War, Peace, and the Industrial Revolution

0:00This morning what I'll be doing is finishing up some important and contemporary points about the question of war and peace among classical liberals and libertarians and then discuss a major issue in the whole history of classical liberalism that is the effects of the industrial revolution. The point of contemporary interest is an issue that is often referred to as a question of the democratic piece. There are a number of theoreticians that have proposed this and it has drawn some criticism as well.

0:46This is a kind of neo-Wilsonian position and it maintains basically that the antidote, The ultimate antidote to war is universal democracy. The major propositions in regard to international relations that it sets forth can be put in the words of a writer whom perhaps you're familiar with, R.J. Rummel. R.J. Rommel is most famous for his book, Death by Government. He's a professor at the University of Honolulu, which strikes me as a peculiar thing to begin with, and is often cited by people on our side because his book, Death by Government, The Federal Government is a compendium of the number of people killed by various governments in recent decades in the 20th century, so that it seems to be useful.

1:52I don't know if you've come across the book or come across references to it, but I would urge you to be very careful in using his statistics. He comes up with a figure of deaths resulting from the policies of the Soviet regime of, I think, 61 million people, which is totally preposterous. Nobody except him believes that. And people who have been critics for a very long time, people who have said, you know, 61 million people, which is totally preposterous. Nobody except him believes that. And people who have been critics for a very long time of the Soviet Union, we'll be talking about Marxism and Soviet Communism tomorrow, have settled on a figure of about 20 million people under Lenin and Stalin, due to all causes. So I'm saying that Rummel is somebody who's in his own field of alleged expertise has to be treated with a certain amount of care.

3:01But he's come into the debate on the question of the democratic peace and might as well quote him as well as anybody else because these are the basic propositions of this school of thought. One, democracies don't make war on each other. Two, democracies limit bilateral violence, and three, democracies are the least warlike of states. Rommel likens liberal democracy, the phrase that's used, liberal democracy which equates with the free society, questionable on a number of grounds, to Hayek's notion of spontaneous order.

3:46Liberal democracy, according to Rommel, is a free market writ large of the economy, society and politics within an overarching legal framework of civil liberties and political rights. Such polities are conducive to compromise and tolerance and are naturally attracted to each other because of their domestic similarities, thus reducing the possibility of violence between them. It is claimed that a vast body of data from the time of the city-states of ancient Greece to the present confirms these claims. The policy implications are clear and indeed have been adopted by the U.S. government.

4:32President Bush himself has said something along the lines of democracies don't make war on democracies. By universalizing democracies, including Rommel and the other people of this school, we can expect an end to war. The theory of the democratic peace has, of course, been subject to a great deal of criticism, and you can check out on the internet articles by Christopher Lane and especially Ted Carpenter of the Cato Institute, criticizing this point of view. Christopher Lane argues that the realist view of international affairs much better explains the lack of armed conflict among democratic nations.

5:20That is, the power relations that existed, for instance, through the Cold War. Because of the fear of the Soviet Union, it's unlikely that other democracies would have entered into any kind of hostile relationship with the United States. Definitions appear to be particularly troublesome. In order to extend the range of data over 2,500 years back to democratic, according to Rommel, democratic classical Athens, He states that the definition of democracy employed in that case was loosened to include the criterion of at least two-thirds of the males having equal rights. However, this just doesn't work. Even in classical Athens, leaving aside other Greek city-states, and leaving aside women, the majority of the population consisted of persons without political rights, slaves and foreigners.

6:13The number of actual citizens entitled to vote was quite small compared to the population of Athens. Cases in which democracies appear to have gone to war against each other are dealt with by denying the name democracy to one of the parties in the conflict. Thus, the Boer Republics, which I talked about last time in connection with the Boer War, The Boer Republics were not democracies, according to this point of view, despite their being so viewed by Britain and the rest of the world. Nobody at that time thought that if you denied votes to illiterate tribal blacks, you were somehow infringing on democracy. So we have the Boer War, Britain presumably a democracy.

7:00At that time, the Boer Republics democracies and yet they went to war. The confederacy, the confederate states of America, also does not qualify as a democracy because only white males could vote and the president was not directly elected. Here Rommel seems to have forgotten that was also the case in the republic founded in 1789 that the president wasn't directly elected. He was elected by a complicated system involving the electoral college which in those days was not a pure formality. Imperial Germany, that is the German Reich founded by Bismarck in 1871, was not democratic according to this view, despite the fact that it had universal manhood suffrage, which Britain did not achieve until decades after that.

7:52Because there was no ministerial responsibility to the Reichstag, the army was not under Reichstag control and, as Rommel says, in foreign policy Germany was autocratic without a democratic leash. It is in particular historical cases such as this that Rommel and the other theorists, who were political scientists and not historians, show an astonishing ignorance. The crisis of July 1914, which I'll talk about on Friday in connection with the origins of the First World War, not only was the British public in Parliament in the dark regarding the secret commitments to France that brought England into the war, but it transpired that even the Cabinet itself was unaware of their true content.

8:42That is, the fact that England had obligations, the French were prepared and insisted on calling in, was not known even to the British parliament or the cabinet itself. This is when John Morley, the last of the great English liberals, resigned from the Asquith government in protest. The idea that the foreign policy of any of the great powers at the time, including the United States, labored under a democratic leash, is absurd. And one example that some of these people use shows an appalling ignorance about how Italy got into the First World War.

9:28What they want to say is that Italy was a liberal government, so it reneged on its obligations to Germany and Austria, and sided with the liberal countries of England and France. That's not how Italy got into the war. Italy was not a democracy at the time. About 10% of the adult males could vote because of literacy and property qualifications. It was a backdoor, a back-stairs intrigue that got Italy into the war once the Italian regime was promised colonial spoils after the war. War. But leaving that aside, I imagine these kind of details seem a bit arcane to most people, somewhat obscure. But the fact is that this is a historical argument. Do democracies ever make war on other democracies? Is democracy historically restraining influence on war making? And the people who take that position, including Rommel, are simply wrong on the history.

10:38Democratic England declared war on Democratic Finland in 1941, to take another small example, as part of Churchill's desire to appease Stalin. Now, a striking example is Rommel's treatment of the Israeli attack on the American spy ship USS Liberty during the Arab-Israeli war of 1967. I don't know, if you know about that, there are websites devoted to this problem by, I think, sustained by some of the remaining survivors of that attack. The attack by the Israelis, which resulted in the death of 34 American sailors and the wounding of 171 others, appears to have been deliberate by all the evidence.

11:24Ordinarily, such an attack would result in a state of war. In this case it did not, because among other reasons, President Lyndon Johnson's position was, according to a U.S. Navy Admiral, quote, that he didn't care if the ship sunk, he would not embarrass his allies, end quote. In any case, Rummel takes the assault to have been intended by the Israelis. He doesn't think that it was an accident or a matter of misidentifying the ship. and Rommel's strange grounds for leaving such an act of warfare out of consideration are that Israel was only partially free owing to its heavily socialized economy. You see how definitions here are being massaged as Carpenter says.

12:13He seems not to realize what bringing socialized economic elements does to his rosy-eyed view of the liberal democracies in the present world and his equation of democracy and freedom. We go back to Herbert Spencer, a century, more than a century ago now, who at the end of his life lived to see people talking so blithely about democracy and how that legitimates anything the government does. This is what Spencer said, free thinks the Englishman. How can I be other than free if by my vote I share in electing a representative who helps to determine the national transactions home and abroad?

13:00But this is what Spencer replies to that position. Delivering a paper ballot he identifies with the possession of those unrestrained activities which liberty implies. This is the case nowadays very often, isn't it? and one reason why the government and whoever controls public service announcements and so on insists that everybody has an obligation to vote because this equates with the most basic freedom of the world. But Spencer says, despite the fact that an individual can deliver this paper ballot once every two years or four years or whatever To take one instance, much more important is the threatened penalty that every day reminds him that his children must be stamped with the state pattern, not as he wills it, but as others will.

13:55What Spencer is saying is much more important than this 100 millionth of a vote, for instance, that Americans have in a presidential election every four years. More important than that is the fact that they're under the thumb of the system of public education. Enforced compulsory attendance, state subsidies, state dictation of content, the content of your kids' minds, that's a lot more important than this mystified, reified, idealized paper ballot. Spencer wrote that the essential question for the citizen is is what part of his work goes to the power which rules over him and what part remains available for satisfying his own wants.

14:43What I'm getting at is what is this thing liberal democracy? Spencer gives a good rule of thumb. The individual is free to the degree that he can control the product of his own labor, the product of his own efforts on the free market. What do we see among these so-called liberal democracies in the world today? And the pattern of liberal democracy that the United States intends to impose wherever it goes, if it even gets that far and is successful at it. In all likelihood, Spencer would have scoffed at the notion that welfare democracies that regularly tax away 50 or 60 percent of the citizens' income can rationally be termed free societies.

15:32They have, sure, I mean the people have the right to produce and distribute pornography to their hearts content, and I'm not saying they should be interfered with, it's a personal matter, but I don't think that that freedom is as important as the freedom to keep what you yourself have earned, and to use it for your own purposes and the purposes of your family. Now, Rommel concedes that even within democracies there are agencies such as the CIA that are virtually totalitarian subsystems, that is under no popular control whatsoever. This he does to forestall the criticism that the United States in recent decades has plotted assassinations, brought into being armed insurrections with states with which we are not at war and actually overthrown or helped overthrow democratically elected regimes in Guatemala, Iran and Chile for instance.

16:32Actions which are hardly compatible with the tolerance, respect for others, etc. that democracy in that account is supposed to foster. Rommel replies that the solution to this problem, the existence of these The solution to this problem is more sunshine and greater democratic control, as if these were at all likely to occur. Bringing the CIA and all the NSA, other intelligence agencies under democratic control, As if these were at all likely to occur, bringing the CIA and the NSA and other intelligence agencies under democratic control, particularly as the United States undertakes to involve itself in the internal affairs of countries all over the world in an attempt to transform them into democracies.

17:27How many people in America even know that the CIA plotted a number of times to assassinate Fidel Castro? The only question is whether they bothered to inform John Kennedy about it or kept him in the dark so that he could invoke deniability if it ever was made public. They tried a number of times, and with their usual brilliance and invariable success, they tried to poison his cigars, they tried to have some kind of depilatory agent introduced so he would lose his beard and the status symbol or whatever patriarchal macho thing it meant to his people.

18:16and a number of other times. It's not surprising that he invited Soviet missiles, especially after the Bay of Pigs invasion of Cuba. So this is how the CIA operates and the idea that somehow sunshine is going to be brought into the activities of the CIA is absurd. One aspect of the question that seems to have been overlooked by the democratic peace advocates is this. Let us suppose that all countries could be turned overnight or in a short amount of time into well-established democracies, because that's a criterion that are used by these theorists, enjoying civil liberties, the rule of law, property rights, etc.

19:09Then, leaving other considerations aside, the notion of universal, perpetual democratic peace might have a certain superficial plausibility, unless what a world of well-established democracies eventuates into would-be world government and short of a nuclear holocaust that's the it's the worst thing that could happen to our race. The idea that of a universal government, right, tax harmonization throughout the world, redistribution from America, Europe, and Canada to the majority of the world's population, in India, China, Bangladesh, Indonesia and so on, a World Bank, they don't have to worry about inflating to their heart's content, so aside from world government, even supposing that we still have independent democratic states, even if that should happen, well maybe there could be universities, and universal democratic peace.

20:23However, the process of turning universalizing democracy throughout the world into a reality, the crusade to do so would be a long drawn-out affair entailing a multitude of unintended consequences. The power and authority of the U.S. government would be enhanced, inevitably, I see it's being advanced even in this current war on terrorism and its cost to American taxpayers increased. How much of the free society would remain is problematical. Now I think what I'll end with here are some general considerations drawn from the history of classical liberal thinkers back to Cobden and even before through Cobden, William Graham Sumner, Rothbard, who wrote a lot on this question, and others.

21:20These I propose as general objections to interventionism in foreign affairs. In the case of the United States, today by far the most significant, since this country is the only existing superpower and a would-be world hegemone, a number of theoretical considerations would seem to weigh heavily against the policy of interventionism from a libertarian standpoint. First, there is no reason to suppose that our political leaders are any more competent in international affairs than they are in domestic affairs. If we think they've made a mess of the economy, if we think that they've made a mess of American society, The process by which our leaders are selected is practically guaranteed to assure a general incompetence and ignorance.

22:16Foreign interventions will often be triggered by purely partisan political considerations, that is immediate advantage to the politician or his party, Since the public opinion polls, as is well known, almost invariably register a shot in the arm, as they say, to the president's popularity when an overseas embrogio comes about. Second, the central insight popularized by the School of Public Choice is highly relevant in the field of foreign affairs. The decision to intervene is subject, like all political decisions, to the influence of pressure groups representing constituencies with their own axis to grind. Meanwhile, the interests of the public at large are lost in the process of determining policy.

23:07It cannot be emphasized strongly enough that the American people are rationally ignorant, as the phrase goes among public choice theorists, they are rationally ignorant in foreign affairs. The knowledge of foreign countries, of their histories, of their problems, even their approximate locations on the map, even the continent in which they are located, is limited, shall we say, and it's been the subject of well-earned ridicule. An interventionist foreign policy will tend therefore to be determined by relatively small groups and cliques, with a private interest, financial and sentimental, in foreign entanglements.

24:03Such groups that have in fact influenced U.S. policy abroad include particular capitalist circles, eager to socialize the costs of doing business in foreign countries, are nowadays the oil companies, obviously, and various American ethnic groups with strong emotional attachments to foreign states and political movements. And I don't just mean the Zionists, they're also the Cuban-American constituency in the crucial state of Florida that keeps pressure on the Republican Party Party to continue this economic blockade of Cuba that's been going on for over 40 years now and has not toppled Castro, but has just given Castro and the communists an excuse for the failure of the communist economy in Cuba, can blame it on the Americans and the and the American Embargo, and now across the board, liberal, conservative and centrist political voices say it's time to end this stupid embargo, hasn't done what it was supposed to do, and why is the embargo not ended, to a large extent because of the political influence of this constituency in Florida that feels immensely strongly about it.

25:30Now, third, even supposing that an activist foreign policy were formulated by competent leaders who never exploited it for personal political advantage and who were invulnerable to pressures from special interests, right, fat chance, still, the world is such a complicated place that there will likely be unintended consequences, negative unintended consequences from American interventions. The classic example I'll talk about on Friday is World War I, where U.S. involvement led to total Entente victory, the total victory of England and France, the Paris Peace Conference, which produced the vindictive Treaty of Versailles, setting the stage for World War II.

26:19A further point. Following the reasoning of William Graham Sumner, a globalist policy perverts the American constitutional system, concentrating power in the presidency and the executive branch, some of them like the CIA, totally impervious to public scrutiny, rather than in Congress, and in Washington instead of the states and localities. Inevitably, if you have an activist foreign policy, that's where the power is going to be channeled. The executive branch, because they're the ones who carry out foreign policy, to Washington, rather than the states and the communities, those powers situated in the places furthest from public oversight and activities centered in the area of policy most distant from the interests and concerns of the people at large.

27:08I mean, if you want to talk about democracy, right, I think that you find it a common phenomenon that people get most excited, you see it on your local TV news, don't you? People get most excited about whether a traffic light is going to be put up at this corner or not. They turn out to discuss this, they debate about it, they pressure their councilmen about it. Whereas, and they know something about it, and they have some deep personal interest in it, when it comes to bombing this country or that country, or threatening to bomb this country or that country, or engaging in acts that are actually acts of war, of undeclared war against one country or another, the American people simply go along with their leaders.

27:59after all, leaders know much more than they do and they're certainly impartial and not self-interested in what they're doing and the whole democratic voting and we voted for him, we voted for these leaders, they are our leaders, the whole democratic myth. Finally, focusing on foreign affairs diverts attention from the need to reform at home. Right-centrists, center-right people like Rommel, may be satisfied that the United States is a free country. The works of James Bovard, you don't know Jim Bovard, he has a web page. And he spoke at, I believe, the last scholars conference here in Auburn at the Mises Institute.

28:49He gets published everywhere because he does real good investigative work. He gets published in the Wall Street Journal, the New Republic, but especially in libertarian publications. The works of James Bovard and others tell a different story. Libertarian and also what you might follow in this regard are the columns of Paul Craig Roberts, In case you don't know who he is, Paul Craig Roberts is a very distinguished economist and also historian, as I'll talk about tomorrow, historian of the Soviet Union. He's also a syndicated columnist and he keeps talking about how our American system is little by little being eroded, particularly in rights having to do with the judiciary.

29:41So, Paul Craig Roberts or another author I will suggest to you is a man who has often spoken at the Mises Institute and that's Paul Gottfried. Now Paul has He's written a number of books, very interesting books, two books in particular, two short books in particular in recent years. One book called After Liberalism and the second book, a follow-up to that, something, I forget the name exactly, but it's about multiculturalism. And what he talks about is the systematic international campaign on the part of elites in America and in European countries, Canada also, the systematic campaign to destroy the traditional culture of those societies and replace it by what left intellectuals would much prefer.

30:47So this includes feminism, this includes attacks on everything they consider racism. The most recent example, where was it, some high school kids decided to have a white, White, besides a regular high school prom, a high school prom for whites, and they were not only attacked by their own school officials, not only attacked by the politicians in the area, this became a national issue. Columnists from the Washington Post and the New York Times and so on attacked these kids. I don't think any of them mentioned that everywhere in America there are black only high school And everywhere in America there are black dormitories, there are areas in which blacks prefer to associate with their own kind.

31:39But the fact that whites did this becomes an issue. And this is the kind of thing that Gottfried is talking about. He's not defending slavery or racism in any real, rational sense. What he's attacking is a campaign against pseudo-racism, that is, as Paul Craig Roberts says, any kind of equal treatment for whites. So that there's an international and also speech codes, which have gone a lot further in Europe than in America, but through international agreements. In the future, they may come to the United States also, as people say, you have to somehow control the Internet, because there's so much garbage and filth there, well, and I would probably tend to agree with something like that, but what I would suggest is that the first attempt to control the Internet, for whatever reason, will inevitably to political censorship of the internet, of anybody considered a right-winger, extreme right-winger, any group considered a hate group, and the usual communist salami tactics, first they'll start with the most extreme, you know, you can redo this famous thing about the Nazis,

33:08First they'll come for the fascists, then they'll come for the extreme conservatives, and anybody who denies their left-liberal egalitarian worldview. So we have to be worried about any attempt to censor the internet, which is at this point really just about all we have in the way of freedom of expression. These are the kind of problems that Jim Boehmard and Paul Craig Roberts deal with. Is the United States a free country that has the right now to simply... We're so far ahead, we're so great, we're so much the city on the hill, that we can now impose our version of democracy on the rest of the world.

34:03It will be interesting to see, by the way, and there are just at this point, just certain Catholic publications that are looking out for this point, how in Afghanistan and Iraq, the United States begins to introduce the methods of planned parenthood. That is, into these traditional Muslim societies, now part of what they mean by democracy are reproduction rights for women, including birth control and abortion. There are some Catholic groups that are looking at this to see what democracy will actually entail. What will entail democracy in the American and West European sense, which includes these so-called reproduction health rights for women. I don't want to deny that there's a case to be made for or a woman's right in general, let's say. However, the point is, democracy is not going to mean what Thomas Jefferson thought it meant, this democracy that's going to be imposed on other countries.

35:11And is America really so perfect that we don't have to worry about what's going on here, we can start worrying about the rest of the world? Libertarians will wonder to what degree a country can be said to be free if close to 40% of the citizen's income is confiscated by different levels of political authority year in, year out. And I will finally end with a relevant quotation from Richard Cobden, along these lines. Cobden said, there is a true secret of despots, it is to employ one nation in cutting the throats of another, so that neither nation may have time to reform the abuses in their and their own domestic government, in other words, directing the attention of the people to foreign enemies, ramshackle regimes as we see that Saddam Hussein's was, that according to Tony Blair were in a position to launch attacks on Britain within 45 minutes notice.

36:24You know, George Orwell talked about the memory hole. You've heard that phrase, the memory hole. You know, in 1984, you should read this, there's so much wisdom in that book. In his book, 1984, the hero, Winston Smith, that's his job in the Ministry of Truth. Whenever the party line changes, what he has to do is go back and search out the newspapers where the party had taken a different position. You know, where the party had said, well, we have to attack East Asia, you know, the whole world is divided into three huge powers.

37:11We're at war with East Asia, East Asians are cannibals and savages and so on, and we're friends with Eurasia. Well, the alliance is shift. Party can't be wrong. Big Brother can't be wrong. So Winston Smith has to go and get the old newspapers and destroy the articles where the party was wrong in the past or seems to have been wrong in the past. And on his desk he has a memory hole, actually a hole, and he tosses it down and goes down into the furnaces at the bottom of the of the Ministry of Truth. Nowadays, the government doesn't need memory holes. What actually was the case, you can find anywhere on the internet, you can find in major newspapers. I mean, they'll be in the newspapers in your library, but right on your computer, you can find that the government lied about this, that the government leaders lied about this.

38:06And the difference is that George Orwell thought that somehow people would care if it turned out that they could read in the newspaper that the government had lied. So that all has to be blocked out. It doesn't have to be blocked out now. It's there, but people don't care, for the most part. So Cobden's view is that instead of diverting attention to non-existent enemies, to puffed-up enemies, What we should do is pay attention to reforming our own domestic society. He meant the England of his time. I would suggest the America of our time. Well, that's what I want to say about international affairs. And I want to start now to discuss another quite important issue.

38:57And that is, in general, the issue of the Industrial Revolution.

39:08Now, there's a book I suggest to you that has been in print since it was published, I think in 1954, from the University of Chicago Press, edited by Hayek, with contributions by a number of different authors. and the book is Capitalism and the Historians, Capitalism and the Historians. Now, it comes from 1954, so the research is somewhat dated, but I'll deal with that in a moment. Actually, the most important thing in the book is the introductory essay by Hayek on history and politics.

40:00And here Hayek has one of his best essays. It really shows Hayek at his best, his wisdom, his careful statement of issues and careful presentation of his own answers. And he says that if we think about it, there's a very close connection between people's view of history and their political views. Now, if you're an economist or a philosopher, if that's your field, you might feel that this is rather unfair. You might feel that really those are the disciplines which people should study in order to come to conclusions about what's best for us and what's individually and what's best for society.

40:50However, you know, for better or worse, that's not the way it's done. And if you think about it, I think that you'll see maybe even in your own case for the most part, that your political views have been very strongly influenced and in many ways determined by what you think history has shown, okay? The Impact of History See if this sounds familiar to you. There was a time in America, starting in the last decades of the 19th century, that America was under a regime of laissez-faire. And under this regime of laissez-faire, there grew up a class of robber barons who got together and eventually cartelized and monopolized the American economy.

41:49Then, thank God, who does look over the United States of America, we had the progressive movement. And the progressive movement and the Sherman anti-trust law and progressive leaders like Teddy Roosevelt, I can't imagine what that man is doing on Mount Rushmore with the others. Maybe Lincoln would have been a soulmate of his. But I think he's staring at Thomas Jefferson. And Jefferson looks cowed. But this view, this interpretation goes on. And put an end to this terrible regime of laissez-faire in that way salvaged by government Intervention salvaged the American economy. Does that sound right at all? I mean, that such a view exists. Have you ever heard such an interpretation as that? Well, okay, that's one interpretation. How about this? In the 1920s, somehow we got laissez-faire back, And laissez-faire went haywire.

42:58People started speculating like crazy on the stock market. There's a tremendous irrational boom, and it ended in the Great Depression, which was thankfully dealt with by the super savior of American history, Franklin Roosevelt, who came in with his New Deal and through government intervention in many different respects saved the American economy. Does that sound familiar? That is this interpretation. Have you ever heard this? Here's another one, more in connection with international affairs. In World War I, We had a man as president who was virtually a saint, agonized with spiritual issues, finally against his will and every inclination was forced to bring about a declaration of war against Germany, get us into the First World War, and this saint, Woodrow Wilson, harbored A dream and a vision called the League of Nations.

44:21God smiled on the United States again, we were on the winning side in that war and President Wilson went to Paris to the peace conference in order to bring about his dream and his vision. It was finally agreed to by his other allies, it was part of the Treaty of Versailles with Germany that there should be set up this League of Nations to put an end to war. This sainted, spiritually tormented man returns to America and tries to get the Senate of the United States to agree to this treaty. The Senate of the United States at that time was controlled by A group of men that history knows, or that you at least know, or that I at least know, is isolationists, right?

45:16Isn't that the term that's used? Not non-interventionists or people who believed in US neutrality, but isolationists. So they turned down the Treaty of Versailles and in this way broke the heart of this sainted American president and kept America out of the League of Nations so that the inevitable result was Hitler or Hitler the Second World War and everything that came about from that. Doesn't that teach us something? Isn't this one of the lessons of history, right? We should follow our sainted and inspired leaders, and especially to engage in cooperative efforts of collective security through international organizations, now the United Nations.

46:08Does that sound like a very familiar interpretation of history? Okay, now, and others could be cited. In all of these cases, the case of the so-called Robert Barons, the case of the Great Depression, the case of the League of Nations, I would suggest that most people who have any views or impressions or ideas at all about the pertinent political issues take their views from these interpretations. This is what determines their We tried laissez-faire in the past. It led to monopolies and trusts. It led to the Great Depression. We tried a system of minding our own business and arm neutrality for the United States.

46:53It led to the rejection of the League of Nations. It led to Hitler and everything else. So that Hayek doesn't give these examples, but these would be examples confirming his view, I think, that history is a major determinant of the views that people have about politics. Now, why Hayek goes into this is that he's introducing this book Capitalism and the Historians and he talks about the supreme myth that has been used against capitalism and that is the myth of what happened during the Industrial Revolution.

47:42That's what I want to talk about in the time that remains. The Industrial Revolution, by the way, we now know that it occurred even in England at a much slower pace than originally supposed. It was over a question, over a span of time of probably close to a century, let's say from 1750 to 1850, that industrialization got underway in Britain. But nonetheless, the main outlines remain the same. It was a question of the introduction of the factory system, System with the production of a particular good now took place in different stages but all under one roof and with the application now of the steam engine and more specialized machinery to every step of the process of production, the division of labor was intensified in this way, the world market expanded, urbanization took place, And these various aspects constitute what's known as the Industrial Revolution.

49:00Now for a long time this myth prevailed, the myth that Hayek refers to. It was thought that the Industrial Revolution represented a catastrophe for the working classes of Britain. And Britain was a test case of the results of the Industrial Revolution. Everybody agreed to that. This revolution eventually spreads to other countries and so on. But we want to focus, people said, we want to, historians, scholars, we want to focus on Britain, see what happened there, whether it was a bad or a good thing. The first idea was that it was a catastrophe. The new factories, it was claimed, ushered in a nightmare world of slave-like conditions for working men that were even worse for women and worst of all for children.

49:46Cruel poverty, filthy slums, rampant pollution, and a host of other social evils were the end result of giving free reign to the heartless regime of laissez-faire. Only in the last years of the 19th century, with the introduction of effective factory laws and other government measures, and above all with the rise of labor unions, did the condition of working people start gradually to improve. The lesson taught by this presumed historical example, repeated endlessly in popular literature from clerical and political pulpits, in school rooms, university lectures, was clear and decisive. But university lecture halls are of particular interest because what happens in the first decades of the 20th century is that in Britain especially, France especially, other Western European countries that have colonial empires, the elites, the native elites are often brought to the home country in order to undergo advanced education there.

50:54In this way, they hoped to meld the native population more to the home country. So what we have are people who became famous after the Second World War as leaders of Ghana, Indonesia, the Vietnam Communist Revolution and many other places in the world. They had studied at British and French universities. They had learned these alleged lessons of the Industrial Revolution and they were determined that, yes, they would industrialize their countries but they wouldn't industrialize their countries through awful laissez-faire because look at what laissez-faire had done to Britain and other countries that had had to endure it during their industrial revolutions.

51:47And in the political arena, this is the intellectual and academic arena, in the political arena this myth created a standing presumption in favor of state intervention to protect the present day victims of capitalist exploitation. However, things began to change in the 1920s when what has been called an optimist school made gradual and then more rapid progress against what are called the pessimists on the higher levels of scholarship. This change was based on the steady accumulation of more objective, less politically contaminated data and the refinement of statistical techniques, the application of better economic theory.

52:41The earlier view had largely been based on the blue books collected by parliamentary House of Commons commissions into the condition of working people in the mid-19th century and after that. These are called blue books and what was behind these commissions is of interest and importance. If we take England in the, let's say, following the Napoleonic Wars of 1815. Parliament is unreformed. There are heavy tariffs to the advantage of the landowning nobility. They control all public offices. The Church of England bases its income largely on tithes extorted from non-believers.

53:39from Presbyterians and Baptists and Quakers and others. In other words you have a parasitic established church. Many other elements of the conservative control and domination of English society. Well, there has been a liberal movement. I've talked about liberalism in different countries. There's a powerful liberal movement in England that threatens this domination. They threaten also, for instance, the slaves owned by the absentee plantation owners, mainly English noblemen, And the defenders of the establishment and the status quo come back with a counter attack.

54:47They say, you liberals, you great lovers of the oppressed, don't you have your own oppressed? Aren't you yourself slave owners in a sense? What about the workers in your factories? Why don't we go and investigate what's happening there? Parliamentary commissions are set up with the political aim of exposing the factory system at the base of the economic power of these liberals and these reformers. And just as when U.S. Congress sets up some committee or subcommittee to investigate sweatshop conditions in Chinatown, in San Francisco, or elsewhere and so on.

55:38What they bring in are people who are ready to tell them the worst horror stories. They don't generally consider why these people are working in sweatshops in San Francisco when they could be enjoying life in Shandong province or something, and living like millionaires And then the Congressional Committee issues its findings. Well, these parliamentary commissions in England issued their findings. And they are compendiums of horror stories, one after another, about terrible people working at whatever, 16, 18 hours, women working, children working as well.

56:26And it was on the basis, and this is data, right? It was on the basis of these collections, of the supposed data, that the first interpretations and histories of the Industrial Revolution were composed. Friedrich Engels, who of course was Marx's collaborator, wrote a book, The Condition of the British Working Class, the English Working Class in 1844. And the book is based on these parliamentary commissions. Other people who began lecturing and writing about the Industrial Revolution took the same tack. So that when in the early 20th century, better, more detailed, more comprehensive data begins to be collected, on wages, on availability of foodstuffs, on longevity, length of life and so on, things begin to change.

57:31People don't have to depend on the contaminated data, they can go to the sort of data that historians can debate, more objective facts. And moreover, new probing questions were asked, the sort of things that didn't occur to earlier writers opening novel perspectives. So you had a different and contrasting interpretation of the Industrial Revolution, beginning with J. H. Clapham, an older historian of the 20s and 30s, but especially in the 40s and 50s, T. S. Ashton, who was represented in Hayek's collection, Capitalism and the Historians, And more recently, Max, as he's known, or R.M. Hartwell, well, he's retired now, but at the University of Chicago and Oxford.

58:33Fundamentally, what came out of this newer research is this. In fact, for most of the working people of Britain, the standard of living did not deteriorate, Let alone collapse, but improved slowly from around 1780 to 1850 and more rapidly thereafter. In other words, what we would have is a graph, let's say 1780, a graph that would go something like this, okay?

59:21This occurred despite powerful factors working in the opposite direction, or countervailing factors that tended to depress the standard of living, so that even if it were discovered that actual living standards had fallen, this would not necessarily count against industrialization, Because it could have been that industrialization permitted people to have a higher standard of living than they would have otherwise. Even though, let's say, in actuality, living standards fell because of other factors that I'll talk about. There was first, and that's shown around here, that's very rough.

1:00:10There was first the destructionist effects of a whole generation of war. with the French Revolution and Napoleon, the most expensive war in history to that time from 1793 when England declared war on revolutionary France after the execution of the king to Waterloo in 1815 with the exception of one year, just one year around 1804 of truce. So a whole generation of war and all of the wealth and assets that England poured into this war. All of the ships and the furnishing of men, the artillery, the other munitions, the subsidies given to its allies on the continent to fight against the French.

1:01:05This immense amount of wealth was, well you could say, used for a good purpose, and the Defeat of Napoleon, but nonetheless was not available for productive uses for the general British public. The kind of wealth that could have gone into increasing the capital stock of England and therefore tending to raise wages, producing more for the British consumers, including working people. Secondly, a sharply regressive system of taxation was used to finance the war and an array of counterproductive government measures and policies for the depressed living standards.

1:02:00Now finally, and I'm going to elaborate on some of these points. Finally, I want to point out this chart over here. What this chart shows is the population of various European countries at various points in modern history. So in the middle of the 18th century, the population of England was six million. It had never been higher than that. And the population of none of these European countries had ever been at all substantially higher. I mean, there had been maybe peaks at one time or another, slightly higher peaks, but basically this was the limit of population.

1:02:48And you see now the population 50 years later and then in the middle of the century and then finally in 1900. Population of Europe as a whole from 1800 to 1900 increased from around 180 million to over 500 million. This was an unprecedented population explosion in the history of mankind. It was not limited to Europe, by the way. You found this in other areas, of course, Eurasia. The reasons for it are not totally clear, but nonetheless, this is the fact of the matter. So, the question is, what were different societies going to do about this population explosion?

1:03:34How could these new tens of millions of people be fitted into the older mercantilist, Guild-controlled economy with the older methods of production and I started off from a series of lectures by quoting Mises on the European miracle and here Mises again puts his finger on the essential point that Europe was faced on the eve of industrialization Europe was faced with this of Unprecedented Population Explosion and the Industrial Revolution was Europe and America's answer to this problem. And ultimately the way that these tens of millions of people were able to survive. So when our friend Ayn Rand says that people should get down on their knees She says something really along these lines, get down on their knees and celebrate the smokestacks of the factories of the Industrial Revolution.

1:04:45That's a novelist way of saying it, maybe, but she is perfectly right. Ultimately, you understand, I hope, that it's not that you actually work a lot harder than your grandfather, than your grandparents or your great-grandparents You might think that you're just totally, you know, you're used by some draft animal and work so hard, but it's not really the case. And the reason that you enjoy a higher standard of living has to do with the accumulation of capital and the workings of the capitalist system. and the workings of the capitalist system. That's what people began to acknowledge to a small degree and then a little bit more, but in any case began to experience during industrialization.

1:05:35These figures are about the best we can get, the best I've been able to find, and they're interesting in their own right. Notice, and the population of France in 1750 must have been about 20 million. Notice that France was always, throughout the history, up until the 19th century, always had a much higher population than England did. And in fact, up until around the time of the French Revolution and also the Russian participation in the partition of Poland, of Poland. France had the largest population of any country in Europe, which is one reason why it was the standard military power of Europe for so long, but the English population begins to explode, then overtake the population of France.

1:06:38France, of all the great countries, is the only one whose population remains quite steady, and for what social reasons are behind that, having to do with the inheritance of land, or early introduction of birth control procedures, I don't think is clear. Here, the population of Italy is increasing enormously, despite the fact that millions upon and millions of Italians emigrated so that they form, for instance, the largest ethnic group, biological, not linguistic, but the largest ethnic group in Argentina. As we know, many of them have come to America and enriched our American culture almost infinitely.

1:07:26As Senator Geary says in Godfather 2, if you haven't seen Godfather 2, I don't even know what I'm doing here talking to you. Godfather 1, of course, also. Have you seen it? Good, very good. Senator Geary, the total sleazeball politician, a really great characterization. I want to say that a growing number of my constituents are of Italian descent, and from the time of the great Christopher Columbus to the time of Enrico Fermi.

1:08:16They have contributed as much as any and on and on of all this rubbish, this politician blah blah blah, that we hear all the time from every politician virtually. So, with the Italians, and with the Italians it remained a steady problem, that is overpopulation. Unlike England and France and Germany, for instance, because in the South industrialization has never taken place. That is south of Rome, Naples, Calabria, Sicily and so on. And they have this endemic unemployment that's been going on for so long and many other social problems.

1:09:07Here, we see very significant growth in population in Germany. So by the end of the century, there are 36 million more or less French and 50 million Germans. And actually there are even more inhabitants of Austria-Hungary in those days. But among the considerable military powers, this is a very significant gap. gap, and Ireland, which in the middle of the century, well the population would be more 1840 than 1850, had six and a half million people, more than it's ever had since, many more than it's ever had since, and then three and a half million afterwards, because of The Irish famine, the vast emigration of the Irish, the diaspora of the Irish, and the deaths from, and these kind of things, people don't die generally from starvation, they die from the diseases caused by malnutrition and the terrible death rate.

1:10:16So, and these figures, if you talk about Russia, if you talk about Poland, the rest of Europe can be paralleled. The question is, what's to be done with all these new people? And as I say, and as you can read in Rosenberg and Birdsell, A book I believe. Have you been given a copy of this book? Haven't they given you anything? So what is it? Basically these sandwiches and chips at lunchtime? Well, times are bad. But it's in the library or I think it's also for sale in the bookstore.

1:11:01Easily available in paperback and so on. How the West Grew Rich. Brad, show them your book. okay okay if you have not seen that before it's a best introduction to what I've been talking about the best summary although there'd be a lot of other works to consult and as they say industrial revolution was not the problem it was the solution well I'm going to continue this I have a few more things to say about this I'll say continue this afternoon but now we want to talk about any we want I'll discuss any questions or comments you might have about the first half of my lecture regarding the idea of the democratic peace and the principled arguments against intervention in foreign affairs and also about the Industrial Revolution or let's say the role of history in forming political views.

1:11:58Yes, Jeremy? Jeremy? Right.

1:12:30Let's say these are small individual plots of land in a village, and let's say, it doesn't have to be a feudal lord, let's say the major land owner of the area, or there are other more substantial land owners, and then there's maybe a major land owner, and this territory here would be commons area, and commons area meant that anybody in the village The time came and there were two waves of enclosures.

1:13:16Enclosures meant that the commons was now literally enclosed, that is, fences or hedges was set up and divided up among, or theoretically divided up among the other landowners, small and large, of the village. Now the argument is that with the absence of enclosures, this meant that the smaller land owners, really small farmers, were not able to survive economically. And since the enclosures were political acts, acts of parliament or decisions by judges, the bulk of the enclosed land went to the most influential people in the village.

1:14:05in the Village. That's an argument that's often used. I don't have all my notes here, but modern research basically has shown that that's very much exaggerated. Yes, there were some people who now could not survive in the village, had to become laborers or whatever, but the bulk of the people who went into the towns were not just a few of these people Queen Anne, Queen Anne, Queen Anne, Queen Anne Queen Anne The Germans, the Hanoverians. Or to take another example, there's a famous historian Edward Gibbon, who has a nice little autobiography.

1:15:10If you want to get an idea of 18th century thought, the part of a highly civilized man, the great historian Gibbon, you can read his little autobiography. And in his autobiography, he says that my father named three of his boys Edward. His own name was Edward. And, you know, it's not because his father was kind of crazy or something. It was in order for the name Edward to survive in the family, to make sure that it would survive. So that terrible infant mortality began to recede. I'm not really certain what the reasons for it were. But nonetheless, it was from this, the higher birth rate, a lessened death rate, that the bulk of the population came.

1:16:00Yeah. Yes, Brad? Did you write something down? Wait a minute, did you have a caricature of me? Is that what you did? As I understood it, when they talked about democracies didn't wade wars on each other, were they saying that these were universal democracies? maybe it's the criticism of, well, this wasn't democratic, that wasn't democratic, but that's all. I would say that universal democracies have a greater chance of going to war, because the greatest tyrannies have been unlimited democracy, where the elites lead the massive ground by they know it, making men think that they're making decisions, they set up the situation where they want us to tell them what to do.

1:17:05Well, that's interesting. What would you consider an example of that?

1:17:26Okay, you raise an interesting point. Why do they talk about democracy? Why don't they just talk about a free society? Take an example in the later 20th century that was very important and that was Hong Kong. Hong Kong was the opposite of a democracy. It was totally ruled by the high commissioner sent from London. There was no democracy in Hong Kong. However, there was a scrupulous respect for property rights and the right of contract and so on. And what happened? You know what happened. Milton Friedman uses this as a prime example in his television series, Free to Choose. I don't know if you ever saw any of that. But I think maybe even the first installment of that shows him in Hong Kong talking about Hong Kong. An area with no natural resources whatsoever, you can imagine, is basically just a city-state. And it became immensely wealthy. The average The average person also, the average person had been before, what used to be known as

1:18:28a Chinese coolie, that is a totally penniless individual who worked enormous amounts of time for nothing, and now gradually middle class came into existence, an affluent working class and of course many very wealthy people, how? By total freedom of trade, absence of government regulations, absence of unionism and so on, The question was, from the laws that began to put in place in the Indianization, this always happened at the end of the time when things were getting started to improve, because the only reason the laws were effective was that people were able actually to do that.

1:19:23You know, normal families, most every family, they don't like the idea of their young children going to work. Why did the young children go to work? That's how the family was able to survive. Why are young children, well at least young teenagers, working in Nike factories in Indonesia? Because their family wants to get the extra income? Well, no, because the family is very, very poor and the alternative to working in the factories is for the boys to be unemployed or underemployed maybe the rest of their lives and for the girls to become prostitutes.

1:20:09That's a reality of those kind of situations. So this campaign to do away with sweatshops in Indonesia, I mean it's a ridiculous thing That's how societies develop economically. That's economic development. Society is very poor to begin with. Leftists think that the answer to that is to simply expropriate all the wealth of anybody who has a little bit more, give it out to the poor. Well, as Camille Paglia said in another context, if we'd done that from the beginning, we'd all still be living in grass huts. You only have economic development if you have capital accumulation. Capital accumulation is in the hands of wealthy people. Their wealth is very good for them. Their wealth is also very good for everybody else if it's put into productive use.

1:21:01So in underdeveloped countries you start with what you want to call sweat shops. But one of the things that happens with economic development, people get Gradually more affluent, and one of the things that they trade off is maybe a little bit higher wages for better working conditions. They're not going to go into those areas anymore because they don't have to, that they can afford not to. They can afford maybe to go to this other job. There are now more job opportunities. So that, and also pardon me, also with education, you don't have to have government compulsory education. If the society starts at a low economic level, gradually improves, one of the things that a family buys after they take care of their most basic necessities is education for their children in one form or another.

1:21:57And that's what was happening also in England, as Edward West, the late Canadian economist specialized in improving. Levels of literacy were improving gradually over time before any government education was put into place in England. So what people see then is a gradual improvement in working conditions and living conditions and education for their kids, a gradual fading out of child labor, at the same time the government is putting in these regulations, Unionism is coming about. So, I figure that it's the latter that accounted for the first. But, if you did not have the gradual economic improvement, government laws and union regulations wouldn't have made any difference.

1:22:50People would have gotten around them in one way or another in order to have the family survive. The repeal of the Corn Laws, is that one of the things that gave a boost after 1850? So by doing that, some of the countries didn't necessarily industrialize, they still had the benefit of industrialization?

1:23:28The story of classical liberalism and the struggle for freedom is a rather dramatic and at times exciting story and one part of it, Brad has brought up, and that is the repeal of the Corn Laws in England. The last and greatest bastion of protectionism in England. Corn laws, corn is used in this British sense of grain, not maize as with us, but grain in general, especially wheat. Okay, after the fall of Napoleon, since international trade had been very heavily interfered with and imports into England restricted, the price of wheat went down.

1:24:16This meant that the rents of the large landowners who controlled parliament also went down. In order to preserve their privileged position, they imposed Corn Laws, and that is a system of tariffs on the importation of grain, especially wheat, into Britain. Now the situation in England is not as bad as in other places, but still bread is a very A very large portion of the expenditure of any working family. So that this was a tax on, an extremely regressive tax on working people especially. And as the liberal movement expanded and progressed, the demand came up to get rid of this tax.

1:25:08The only people that really benefited were the large landowners. didn't even benefit other farmers who leased and rented land from the large landowners because their rents went up with the increase in price of the grain, so that they didn't have any net benefit from it, it was the large landowners who benefited. Everybody else was harmed, consumers, working people, also, as Brad points out, providers of Grain in Foreign Countries. In those days, especially Poland, Lithuania, Russia, Prussia even, who would be perfectly happy to sell their foodstuffs, their wheat and so on to the British, and in return by British manufactured goods. So this was the class situation, I mean this is class conflict of the sort that I talked about yesterday, pitting a privileged and land-owning aristocratic class against every other class in society.

1:26:16Well, gradually the system of protectionism was done away with in England step by step until the major thing that remained were the Corn Laws. And in the 1840s, around 1840, an organization came into existence called the Anti-Corn Law League. And it was led by the two men that I mentioned yesterday, John Bright and especially Richard Cobden, and they had other leaders as well, but they were the main men, the Manchester School. It was the first mass political movement in British history. What they did was, as has to happen, you have to get money from somewhere, and they got money from northern manufacturers, Show that they had an economic advantage in free trade and with this money, this anti-corner law league, they put out newspapers, they put out pamphlets, they had campaigns to elect people to the House of Commons, they sent speakers out all around the country, they hired holes in London week after week, a massive educational campaign to repeal the Corn Laws. Cobden and Bright were elected to the House of Commons.

1:27:34and there were the two main parties, the Whigs and the Tories of conservatives were controlled by the landed interests so that they resisted the demand for free trade in grain until the time came when the arguments just seemed insuperable and the Irish famine and it seemed savagely criminal to continue the Corn Laws in the face of this famine. And Richard Cobden, maybe you've got the idea, is one of my favorite guys, gave a speech in the House of Commons, marshaling all the arguments, summarizing everything.

1:28:24And the Tory Prime Minister, Robert Peel, turned to William Gladstone, who in those In those days was a Tory, he became a great liberal Prime Minister afterwards, and Chancellor of the Exchequer, and Sir Robert Peel said to Gladstone, you have to answer Cobden because I can't. In other words, the leader of the Conservatives had conceded, had surrendered, had given in on the question of repeal. 1846 the Corn Laws are repealed and England goes over to free trade and becomes the bastion of free trade and the beacon of free trade until the Great Depression and they finally, there's too much pressure and they give into a certain amount of protectionism but really it's a great story and as I mentioned last time then after this victory Cobden and Bright go on and tackle the issue of war and peace. They oppose the The Crimean War In London, you can see a statue, a female figure, and it says Crimea.

1:29:27This was the war of Florence Nightingale. Through war and combat, but mainly through disease, the English lost over 100,000 men. The French more, the Russians and many, many more, the Turks. It was a terrible war, senseless war. To this day, nobody understands why it took place. And there's this statue of Crimea, and John Bright had a big family, one time he was with his grandson, strolling through the streets of London, and the little boy asked, what is that? What does that say? and Bright says, a crime. Crimea, a crime.

1:30:15Because they opposed the Crimean War, these two great heroes of the productive English middle class lost their seats in the next election. They had been feted and celebrated and praised throughout the country because of their great work in regard to free trade, but the jingoism, the chauvinism, I don't know if they had flapping Union Jacks from their coaches in those days or what, but that kind of attitude did them in. They went back into politics afterwards, but it taught them a lesson about the public and misunderstood conception of patriotism. Well, I think it's about enough for right now. We'll continue this afternoon.