This week I’m attending Mises University, one of the largest and most rigorous summer courses in the Austrian School of economics (or “reality economics,” as my friend Michael McKay likes to call it).
Among the various lectures, there was one in particular that struck me as particularly relevant to the work of the Acton Institute. Peter Klein, professor of economics at the University of Missouri, delivered a presentation on entrepreneurship, a large part of the focus of his academic work.
Dr. Klein approaches the subject of entrepreneurship from the more realistic Austrian perspective. Rather than viewing people as examples of the homo economicus, as almost robotic, quantitatively-driven machines, Dr. Klein views human beings as unique and free actors. When we act, we do so under conditions of time and uncertainty. Though every human action presupposes cause and effect, there is no guarantee that our instincts are correct or that our efforts will pay off. In this way, every one of us, whenever we choose some action, is a kind of entrepreneur. In the face of uncertainty, we have an intended – but not guaranteed – result of action.
Combine that with the Austrians’ very realist take on production: production is not some kind of abstract graphical function, but the concrete act of taking a natural resource (e.g. some wood, a stone, some metal ore), and using one’s labor – almost investing a part of oneself – to physically transform it.
In a very broad sense, we all participate in this two-sided entrepreneurial action: actively and consciously transforming the world around us, and doing so in the face of uncertainty and imperfect knowledge.
In a much more specific sense, this activity applies to the people we would usually call entrepreneurs (Ludwig von Mises called them, “entrepreneur-promoters”). These are the businessmen we all know: the small-business owner, the investment banker, the risk-taker. These are individuals whose entrepreneurial spirit in a special way exceeds those of everyone around them. They are the ones willing to take on greater risk, confront greater uncertainty, and make more difficult decisions.
In any case, I find that this realistic description of the role of entrepreneurship fits extremely well with the theology in The Call of the Entrepreneur. In the film, we learn that the entrepreneur is a “co-creator”: He participates in the act of transforming raw materials and natural resources into products for consumers; but the entrepreneur does so by investing time and energy into the production process. And creativity and imagination play an indispensable role in this process of co-creation.
I remember a kind of feeling of awe when this thought dawned on me during Dr. Klein’s lecture. Here we find yet another example of how the market process, when understood and employed correctly, is not simply a morally indifferent result of choice, but a morally positive thing. Society and its consumers are made better off, and both the laborer and the entrepreneur are reminded of their human dignity as they participate in God’s work of fashioning the world.
In a recent post Dr. Sam Gregg outlined several arguments in the case for returning to some kind of gold or commodity-based monetary system. One of the advantages to a commodity standard, Dr. Gregg argues, is that it “placed a high premium on economic security by reducing the uncertainty and risk that flows from fluctuations in the value of money that have nothing to do with the relative valuation of different goods and services.”
One of the main determinants of trust in a currency is its ability to maintain its value over time.
On that note, reports have begun coming recently from central Michigan about the emergence of “competing currencies.” One of the concerns that the currency traders specifically raise during the video is their uncertainty over the future value of the dollar.
Milton Friedman used to remark that one indicator of a country’s relative success was how people “voted with their feet”: i.e. people fled from Cuba to the USA, and from China to Hong Kong, but never the other way around.
In the same way, even as Fed Chairman Ben Bernanke assures us that the nation’s central bank expects low inflation for the near future, perhaps this episode raises a new question: What does people “voting with their currency” mean for expectations of inflation and the stability of the dollar?
Thomas Jefferson’s long-forgotten theory of state nullification may have found an ideal time for a resurgence, as the Tea Party and other groups advocate limited government as a solution to many of our current problems in health care, the economic crisis, our broken educational system, and the relentless expansion of government. The concept of nullification is simple, yet powerful: That individual states can and should refuse to enforce unconstitutional federal laws; and that the states, not the federal government, should have the final word on constitutional interpretation. The return of this “forbidden idea” (as its contemporary advocates sometimes describe it) represents not only an opportunity for small-government groups like the Tea Party to enact substantial change, but it also provides a unique opportunity those who are serious about a Christian social witness in public life to implement the principle of subsidiarity.
It is in this spirit that Dr. Thomas E. Woods, Jr. writes his newest book, Nullification: How to Resist Federal Tyranny in the 21st Century. Dr. Woods, who has authored two publications for the Acton Institute (the award-winning The Church and the Market and the monograph Beyond Distributism), as well as two New York Times bestsellers, now brings back the tradition of nullification into the public eye.
The seemingly radical idea of nullification flies in the face of nearly everything we have learned about the federal government and the Constitution: that federal authority always supersedes that of the states, that the Supreme Court has the final say on interpreting the Constitution, and that the only way to get rid of undesirable federal laws is to either have Congress repeal them or the Supreme Court overturn them.
However, Thomas Jefferson was convinced that if the federal government had a monopoly on interpreting the meaning of the Constitution, then there would be no certain way to constrain an unconstitutional expansion of its power. What if the constitutional system of checks and balances were to fail? What if, counter to the wishes of James Madison, ambition fails to counteract ambition, and the different branches of the federal government are able to cooperate in increasing the central government’s reach? Rather than wait two, four, or six years until the next election cycle, Jefferson thought, a more “rightful remedy” would be for states to simply declare that the laws in question violated the Constitution, and would not be enforced in said states.
He was not alone in this belief, as one can find the practice of nullification in the earliest years of the Republic. Kentucky and Virginia famously nullified the Alien and Sedition Acts of 1798. During Jefferson’s own presidency, northern states employed nullification against the total trade embargo imposed by the federal government. During the War of 1812, northern states once more passed resolutions nullifying any potential federal conscription acts. South Carolina passed resolutions nullifying the 1832 “tariff of abominations.” And in the 1850’s, free states frequently invoked nullification in an effort to combat unconstitutional aspects of the fugitive slave laws. Also interesting to note is that southern states did not invoke nullification to defend slavery.
To some extent, this practice continues today. As the Tenth Amendment Center thoroughly documents, dozens of states seek to propose legislation that would prohibit the federal government from enacting health insurance mandates, enforcing some federal gun laws, abusing the interstate commerce clause, and imposing cap-and-trade regulations, among other things. And though these efforts are still underway, supporters of nullification can already point to one success story: over two dozen states openly defied the Real ID Act of 2005, which imposed federal standards on state drivers’ licenses. Though the law is still “on the books,” so to speak, the federal government has given up on enforcement, due to the widespread and extremely overt opposition.
But what does all of this have to do with subsidiarity? At their core, the ideas of nullification and federalism that Dr. Woods invokes echo many of the same concerns that the Church raises in speaking of subsidiarity and the role of the state in society: that there needs to be a just division of responsibilities between different social orders. Social problems should be addressed at their lowest possible level. An unnecessary usurpation of power by, for example, the federal government, undermines the role that state governments should play in resolving some of their own domestic problems.
This principle is often invoked in religious discussion of public policy. The Catholic Church places such great emphasis on the principle of subsidiarity that the Compendium of the Social Doctrine of the Church lists subsidiarity as one of the four foundational principles of social teaching. The Church not only exhorts us to respect human dignity, respect the common good, and have solidarity with the poor, but also teaches that we should pursue these social goals in the proper context of subsidiarity:
It is impossible to promote the dignity of the person without showing concern for the family, groups, associations, local territorial realities; in short, for that aggregate of economic, social, cultural, sports-oriented, recreational, professional, and political expressions to which people spontaneously give life and which make it possible for them to achieve effective social growth [….]
On the basis of this principle, all societies of a superior order must adopt attitudes of help (“subsidium”) – therefore of support, promotion, development – with respect to lower-order societies. In this way, intermediate social entities can properly perform the functions that fall to them without being required to hand them over unjustly to other social entities of a higher level, by which they would end up being absorbed and substituted, in the end seeing themselves denied their dignity and essential place. (185-186)
One can certainly see a similar spirit in the intentions of the framers of the Constitution: the purpose of this founding document was not to provide a new kind of all-powerful entity lording over the states; rather, the states created the federal government in order to serve them as an instrument for promoting the common good – as the Compendium says, to provide “support, promotion, and development.” To discover this, one need look no further than the preamble of the Constitution:
“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”
In the same way, subsidiarity dictates that higher orders (e.g. the federal government) exist to promote and assist lower orders (e.g. states) in developing and protecting the common good. But a political system in keeping with the principle of subsidiarity should have appropriate mechanisms to ensure that the abuse and usurpation of power does not take place. This makes the need for a revival of nullification all the more urgent.
Today’s Tea Party-ers eye with skepticism the intrusions of the federal government into all sorts of matters: guns, education, charity, health care, business regulation, etc. They clamor for change, and will certainly have a substantial impact on the coming electoral cycle. But advocates of limited government should also reflect on which strategies are most effective at introducing real and substantial change. Both Thomas Woods and Thomas Jefferson contend that waiting for a benevolent Supreme Court, President, or Congress is not the right way. States cannot trust the federal government to police itself. They must take a direct role in reeling back federal power. Nullification is the best way to concretely implement the principle of subsidiarity, restore true federalism, and strengthen a truly Constitutional rule of law.
Acton’s The Birth of Freedom comes to six PBS stations this Independence Day weekend, and AEI’s Enterprise blog has a good post about the Christian foundations of American freedom and The Birth of Freedom: “It’s a good place to start if you’re interested in recalling, learning, or helping others to learn about the deep roots of the freedom we celebrate every Fourth of July. Those roots define, in part, what it means to be an American citizen.”
PBS Airings This Weekend
Tampa Bay, WEDU–July 4th, 9:00 p.m.
Carbondale, Illinois, WSIU/WUSI–July 4th, 1:00 p.m.
San Diego, KPBS–July 5th, 12:00 am (also July 7th, 4:00 am and July 11th 3:00 a.m.)
Baton Rouge, Louisiana Public Broadcasting–July 4th, 8:00 a.m. on LPB2
Grand Rapids, Michigan, WGVU–July 5th, 12:30 a.m.
Syracuse, New York, WCNY–July 4, 3:00 p.m.
Here’s the PBS station finder if you want to thank your station for airing it or find out if your station plans to air it later.
Last week Acton research fellow Jonathan Witt treated the topic of Tolkien and the free society at the June “Acton on Tap.” I was reminded of this theme when I finished reading C. S. Lewis’ novel, The Lion, the Witch and the Wardrobe (Ed. note: The lack of a serial, or so-called Oxford, comma in that title bothers me.) to my son last night. There’s a beautiful passage towards the end that illustrates what Lewis thought good government looks like:
These two Kings and two Queens governed Narnia well, and long and happy was their reign. At first much of their time was spent in seeking out the remnants of the White Witch’s army and destroying them, and indeed for a long time there would be news of evil things lurking in the wilder parts of the forest—a haunting here and a killing there, a glimpse of a werewolf one month and a rumor of a hag the next. But in the end all that foul brood was stamped out. And they made good laws and kept the peace and saved good trees from being unnecessarily cut down, and liberated young dwarfs and young satyrs from being sent to school, and generally stopped busybodies and interferers and encouraged ordinary people who wanted to live and let live.
This kind of vision is why I’m really at heart a monarchist (even if only of a divine sort).
U·to·pi·a [yoo-toh-pee-uh]- noun – an imagined place or state of things in which everything is perfect. The word was first used in the book Utopia (1516) by Sir Thomas More. The opposite of dystopia.
ORIGIN based on Greek ou not + tóp(os) a place
Note, dear reader, the origin of the term “utopia”: the Greek root indicates that utopia is, literally, nowhere. It is not a place. It does not exist. Sir Thomas More, who first used the term, certainly never considered such a place to be realistically possible. And the truth of the matter is that anyone remotely acquainted with the reality of human nature and history must admit that we do not live in a perfect world, and that such a place would be impossible for fallen humanity to create.
Anyone, that is, besides leftist intellectuals and politicians, who continue to insist – against the overwhelming evidence of history – that socialism can work, that indeed it must work! They argue, in spite of all the plain evidence against them, that socialist solutions are more efficient and equitable than market solutions, and that the classical liberal system that has created the most vibrant societies and powerful economies in world history should be at the very least reined in and subjected to strict scrutiny, and at most outright replaced by a “more humane” socialist system.
Jean-François Revel was a French intellectual, a member of the Académie française, and one of the greatest French political philosophers of the 20th century, at least in the seemingly small branch of 20th century French political philosophy that wasn’t completely enamored of totalitarian schemes. Prior to his death in 2006, he penned a book called Le Grande Parade, which has now been translated into English and re-titled Last Exit to Utopia, in which he exposes the intellectual and moral failure of leftist intellectuals who have served as apologists for the brutal communist regimes that brought misery and death to millions in the last century, and examines the project that was undertaken by the left after the fall of communism to rehabilitate Marxist and socialist ideas.
Revel was no stranger to this type of clear thinking; indeed, as early as 1970 (in an earlier work, Without Marx or Jesus) he was willing to completely dismiss the argument that Stalin had hijacked and warped the course of Lenin’s revolution by noting that “…Neither Lenin, if he had lived, nor Trotsky, if he had remained in power, would have acted any differently from Stalin.” He understood that the problems in socialist systems were not caused by people corrupting the system, but stemmed from the design of the system itself. He restates that 1970 argument in 2000 – this time with the benefit of retrospect – in Utopia, describing the state of affairs after the fall of the Berlin Wall in 1989: (more…)