How Ludwig von Mises Dispels Current Myths About Capitalism

0:00The title in the program was the paper I gave last year, so I don't know how that happened. Professor Gerson, do you like putting Balkan Sobrani tobacco in your pipe? Well, you were my professor back in 1977, my professor of metaphysics, because I remember you had a pipe and you always had that Turkish... Yeah, you always smoked Balkan Sobrani, so it's the same guy. I haven't seen you since, but what a coincidence. Here we are and we're back to back, yeah, with the same... Yeah, I took up smoking a pipe after that class too. I still smoke mine sometimes. Okay. Yes, I want to talk about...

0:45I have sort of two parts to my paper and of course I'll have to... I think I have about 20 minutes, is that okay? Okay, I'll read my abstract first. The purpose of this paper will be to take a look at Cato's work on agriculture. of Agriculture, Cato lived in the second century before Christ, to see how Romans organized agricultural activity. This paper is not meant to be a purely historical reflection, but the purpose is to see whether there are any elements of Roman practice which could be applied in a world of highly subsidized agricultural activity today. For example, Cato teaches that your barn should be bigger than your house, showing propensity towards frugality, simplicity and investment. Also, I would like to ask thus, is the small farm an economic possibility today in the world of industrial farming?

1:34Is the small farm worth promoting? Can any one country also unilaterally reduce its subsidies and maintain its agricultural sovereignty at the same time? What would be the consequences of liberalism in agriculture today, good or bad? And can we learn anything from the pragmatism of the Romans? And for those of you that were at the session this morning, as you can see, my paper is somewhat similar to the one that was given this morning on farming. Now I'd like to say a few words. I live in Quebec, and so I can only sort of speak from my region, which I know quite well. And in Quebec, we have somewhat of a crisis in farming today. There is a lot of farming activity in Quebec, but I think it's the same thing everywhere.

2:21It's extremely expensive now to acquire a farm. It's almost impossible for young couples, let's say in their 20s, to acquire a farm. Any farm will cost at least a million dollars. And if you want to, for example, build a farm from scratch, let's say a hog farm with stables being about 300 feet long and that could perhaps keep a thousand hogs, you're looking at about five million dollars. That's including the purchase of the land, a couple hundred acres of Money, The Theory of Money and Credit of Money and Credit of Money and Credit of Money

3:16Gage à la mort, in French it means it's like a death wish, it's like a bond to write till death. So it's a very tough way to start when you're mortgaged for over a million dollars. Another big problem with the farms today too is these large farms is that 39% of the farms do not have anyone to take them over. It means there's no succession. The children of the farmers do not want to stay on the farm. They've left the farm. of the Farm And even in the cases where one of the children wants to take over the farm, it's not often a very happy situation for the farmer, because a lot of these farmers, there are couples who are maybe in their late 50s, they've worked very hard for 30 years, and as you know in farming it's 7 days a week, you really can't take holidays or go down south, it's a lot of work, and they don't necessarily want to give their farm to their kids, they would

4:39Now, in Quebec, and this was confirmed to me by a bank, that 50% of the farms don't even make any profit at all, and that is with the subsidies they get. Despite the subsidies, only half are making some kind of a profit, and on most farms, either the husband or the wife has a day job, because they cannot survive just from the farming. Now, also we have challenges in the sense that we're in a very cold climate and it's very hard to compete with farms in southern areas like here or in Brazil. So, what is happening is that a lot of farms are being dismantled and this is leading to a certain risk in terms of, like I said, agricultural sovereignty or as you said this morning, food security. If farms are going to waste, how can a society, let's say in our case a certain province, how can we be sure of being able to feed ourselves in the future?

5:38If you rely just on imports, you can say, well you can import food, well that's fine, but the cost of transportation and oil is going up all the time and food can become very expensive in that sense. So it is worth saving, it is worth working towards. Now also, of course, the subsidies have distorted things to a great extent. For example, in the 1980s, the Quebec government was subsidizing the creation of hog farms, but today they're trying to, they've put a moratorium on hog farms. You cannot create a hog farm today because the environmental movement now is very much against hog farming and for different reasons that you could perhaps understand. And another thing is that the subsidies, the system of subsidies that exists has created the fact that farm equipment is extremely expensive.

6:31And I'm not just talking about machinery, large machineries, tractors or combines, but even the smallest things like small thermostats and ventilators, regulators in the stables The whole situation seems to be into a big mess, but it's not a joke, it's a very serious thing. Also in the world today, there is going to be a food crisis. Food Crisis, we're already having food riots around food and many parts of the world there's a desertification going on, in other words deserts are growing, in China more and more the deserts are expanding, in Australia the deserts are growing, there are problems of drought even in the Canadian prairies.

7:30So the farm areas that are left somehow have to stay productive otherwise humanity will be in big trouble. Now my question is, also as you said this morning in your paper with the problem of subsidies is that of course the subsidies go to the biggest industrial farms and the small farmer gets almost nothing because a lot of the small farmers are working under contract to bigger companies and the bigger companies are the producers, they get the subsidies and then they put the squeeze on the small farmer who has to basically work for peanuts. Now another problem The problem that this subsidies has created is a lot of the big industrial farms are very, very highly leveraged.

8:15They've had their big expansion because they've borrowed money, huge amounts of money, knowing that they're going to have the subsidies to make their payments. So this is all a very complex situation. What I would like to say is that we have to somehow find a way back to the family farm. Now, for a family to survive, I have an old book I should have brought it. of the Garage Sale is called Five Acres in Independence. It was written in the 1930s at the height of the depression to get to teach people how to farm their five acres and survive. And maybe a small farm today could be a hundred acres, but somehow this has to be re-encouraged and we have to find a way to get back to this model and that people and that people would take pleasure in working on a farm.

9:04And I came across this text by the Roman statesman Cato. And this text is from the second century. And when I read it a few years ago, I was just fascinated by it. And I thought, how much wisdom. And the text, Cato was a statesman who grew up on a farm himself. And I'll just read a little bit. Mises growing up on the farm, he acquired the qualities of simplicity, frugality, honesty, austerity and patriotism, which were to become the typical Roman virtues. And from his youth, he also acquired a love for the soil. Nevertheless, he went on to do a military and political career and then he became a very, very large-scale farmer. He wrote about 150 books and he was He was actually one of the first self-published author in history, kind of like the rich dad, poor dad guy, he was extremely popular and he also used to, he held some hundred and seventy speeches in front of the Roman Senate and he was once on a mission in Carthage and he hated the Carthaginians and he used to end every speech by saying Carthage must be destroyed and that started the Third Punic War, I mean the Senate then followed his advice. Anyways, of all his writings and all

10:24All his work, everything is lost. We only have fragments that we can read in Cicero and other authors, except for one book, which is called De Agricultura, on agriculture. And it is a fascinating book that covers all aspects of agriculture, from land, from equipment, from planting, the different types of crops, talks about land reform. This is a senior statesman writing. And at the end of the book, he even gives his own recipe for cheesecake. So, he covers everything. Now, let me read a little bit. Marcus Cato begins his book De Agricultura by admitting there are some activities which are more profitable than farming such as being a trader, which by the way can also be very risky, he says, but the most honorable of occupations is that of the farmer and so it has been from the times of the ancients. And to quote Marcus Cato, the trader I consider to be an energetic man and and one bent on making money, but as I said above, it is a dangerous career and one subject

11:30to disaster. On the other hand, it is from the farming class that the bravest men and sturdiest soldiers come and their calling is most highly respected, their livelihood is most assured and is looked upon with the least hostility and those who are engaged in that pursuit are least inclined to be disaffected. Cato gives his advice to one who is thinking about buying a farm. This book is a practical manual for farmers or those wishing to acquire a farm. He says, do not rush into it and look around very carefully. It is not enough to just go over it once. He recommends examining the investment very carefully. First of all, the land must be in such a place where you will have pleasure each time you visit it.

12:15Then he writes, look at the neighbor's farms. Notice how the neighbors keep up their places. If the district is good, they should be well kept. The farm should be located where the climate is good, not subject to storms, and if possible, it should lie at the foot of a mountain and face south. There should be workers living nearby, water sources should be abundant, and the farm should be close to a town or a seaport or a good road. It is best if the farm is in an area where ownership does not change very often and where those who have sold their farms are sorry to have done so. It is best to buy the farm from someone who is a good farmer and a good builder. Observe too how well the farm is equipped. If there are numerous oil presses and wine vats, you can know that the farm has a good yield.

13:04If there are few, you know that the yield is poor. But more important than the equipment is the location. You don't want to be paying just for equipment. It is the location which is to be the principal value. And Cato says, and I quote, See that it is equipped as economically as possible. Remember that a farm is like a man. However great the income, if there is extravagance, little is left. When one acquires the farm, the first thing is to go over everything. When the master arrives at the farmstead, after paying his respects to the god of the household, let him go over the whole farm, if possible, the same day. Then the owner must meet the farm manager and learn what has been done recently and what is still to be done. Afterwards, cash accounts must be checked, grain accounts, purchases, etc.

13:53Then decisions must be made, and orders given, and do this in writing, says Cato. Cato advises that nothing be kept on the farm which is not needed. Sell superfluous things, don't keep old stock. Sell worn out oxen, blemished cattle, blemished sheep, wool, hides, an old wagon, old tools Keto advises that, much before building, planting has to be done first. The farmer should think a long time about building, but planting is a thing not to be thought about but done. You should build when you reach the age of 36, but only if the land has been planted.

14:38Then before the house must come the barn. It is well for the master to have a well-built barn. When you do build your house, build within your means, Cato says. Also, make the house a comfortable one so that you spend more time there. If you build substantially on a good farm, placing the house in a good situation so that you can live comfortably in the country, you will like to visit it and will do so oftener. The farm will improve, there will be less wrongdoing and you will receive greater returns. Also, be a good neighbour, Cato writes. It will be good for business. Be a good neighbour and do not let your people commit offences. If you are popular in the neighbourhood, it will be easier for you to sell your produce, easier to let out your work, easier to secure extra hands. If you build, the neighbours will help you with their work, their teams and their materials. If trouble comes upon you, which God forbid, they will be glad to

15:34It is important to find a good manager for the farm. He must not steal. He must settle disputes among the slaves and punish them in proportion to their faults. He must see that the servants are comfortably provided for and do not suffer from cold or hunger. In other words, he must take proper care of the workforce and, in today's terms, pay them a proper wage. The manager must not tolerate any nonsense or shady work, but he must also know how to praise work well done. Well Done, says Cato. As you can see, it's very modern in his psychology. He must express his appreciation of good work so that others may take pleasure in well-doing. Furthermore, the manager must be loyal to the master. He must keep the servants busy and see that the master's orders are carried out. He must not assume that he knows more than the master.

16:26He must consider the master's friends his own friends. He must extend credit to no one Kato then also goes into the importance of rationality in business decisions in the farm. The master must not consult fortune tellers or prophets or diviners or astrologers. In other words, religious beliefs must give thankfulness to the gods, but basically decisions are made rationally. And all of this I found very much, just to finish off, I could go on, but just to finish off saying, all of this is very much in line with the writings of Ludwig von Mises and the sort of common sense approach to business and the also reason being our main criteria.

17:23And you have all of this in this ancient text by Cato. And I think I'll stop there just to respect the time period.