ring of Power gives its bearer strength to rule the world, it also overcomes him. It is an entity whose nature is to control everyone and everything. Thus, if the ring were to be worn by Gandalf or any other of the great heroes, it would become a terrifying implement of destruction, since anyone who slips it on his finger stops being himself and becomes instead a mere servent to the ring.

Only someone so mediocre, so weak, inept, and created seemingly for the sole purpose of minding his own merry business like Frodo Baggins — Bilbo's heir — could, at least to some extent, resist the evil power. Not clearly knowing what awaits him, Frodo sets upon his mission accompanied by a few friends from the Shire along with the distinguished knights of other races: Gimli the Dwarf; Legolas the Elf; two men, Aragorn and Boromir; and wise Gandalf himself.

Many times, the long journey puts Frodo's immunity to the test, showing that even such a moderate creature as himself cannot always resist the power of darkness. Once the ring eventually gets thrown into the abyss of Mordor, the sun rises again over Middle-earth, everything can be started anew, and the old world order is restored — without replacing the defeated power by a new, more sinister one.

How to Fight the System

These summaries might suggest that since the story told in The Lord of the Rings takes place in a fictitious world, while Atlas Shrugged describes a real-life situation, it is Rand's novel that does a better job of dramatizing the libertarian creed. Nevertheless, even though Tolkien creates his own world, different from the one we see around us each day, he meant the characters, the heroes of the war for Middle-earth, to be just as real as, say, the pygmies of the African jungle.[11]

Legolas, Aragorn, and Gimli are all characters created for the purpose of storytelling, but this does not change the fact that they are exemplifications of definite truths, principles, and values — as are Rand's characters, John Galt and Dagny Taggart. It does not matter whether one fights to defend Hobbiton or Taggart Transcontinental. In their most profound, most significant message, the two novels essentially talk about the same things — about challenges that a man must face, about his moral responsibility for himself and for all that he loves, and about the captivating and destructive influence of power and coercion.

Moreover, both novels clearly denounce the so-called imperative of action, that is, the belief that a system can easily be changed from within. It is plainly described in Atlas Shrugged, where the main characters express their opposition to the wickedness of the world by simply running away from it, confirming with their deeds the famous dictum of Etienne de la Boétie: "Resolve to serve no more, and you are at once freed."[12]

Even though in The Lord of the Rings it is an active fight and not passive resistance that forms the central theme of the novel, the fight is fought outside the system. Gandalf and Galadriel, both of great powers, consciously reject the possibility of defeating Sauron with the ring — they know very well that it would turn them into tyrants themselves.[13] The Lord of Darkness can only be defeated by destroying that which constitutes the very essence of his might — the Ring of Power.

Those similarities do not imply that there are no differences between Atlas Shrugged and The Lord of the Rings. Quite to the contrary — differences exist and they are the very reason why one of the novels serves better as a contextualization of the idea of natural order. To see this, we shall turn to the dissimilar structure of worlds and characters in both novels.

In Atlas Shrugged, for example, it is hard not to notice that somebody drives the world, maintains the reality in order, and without him everything would plunge into chaos. Clearly, that mysterious entity is not the state apparatus — rightly described as a machinery of exploitation — but a group of exceptional individuals who have simply created civilization — radio, television, central heating, music, law and order, etc. Luckily, the Übermenschen are benevolent and have no evil intentions vis-à-vis ordinary people. They wish neither to exploit, rule, nor control the rest of the society, but rather to impose upon it their rational project of "enlightenment" — they want to make use of their genius and bring prosperity and comfort to all.

It is totally different in The Lord of the Rings, where there is no "great plan for the world"; Middle-earth is inhabited by many different races — elves, dwarves, hobbits, men, ents, etc. — who all live, albeit separately, in tolerance, sometimes even friendship, but as a rule not interfering with each other. There is no government, central or local,[14] no industrial revolution and no uniform vision of progress or future. Even in the face of a terrible war, it is extremely hard to create a coalition against Sauron.

The world in Tolkien's novel is simply divided, decentralized to the extreme; beautiful in the diversity of various races, peoples, languages and outlooks — that is why no such thing as a "plan for humanity" could ever arise there as something good. There are, however, millions of smaller plans — for living through a harsh winter, for cultivating one's garden, for drinking a pint of beer in a local inn — drafted by millions of distinct individuals. The only unified vision that appears in the book is Sauron's plan; and let us not forget that Sauron stands for "an incarnation of Evil."[15]

It is instructive to compare also the main characters of the two novels. In Atlas Shrugged they are exceptional and it is precisely because of that quality that they became characters of the novel. Each of the Atlases is unblemished, pure, proud. Every detail of their physiognomy speaks of genius and magnificence. The Übermenschen do not simply move: they make motions full of charm and elegance. They do not simply work: they craft, always with passion and enthusiasm. They never get tired, weary or bored with what they do; they have no families, no children, no obligations; they are frightfully rational; they live only for themselves and for their occupational passions. If they happen to be businessmen, they never own little family businesses; they run huge corporations, ironworks, mines, or railway companies. In Rand's novel there is no place for moderation and inconspicuousness. Only that which is huge and effective deserves praise and attention.

Completely different, more human-like, are Tolkien's characters. In fact, the whole novel — though told from the hobbit's perspective — has a profoundly anthropocentric dimension. There are men in The Lord of the Rings, to be sure, but it is the hobbits who resemble real humans the most — they are rather clumsy, neither exceptionally smart, stout, nor courageous, but good, sociable, faithful and generally cheerful. The most important characters in Tolkien's novel are actually anti-heroes — they try to stay away from the world of big politics; however, when fate throws them in its very middle, they act bravely and ultimately bring salvation.

What the author of The Lord of the Rings seems to be saying, then, is that it is not titans who support the earth, but hobbits; each and every one of us, therefore, can answer the call of greatness and novelty, even should he live in Hobbiton spending most of his time cultivating his garden, smoking a pipe, and drinking beer in the local pub.

Every one of us struggles daily with the Saurons of his life, and maybe it is precisely those little triumphs that make the world a better place. As for respect and praise, it is not the directors of big corporations who deserve it the most — since, by the very nature of things, they are much too close to the ring — but those who, using only their own modest resources, earn their living by running little shops, kiosks, and family businesses. In those places one can sometimes still find the real, healthy spirit of capitalism. No wonder, then, that the Eye of Mordor constantly looks in their direction.


Given the breadth and length of both novels, the comparison of Atlas Shrugged and The Lord of the Rings could go on much longer, revealing many new themes and interpretations. It seems, however, that even the few differences sketched above allow for a tentative answer to the questions raised in the introduction. As much as Ayn Rand's novel, with its strictly modernist message, could have been at some point in the past an effective remedy against the plagues of socialism and collectivism, the world described in it does not fit today's reality and does not help in introducing the idea of natural order. Today, it is no longer necessary to protect big business from people. On the contrary, it is people who need protection from big business, which now goes hand in hand with Leviathan in trying to create a homogenous and completely atomized society.

The Lord of the Rings shows not only the great danger associated with all attempts to defeat evil power by power, but it also teaches that collectives do not really exist, that every one of us is the hero of his own individual story, and that law and order can easily exist without the state. Despite its egoistic message, Atlas Shrugged is full of imperatives to act, to fight, to bring salvation. Rand's characters suffer not only because the state reaches into their wallets, but because the society rejected their rational, "enlightened" vision of what is good and right.

Tolkien, on the other hand, disliked such imperatives. He hated the outlook that if something can be done, it has to be done, and once even admitted that the greatest deeds of mind and spirit are born in abnegation.[16] That is most likely the reason his characters do not look for great challenges, nor wish to change the world, and instead live quietly, fulfilling Voltaire's dictum Il faut cultiver notre jardin.

This is what makes The Lord of the Rings a much better means for conceptualizing the ideas of freedom than Atlas Shrugged. Reading Tolkien helps realize that, even after the "end of history," the world and society can move in the direction of Merry Old England rather than a soulless homogenized mass of atoms. Moreover, The Lord of the Rings conveys an extremely important and optimistic message, namely that a plurality of many different cultures, languages, societies and visions, all existing together, yet separate and independent of each other, is still viable — not in a democratic regime, but in the new world of Hoppean natural order.

Juliusz Jablecki is summer fellow at the Mises Institute, and works with the Mises Institute, Poland. Send him mail. Comment on the blog.


[1] This fact has been brilliantly captured by Jerome Tuccille who entitled his book on the birth and evolution of the libertarian movement It Usually Begins with Ayn Rand, Fox and Wilkes, 1997.

[2] Ayn Rand, Atlas Shrugged, Penguin Books, London, 1992.

[3] See Walter Block, "On Autobiography."

[4] J.R.R. Tolkien, The Lord of the Rings, HarperCollins Publishers, London, 2005.

[5] The Letters of J.R.R. Tolkien, Humphrey Carpenter ed., HarperCollins, London 2006, p. 233.

[6] He wrote: "My political opinions lean more and more to Anarchy (philosophically understood, meaning abolition of control not whiskered men with bombs) — or to »unconstitutional« Monarchy. I would arrest anybody who uses the word state (in any sense other than the inanimate realm of England and its inhabitants, a thing that has neither power, rights nor mind); and after a chance of recantation, execute them if they remained obstinate!"; see The Letters…, p. 63.

[7] The Letters…, p. 121.

[8] For a detailed, socio-economic treatment of the idea of natural order see e.g. Hans-Hermann Hoppe, Democracy: The God That Failed, Transaction Publishers, Rutgers, NJ, 2001.

[9] Indeed, "The Strike" was meant to be the title of the novel; see Leonard Peikoff's introduction to the cited edition of the book.

[10] Atlas Shrugged, p. 686–687.

[11] See The Letters…, p. 233.

[12] Etienne de la Boétie, The Politics of Obedience: The Discourse of Voluntary Servitude (PDF), p. 48.

[13] Thus, Gandalf cries: "No! With that power I should have power too great and terrible. And over me the Ring would gain a power still greater and more deadly! Do not tempt me! For I do not wish to become like the Dark Lord himself. Yet the way of the Ring to my heart is by pity, pity for weakness and the desire of strength to do good. Do not tempt me! I dare not take it, not even to keep it safe, unused." See The Lord…, p. 61.

[14] See The Lord…., p. 9–10; The Letters…, p. 272.

[15] The Letters…, pp. 151, 154.

[16] The Letters…, p. 246.

Thursday, July 9, 2009

No More “New Perspective” (for me, anyway)

On the theological front, I have been reading (and listening to podcasts of) a relatively young but brilliant British scholar named Simon Gathercole, a fellow at Fitzwilliam College, University of Cambridge. Gathercole takes a modified traditional reformed position toward the “New Perspective on Paul,” the latter being an insight into the problem of justification in Paul’s writings, based on work in the ‘70s by E.P. Sanders and popularized of late by N.T. Wright. Broadly speaking, the New Perspective says that justification is about “getting in” and, more precisely, “staying in” the covenant people of God. “Boundary markers” like Sabbath observance, circumcision and kosher dining are, in the age of the indwelling Holy Spirit, no longer necessary to distinguish the family of God.

Gathercole agrees with that statement so far as it goes; but he criticizes the baggage that tends to accompany the New Perspective: a downplaying of the severity of personal sin, a muddying of the importance of the atonement, and a slide toward universalism, or what he more specifically designates as “non-conversionism,” i.e., the gospel being not so much about converting lost souls to the sin-bearing Redeemer as inclusion of people in God’s great big happy family.

To get a sense of the issues involved, one can listen to a slightly meandering but nonetheless fascinating discussion with Gathercole and his colleague, biblical textual scholar Peter J. Williams, here (at the time of the interview both men were teaching at the University of Aberdeen in Scotland; both are now at Cambridge).

Saturday, July 4, 2009

Just Say No to State-worship

A pair of challenging essays, apropos a weekend when professing followers of Jesus Christ will likely be summoned to render glory to the State. From a Catholic perspective, Jeffrey Tucker; from a fundamentalist, dispensationalist perspective, Laurence Vance.

May we distinguish patriotism from nationalism, and our neighbors from the state-corporate system.