In the first months of the Great Depression a secret association began between Engelbert Dollfuss, the future Chancellor of Austria, and Ludwig von Mises, dean of the Austrian School of Economics. According to Mises, in time of crisis a democratic government must take a back seat to the survival of the Free Market system, especially when Government is overly protective of the lives and livelihood of workers. To those who questioned how a free-market freak like Mises could cavalierly call for government intervention, even armed intervention when it suited him, Mises answered:
Self-regulation of the market is strongly obstructed through the intervention of the labor unions… This goal the unions pursue by the use of violence… Were [Government] to proceed in the usual way and interfere with the criminals who abuse jobseekers and vandalize the machines and other of the entrepreneurs’ facilities, then circumstances would be different.
Or, as Andrew Mellon, the US Secretary of the Treasury, put it, "Liquidate Labor." Literally.
Four years later, Dollfuss put Mises' suggestions into practice, sending in the regulars and the Heimwehr, the private army funded by Austrian and German industrialists to crush the elected Government of "Red" Vienna, instituting the period of Austro-Fascism and putting the country's finances in order. As Gulick explains, the First Republic was destroyed because of "the determination of big business and big finance to crush labor." By 1938 the working class was sufficiently crushed and the State's coffers sufficiently replenished to allow the Nazis to breeze in and take over the Treasury in order to finance the next World War—nice work, Wiggy.
Those who lie about History are hoping to repeat it. There is little in James Grant's thesis that isn't a reiteration of the Austrian School's own fantasy interpretation of the Depression of 1920-1921 in America: James argument, presently presented in the press as some daring new statement, has been repeated and debunked ad neo-seam over the past sixty-five years. According to the Austrian eco-chamber, in 1920-21 the Government decided to do nothing in the face of economic contraction, "therefore" the economy quickly recovered, as it would have done during the Great Depression if the Government hadn't intervened; as it will, supposedly, if the Government doesn't intervene tomorrow.
And here's a few forgotten thoughts about the Forgotten Depression: perhaps it started in 1919 in Seattle, when a supposedly neutral Government agency sent its plans to bust the unions to the Metal Trades Council (union) by mistake instead of the Metal Trades Association (bosses). Or perhaps with the vicious Palmer Raids against "hyphenated-Americans," meaning immigrant workers: this is where J. Edgar Hoover got his big break as a union-buster and red-baiter, before moving on to other types of hyphenateds. Then again, you could argue that the Government really bore no responsibility in the crushing of the Anaconda Road Massacre in 1920 since the troops that were supposed to maintain order didn't turn up until the day after seventeen miners were shot in the back. The operation was a success and the workers died; that must be what one enthusiastic reviewer of Grant's book when he referred to the Government's policy as "steely inaction." This is the same strike that provides the back story to Dashiell Hammett's appropriately named novel, "Red Harvest," with its tale of privatized fascism in a broken company town. Or, as Mises put it in a later screed,
The maintenance of a government apparatus of courts, police officers, prisons, and of armed forces requires considerable expenditure. To levy taxes for these purposes is fully compatible with the freedom the individual enjoys in a free market economy… Every step a government takes beyond the fulfillment of its essential functions of protecting the smooth operation of the market economy against aggression, whether on the part of domestic or foreign disturbers, is a step forward on a road that directly leads into the totalitarian system where there is no freedom at all.
Hey, libertarians, if that's what you want, only don't start whining once you get it. There's hope for the Planet when even free-marketers start to recycle their own garbage.
January 27, 2015
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Goon but not forgotten