Ep. 288 Do Libertarian Conspiracy Theories Violate Austrian Economics?
Bob uses a recent exchange between Dave Smith and reason’s Liz Wolfe to analyze the apparent tension between libertarian allegations of coordinated skullduggery and the Austrian critique of socialism.
Mentioned in the Episode and Other Links of Interest:
- The Part of the Problem episode featuring Liz Wolfe.
- Bob’s pamphlet Chaos Theory, his Libertarian Papers article on private military defense, and a Mises U lecture on private military defense.
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
Bob,
You mentioned the meat grinder of WW1. If you have not seen it, Path of Glory (Stanley Kubrick directing Kirk Douglas), you should. It’s the best antiwar movie i have ever watched.
I felt like I had to push back on this a little bit.
I think the real reason why we can say the state appears inefficient in all of these other areas, but may still be able to orchestrate sophisticated conspiracies has to do with correctly understanding the insight of Mises’ calculation problem. The main limitation of the state is that it can’t satisfy consumer preferences, because, by definition, the state maintains itself via coercion, and doesn’t have profit and loss feedback to guide its decisions. The state only appears to be incompetent because we usually implicitly assume that it’s trying to improve the public welfare – the primary thing that it cannot do. But the state CAN martial its vast pile of resources to satisfy its OWN preferences just as well as a private organization of comparable size. And this is why it appears to be effective at orchestrating conspiracies, manipulating the public, killing and destroying and so forth.
I think you’re right that, in practice, the US government is bad at doing even these things, but I think the reasons for that have to do with how it’s organized, specifically, its sheer size and the fact that the public expects a certain amount of accountability. The expectation of public accountability makes the government’s internal procedures even more bureaucratic than they otherwise would be. Everything they do has to be documented, and approved according to rigid procedures. More importantly, it also has lead the government to be created in a way that distributes power across the organization. As a result, the government usually lacks a unified set of preferences, and is instead a battle ground of interests – like a creature with a hundred brains, each trying to move the body towards its own ends. I think this explains what we saw during Covid. Certain actors in the government wanted to enrich themselves and their pharmaceutical cronies, but other actors were more risk averse, and were unwilling to go as far in bamboozling the public. So you would get one set of “facts” coming out one day, and a more conservative set of “facts” coming out the next. You would get the wild sensationalism of the CDC spokesmen contradicted by the more careful and cautious distortions of the CDC’s site content manager, etc.
The sheer size of the government is also a significant reason for its inefficiency. Mises describes in ‘Bureaucracy’ how an organization necessarily becomes more inefficient as it grows, until it can scarcely function at all. No private organization exists that even comes close to the size of the US government, and this makes the government appear uniquely inefficient compared to private organizations. But a private organization as massive as the US government would suffer from that same inefficiency.
I wanted to say something along these lines. I’ve worked for very large corporations and they were hamstrung by bureaucracy. But still nowhere nearly as badly as government is. The people in government accomplish their goals of obtaining money and power. That’s as close to success as any organization can be said to be.
Would it be a conspiracy theory to suggest that the phrase “conspiracy theory” was created by the CIA and disseminated to the public via the mainstream media via Operation Mockingbird? Inquiring minds want to know.
Fairly sure that no Austrian Economist ever said that Communism does not exist … they might have said that Communism is inefficient and ends up hurting a lot of people in many horrible ways.
Is anyone seriously suggesting that the Mafia don’t exist, or that there have never been any violent street gangs anywhere in the world? Is that the official position of Reason Magazine … organized crime is impossible?!?
Why do we get into these nutty arguments? I feel like there might be something more important to focus on.
I think what we’re trying to get at is the entropy advantage that voluntary efforts have over coercive efforts. Voluntary groups have individual incentives aligned sufficiently to create a kind of coherence of action that can even reach a self-sustaining level, whereas coercion thinks it will automatically happen if we just give orders with a threat of punishment. With people’s interests all out of sync, the coercive thing lumbers along like a train wreck–might accomplish something, especially in the beginning, but far inferior.
This is the difference between a tornado and a demolition team. Sure, the government can hire a demolition team, but then the coercive misalignment occurs around the dynamics of raising the funds, approving the plan, etc. That’s what we have with the military: a potentially powerful command structure that sometimes can act with great synchronized efficiency… but at WHAT? For WHOM? And WHY? For HOW MUCH money? The dis-coordination retreats to that higher level and leaves people deceived when they watch the physical action taking place at a micro level–when we’re lucky and things are going well, after the “hurry up and wait” phase and without a SNAFU or an attack of Murphy’s Law. The larger the corporation, the more government-like they can act, but private actors still have that restorative force of voluntarily aligned interests to keep them from spinning off into a tornado.
And you can’t BUILD anything with a tornado, though you can with a hired team organized like the demolition experts, just by hiring different personnel with the skills and tools for the given job.
There is a real sense in which “government is good at destruction” but only in this high-entropy manner, such as dumping trillions of dollars into good-sounding social programs that make people worse off. That’s real destructive talent! A tornado. But it’s totally different than the talent of blowing up a bridge efficiently or “killing all the terrorists.” It’s a talent for chaos.
Conspiracies operate just fine in the tornado environment, the same way as the hired demolition team. The conspirators can organize themselves to commandeer the government resources they need for their plan; if they have the resources at their disposal every day at work, what’s to stop them? The incompetence is at the higher level of fit-for-purpose of the government at large, as a result of the conspiracy making it do things off-mission. We can hide a conspiracy, cabal, or resistance much more easily inside a government’s ponderous bureaucracy than we can inside a corporation that might hire a new CEO to clean house at any time. If Microsoft became infested with a sort of “deep state,” furtively resisting the executives and board, or just sabotaging profitability or market share, how long would that last? The Twitter takeover is an example, with the restorative force coming entirely from outside, from market and social pressures that routinely fail to budge government agencies at all. Plus one billionaire… put that’s the point, isn’t it? It only takes ONE billionaire. Trump tried to be that ONE billionaire in the government sphere, and how did that turn out?
The trouble with this “conspiracies aren’t Austrian” thesis is that it gets confused by its own words and fails to *discern* what is meant by “conspiracy” and “good at destruction.”
This to me was some of your best commentary.