Tag Archives: National Health Care

A New Red Dawn Over America—Obamacare & the Police Power in Arizona are Upheld—the Constitution again ruled DOA at the Supreme Court (full text of the Supreme Court’s Worst Two Decisions of the Week attached)

Chief Justice John Roberts is rapidly becoming my least favorite U.S. Supreme Court Justice in history.  First, in 2007, the debut innovation of “the Roberts Court” was Bell Atlantic v. Twombly, then a followup kick in the face of freedom under the name of Ashcroft v. Iqbal and now this week (on Monday, June 25, 2012) Arizona v. United States (Arizona v US) and, today Thursday, June 28, 2012, yet another day that will live in infamy: NATIONAL FEDERATION OF INDEPENDENT BUSINESS et al. v. KAREN SEBELIUS, SECRETARY OF HEALTH & HUMAN SERVICES (NATIONAL FEDERATION OF INDEPENDENT BUSINESS et al v SEBELIUS SECRETARY OF HEALTH).

It’s been a really bad week for the Constitution and for the American people, and a very good day for  Obama’s flourishing Dictatorship of the Proletariat.  Oh yes, and what a nice present for Hillary Clinton as she celebrates lasting longer as U.S. Secretary of State than any other of the 96 individuals to hold that office—and we were all sure she was just a joke back in the early 1990s when she was pushing a National Health Care System which looked an awful lot like what we’ve got now with Obamacare.

First with regard to Arizona v. US: The expansion of the American Police State seems never-ending, as the late great Strom Thurmond’s States-Rights Democratic Party Platform very accurately predicted in 1948.   The great triumph of the Civil Rights Movement in the United States over the past 64 years is quite simply this: all oppressive acts of government, so long as they are applied equally to White people as well as Blacks, Hispanics, Asians, and all others without Racial, and only with Economic and Political, Prejudice, will be upheld.  But try asserting any constitutional right other than your right to be on an equal footing with all other slaves, and man YOU ARE DEAD MEAT!!!!  States Rights got a minor boost last year when an individual right to sue under the Tenth Amendment was recognized, but this year the 162 year trend towards the complete suppression of State Sovereignty marches forward unabated….

The main issue regarding Arizona’s immigration statutes was whether the individual states of the Union have any right to make more restrictive laws regarding residence and citizenship than the United States as a whole.  Under the expressly anti-States’ Rights 14th Amendment, the Supreme Court said NO.  But, if the Arizona police want to go around harassing people on the highways, they are free to do so, so long as they are willing to say they suspect that every blonde-haired & blue-eyed caucasian must have recently entered illegally from Sweden or Norway perhaps….  The Supreme Court, these days, never seems to miss an opportunity to enhance the power of the police to oppress the population at large.

With regard to the “Obamacare” case, I can only say I’m NOT even as surprised by this result as I was not by the result in the Arizona immigration opinion.  Ever since Franklin D. Roosevelt gave up his plan to “pack” the Supreme Court, there is no infringement on the economic liberty and personal choices of the American people which the Supreme Court finds too trivial to be worthy of Federal Enforcement.  The only comment-worthy deviation from predictions was that Chief Justice John Roberts in this case came up with the novel notion that the U.S. government can tax anything and anyone it wants to for any reason, including non-compliance with a mandatory insurance purchase requirement, and that this punitive tax or purchase choice makes it all “OK.”

Of all the commentary and punditry that came out on Thursday after the decision, two of the most “spot on” that I saw were first) the article describing John Roberts’ “Liberal Apotheosis”:

After Thursday’s Obamacare ruling, Supreme Court Justice John Roberts became a minor deity to some liberals for voting to save Obamacare. But just days before Roberts’ apotheosis, liberals lamented that the “conservative” Supreme Court was taking America down a dangerous path.  (http://news.yahoo.com/obamacare-ruling-liberal-apotheosis-john-roberts-035207618.html)

The “Liberal Apotheosis” of John Roberts?  “Apotheosis” of course, means transformation into a god—and what did the pagan gods of Olympia or Pharaonic Egypt do?  Exactly what any god can do:  A “god” can work Miracles,  first Make and then Bend the all Rules, Change the Natural Order of Things….   I suppose my own religious notions, such as they are, posit an unchanging God defined by the phrase from the old BCP: “as it was in the beginning, it is now and ever shall be, world without end amen” which seems curiously absent from most Episcopal services these days.   I equate God with Nature, and while I believe rather fervently in Evolution, I believe Evolution operates according to certain utterly unchanging rules, such as the laws of thermodynamics, which even the discovery of man’s ability intentionally to split or fuse atoms could never quite change.

And yet the Godlike role of the Supreme Court in making and bending rules seems more than a bit undemocratic.   So that is the second part of the analysis we need to perform today: Was Roberts’ decision to side with Obamacare entirely a matter of political strategy?

 The American Concept of Constitutional Judicial Review predates Chief Justice John Marshall. The Supreme Court’s decision Chisholm v. Georgia 2 U.S. 412 (February 1, 1793)(Chisholm v Georgia, 2 U.S. 419, February 1 1793triggered the (I would now say very unfortunate) move to enact the 11th Amendment during the First Term of the Presidency of George Washington.  But Chief Justice Marshall’s notions of judicial review shaped the Court, much to his cousin Thomas Jefferson’s dismay and disgust.   I recall hearing the story of Marbury v. Madison and judicial review in my Freshman year at Tulane, from Professor Jean Danielson in Political Science H103, where I met my long-time college years best friend John K. Naland, now a long-time veteran of the U.S. State Department.  Professor Danielson explained the political genius of Marbury v. Madison was that it empowered the Court while respecting the political boundaries of the time.  Chief Justice Marshall knew that, as President Adams’ last major appointee, any decision made in favor of the appointment of Adams’ minor “midnight judges” including William Marbury would simply be ignored by the new Democratic-Republican administration of Jefferson (with James Madison as secretary of state and the defendant in the case) as an act of political partisanship on the part of a Federalist appointee favoring Federalist appointees.  On the other hand, to uphold Secretary of State Madison’s power to refuse to honor the appointments made by President Adams would seem like craven capitulation without legal or moral integrity.  So, in a result which no one ever anticipated, Chief Justice John Marshall carefully reasoned and soundly declared the statute authorizing the appointment of Magistrates in the District of Columbia to be an unconstitutional act in excess of Congress’ power under the Constitution—and the role of the U.S. Supreme Court as Constitutional arbiter of the United States was established forever—or, at least, for a long time.

That particular “long time” ended in 1936, which, as a another commentator/pundit on the Obamacare decision pointed out, was the last time in history that the United States Supreme Court overturned a major piece of Congressional legislation as Unconstitutional.    Franklin Delano Roosevelt’s first term as President was unlike anything the United States had ever since, including George Washington’s First Term.   In Washington’s First Term, the constant debate in Congress was whether the Federal Government had power under the Constitution to do much of anything at all.  The spirit was decidedly “conservative” in the sense of cautious, even as a new nation conceived in liberty and dedicated to the proposition that all men are created equal was being launched as a more formally organized “corporate” type of enterprise (the Articles of Confederation were much more analogous to a “partnership” among the States—with each partner having a nearly full veto power).

During FDR’s First Term, there were also many in Congress who asked whether the Federal Government had the power to do a great many of the things the New Deal proposed to do, from the NRA to the TVA (National Recovery Administration to the Tennessee Valley Authority).  But from 1933-1937, such questions were not asked in a cautious or even skeptical voice regarding what Congress and the Federal government could legitimately do, but in the desperate and panicked voice of people who saw and feared “you are taking our lives, our fortunes, our sacred honor” from us.  Those people sought recourse against the reckless usurpation of Federal Power in the Supreme Court, and in the years 1933-1937, the Supreme Court struck down 29 Congressionally passed statutes signed by the President as part of the New Deal.

Roosevelt’s first hundred days and all that followed provoked an unprecedented clash between the Supreme Court Justices and the “New Deal” alliance of the legislative and executive branches. At Roosevelt’s instigation, Congress in the 1930s enacted a series of laws ostensibly, supposed, aimed at ending the Great Depression and restoring the nation’s economic well-being, but in fact aimed at shoring up the American Elite, especially the Banking system, from the threat of a Communist and/or Fascist revolution analogous to those taking place in Europe at the same time.  Of eight major “program” statutes to come before the Court, only two were upheld. Laws that were struck down included the Agricultural Adjustment Act of 1933, the National Industrial Recovery Act of 1933, and the Bituminous Coal Conservation Act of 1935.  The Court came under heavy fire for its decisions, and Roosevelt proposed a controversial plan to increase the size of the Court, presumably to ensure a majority sympathetic to the New Deal.

Shortly after the plan was proposed, the Court defused the issue by upholding a series of revised New Deal laws.  Dominated by economic conservatives, to which group even late 19th/early 20th Century “Progressives” such as Oliver Wendell Holmes were (by comparison, anyhow) the Court threw out numerous laws Congress enacted to protect workers and consumers. The conflicts peaked in 1936. The Court threw out twenty-nine laws during that period, but the last of these was in 1936, when when the court invalidated a federal law that limited work hours and prescribed minimum wages for coal workers.

Everything changed in 1937 when, FDR Proposed the Judicial Procedures Reform Bill of 1937 on March 9 of that year in one of his legendary “Fireside chats” whereby he jumped over the Congress and all Constitutional Separation of Powers and asked the American people directly to endorse and support his programs.  The public reaction was overwhelmingly negative, almost the first time the 33rd President had seen any of his initiatives draw such opposition.  But the Justices of the Supreme Court saw the writing on the wall—mene, mene, tekel upharsin—and when faced with the two major cases challenging Social Security (the ultimate authority and most direct antecedent for Obamacare), the Supreme Court ruled in favor of the most massive fraud ever perpetrated on the American people—the law creating a “Social Security Trust Fund” with the bribed cooperation of the States—into which Social Security Trust Fund not one dime of real money (certainly not one dime of the 14 Trillion dollars paid since 1937 in Social Security Taxes) has ever been paid.

Helvering v. Davis (05-27-1937 Helvering v Davis 301 US 619 57 SCt 904 Jusice Cardozo endorses the SS Trust Fund Fraud) and Steward Machine Company v. Davis (Charles C Steward Mach Co v Davis) thus effectively marked the end of the Supreme Court as an independent branch of government.  The new mantra was not “that government is best which governs least” but instead, “The concept of the general welfare is not a static one”…. “Needs that were narrow or parochial a century ago may be interwoven in our day with the well-being of the nation. What is critical or urgent changes with the times.”   (Helvering v. Davis, 301 U.S. 619, 641, 57 S.Ct. 904, 909, 81 L.Ed. 1307, 1315 [1937])

From that time forward Courts held that there appeared to be only four (all extra-constitutional) prerequisites to a finding that a spending clause measure and condition attached to it are valid: (1) The federal power is used for a legitimate national purpose, i.e., promotion of the general welfare (Charles C. Steward Machine Co. v. Davis, 301 U.S. 548 at pp. 585–590, 57 S.Ct. at pp. 890–92 [1937], 81 L.Ed. at pp. 1290–1293); (2) the condition is related to a legitimate national goal (Charles C. Steward Machine Co. v. Davis, supra, at pp. 590–591, 57 S.Ct. at pp. 892–93, 81 L.Ed. at pp. 1292–1293; See also Note, Federal Grants and the Tenth Amendment: ‘Things As They Are’ and Fiscal Federalism (1981) 50 Fordham L.Rev. 130, 140–141); (3) the condition is related to the purpose of the federal funds whose receipt is conditioned (FCC v. League of Women Voters (1984) 468 U.S. 364, 104 S.Ct. 3106, 3132, 82 L.Ed.2d 278, 309 (Rehnquist, J. dissenting); State of Okl. v. Schweiker, 655 F.2d at pp. 407, 411); and (4) the condition is unambiguous (Pennhurst State School v. Halderman,  451 U.S. at p. 17, 101 S.Ct. at pp. 1539–40 [January 23, 1984])(Pennhurst State School And Hosp v Halderman).
It was in the spirit of such a “living constitution” that Chief Justice John Roberts allied himself with the enemies of limited government on June 28, 2012.  And it is in that sense, much like the Supreme Court in 1937, ruling in Roosevelt’s favor in both of the Social Security Cases, Helvering and Charles Steward above, that Chief Justice John Roberts “saved the Supreme Court” (http://news.yahoo.com/blogs/power-players-abc-news/did-chief-justice-roberts-save-supreme-court-103301790.html).  More likely, Chief Justice John Roberts just danced on Chief Justice John Marshall’s grave and said, “You think that failure to follow the Constitution is Judicial Treason?  Well, let’s see what you’re going to do about it now.”  According to that same article, Chief Justice Roberts had told the Senate at his confirmation hearings:
“Judges are like umpires. Umpires don’t make the rules; they apply them,” said Roberts at the time. “The role of an umpire and a judge is critical. They make sure everybody plays by the rules, but it is a limited role. Nobody ever went to a ballgame to see the umpire.”

Now, strangely enough, Chief Justice John Marshall wrote a very different kind of opinion in 1820:

The judiciary cannot, as the legislature may, avoid a measure because it approaches the confines of the constitution. We cannot pass it by because it is doubtful. With whatever doubts, with whatever difficulties, a case may be attended, we must decide it, if it be brought before us. We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given. The one or the other would be treason to the constitution. Questions may occur which we would gladly avoid; but we cannot avoid them. All we can do is, to exercise our best judgment, and conscientiously to perform our duty.  Cohens v State of Virginia, 19 U.S. 264, 5 L.Ed. 257, 6 Wheaton 264 (March 3, 1820)

There is a great deal of confusion among the commentators and pundits, I think, about what “Judicial activism” really means.  I would NOT call Chief Justice John Marshall a Judicial Activist—although, indeed, he advocated throughout his 35 years on the bench a considerably more positive role for the Court in preserving the Constitution than Chief Justice John Roberts has shown to date.  “Judicial Activism” does not mean “striking down unconstitutional laws”—“Judicial Activism” as a term should be reserved for reshaping or restructuring the laws in the absence of Congressional Authority to do so.  The “Warren Court” from 1953-1971 was the epitome of “judicial activism”—the Supreme Court during those two decades effectively rewrote the laws of the United States and told CONGRESS and the STATES what to do, rather than vice-versa.

In the case of Obamacare, Chief Justice John Roberts acts his role as an umpire very poorly.  He has seen the foul, called it (under the commerce clause) and “covered it up” under the guise of the taxing power, which (in reality) is even less constitutionally justified than the commerce clause rationale (which at least has the past 75 years of tradition—however illegitimate, behind it).

And so was the U.S. Constitution rewritten in 1937 to allow for first the “relatively” modest program of Social Security and now, 75 years later—on the occasion of the 75th Annual Hunger Games (cf. Suzanne Collins, Catching Fire [2009] and Mockingjay [2010], both New York: Scholastic Press)—Obamacare comes forward to cap the fraud by, in Chief Justice John Roberts’ view—a non-coercive, mere “Tax” on those who do not buy governmentally mandated insurance… and of course, jail for those who do not pay their taxes.

SO WHAT IS THE SHORT-TERM SOLUTION?  NULLIFY OBAMACARE!  I should say that, without any hesitation whatsoever, I absolutely endorse and support the Tenth Amendment Center’s position on Obamacare (this Los Angeles based think tank is just one of the brightest stars on the Political Horizon—of our New Red Dawn):

Now that the Supremes have crushed Constitutional limits once again, the next step is to focus all our energy on a state and local level to NULLIFY this – and every other – unconstitutional act.
We have model legislation for yor state.  Ready to go right now.  Press your state reps to introduce this bill today, or for the next legislative session.
http://tenthamendmentcenter.com/legislation/federal-health-care-nullification-act/
Please SHARE this information widely!
*******
We need your help to continue this work, and help people take the next step at the state level.  Please join us, and help nullification happen!  Whether it’s $500 or $5, every bit of help right now is crucial!
Please visit this link to help now:
http://tenthamendmentcenter.com/donate/
*******
Thomas Jefferson told us that when the government “assumes undelegated powers” a nullification is THE “rightful remedy”
James Madison said that states were “duty bound to interpose….to arrest the progress of evil”
Today’s ruling is an assumption of undelegated powers, and evil is advancing.  The time to act in support of nullification in your area is NOW!  Please share the model legislation for Obamacare with as many people as possible, and please chip in as generously as possible to help us push this campaign aggressively.
While the task is difficult, our cause is just.
Concordia res parvae crescunt,
(small thing grow great by concord)
Michael Bolding
Tenth Amendment Center
==================================================
Our mailing address is:
Tenth Amendment Center
123 S. Figueroa St
Suite 1614
Los Angeles, CA 90012
Our telephone:
213.935.0553

AND WHAT DO I DO AS I WATCH ALL THIS TRANSPIRE?

I sigh.  I cry.  And sometimes I just want to lie down and die.  This is not the land of my birth, even though on the map it generally looks like it should be the same country as it was in 1960.

The transformation over the past fifty two years is simply horrific.  52 years was a key cycle of time among the Aztec, Maya, Mixtec, Tarascans & Zapotec in ancient Mesoamerica, and I can only say that I feel a certain sympathy for how an Aztec born in 1518 might have felt looking at the wreckage of his once proud nation in 1570 after 52 years of Spanish conquest, rape and pillage.  Like an Aztec born in the last year before the arrival of the Spanish, I have grown up and come to age watching my own people (the American Middle Class, especially Protestants of European descent) reduced to second class status, my people’s most attractive and beautiful women taken as prizes by the conquerors, my nation’s heritage and values denigrated, suppressed and taught in the schools as nothing but “heresy” from the New World Order.

I do speak Spanish fairly well and have spent many of the happier moments in my life in Mexico and elsewhere in the Hispanic World, from Bogotá to Barcelona, and I keep in touch with many friends and acquaintances of a Constitutional mindset from those parts of the world.  When they ask me what I consider to be the greatest single constitutional development under the Presidency of Barack Hussein Obama, I tell them without hesitation: N.A.D.A.  (aka Senate Bill 1867, you know, the statute that effectively repealed the Fourth, Fifth, and Sixth Amendments that passed the Senate 93-7 last December).

Some Austrian thoughts for Americans Analyzing the first day after the passage of National Health Care Plan

Words cannot describe my COMPLETE lack of Surprise that Obamacare, National Health Care, passed.  It was Hillary Clinton’s priority in 1992-95, 18-15 years ago, and look where she is now?  The Oligarchy has imposed Collectivism on an unwilling Majority, certain, like Barbara Boxer, that the members of the Elite know so much better than the ignorant masses how to govern themselves than the people could possibly do themselves.  Individual Freedom, Individual Autonomy, the importance of the individual itself—all of these are obstacles.  Individualism must give way to acquiescence in the greater good, as if the “greater good” were not the sum total of individual well-being.  I say, as I so often have said in this blog, “Cry, the Beloved Country.”  We are on a path of self-destruction and ruination. 162 years after the Communist Manifesto, Barack Obama is President, Hillary Clinton is Secretary of State.  Cass Sunstein is a Czar….

National Health Care is the logical outcome and conclusion of the process that began with Social Security, and it is no more mandatory, coercive, or invasive of private liberty than the Social Security “tax”—universally forced purchase of a rather modest retirement pension which the government periodically loots and which has never been managed by true fiduciary standards at all.  Rather than talk about the wretched details, I would prefer to contemplate the radical roots of the problem: the replacement of Classical Liberalism with Socialism, which is no kind of “liberalism” at all.   The full article is quite long and I only intend to give a taste here.  The balance can be read at: http://mises.org/daily/4113, but (even though my current attempt to run as a candidate against Barbara Boxer has stumbled and doesn’t seem to be getting off the ground very well) I will continue my candidacy for U.S. Senator from California (realistic target date 2012 against Feinstein?) and I will work in support of a plan of Classical Economic Liberalism, in fact for “Capitalism and Freedom” to borrow the title of Milton Friedman’s book, and I hope that we will eventually escape from the wreckage that IS the Obamanation of today.

Austrian Economics and Classical Liberalism

Mises Daily: Thursday, March 04, 2010 by 

I. Introduction

Classical liberalism — which we shall call here simply liberalism — is based on the conception of civil society as, by and large, self-regulating when its members are free to act within very wide bounds of their individual rights. Among these the right to private property, including freedom of contract and free disposition of one’s own labor, is given a very high priority. Historically, liberalism has manifested a hostility to state action, which, it insists, should be reduced to a minimum (Raico 1992, 1994).

Austrian economics is the name given to the school, or strand, of economic theory that began with Carl Menger (Kirzner 1987; Hayek 1968), and it has often been linked — both by adherents and opponents — to the liberal doctrine. The purpose of this paper is to examine some of the connections that exist, or have been held to exist, between Austrian economics and liberalism.

II. Austrian Economics and Wertfreiheit

Writers have sometimes freely referred to “the Austrian ethical position” (Shand 1984, p. 221) and the “moral and ethical stance” of the Austrian economists (Reekie 1984, p. 176), denoting a position with strong (liberal) implications for politics. At first glance, this is surprising, since Austrian economists have been at pains to affirm the Wertfreiheit (value neutrality) of their theory, and thus its conformity to Weberian strictures on the character of scientific theories (Kirzner 1992b). Ludwig von Mises, for instance (1949, p. 881), stated that, “economics is apolitical or nonpolitical … it is perfectly neutral with regard to judgments of value, as it refers always to means and never to the choice of ultimate ends.”

That said, however, the fact is that all of the major figures in the development of Austrian economics habitually took positions on policy issues that they held to be somehow grounded in their economic doctrines. Mises, for instance, is widely recognized as probably the premier liberal thinker of the 20th century. In his magnum opus, Human Action (1949), he shed light on the connection between value-free economics and liberal politics:

While praxeology, and therefore economics too, uses the terms happiness and removal of uneasiness in a purely formal sense, liberalism attaches to them a concrete meaning. It presupposes that people prefer life to death, health to sickness, nourishment to starvation, abundance to poverty. It teaches man how to act in accordance with these valuations.… The liberals do not assert that men ought to strive after the goals mentioned above. What they maintain is that the immense majority prefer [them]. (p. 154)

According to Mises, economics teaches the means necessary for the promotion of the values most people endorse. Those means comprise, basically, preservation of a free-market economy. Thus, the economist per se passes no value judgments, including political value judgments. He only proposes hypothetical imperatives (if you wish to achieve A, and B is the necessary means for the achievement of A, then do B) (Rothbard 1962, volume 2, pp. 880–881, 1976b). A question that will concern us is whether the division between Austrian theory and liberal principles is as surgically clean-cut as this seems to suggest.

III. Methodological Individualism

Methodological individualism has been a keystone of Austrian economics since the publication of the first Austrian work, Menger’s Principles, in 1871. As Menger wrote in his Investigations,

The nation as such is not a large subject that has needs, that works, practices economy, and consumes.… Thus the phenomena of “national economy” … are, rather, the results of all the innumerable individual economic efforts in the nation … [and] must also be theoretically interpreted in this light.… Whoever wants to understand theoretically the phenomena of “national economy” … must for this reason attempt to go back to their trueelements, to the singular economies in the nation, and to investigate the laws by which the former are built up from the latter. (Menger 1985, p. 93, emphasis in original)

Methodological individualism was endorsed by the other leaders of Austrianism, to the point where Fritz Machlup (1981) could list it as the first of “the most typical requirements for a true adherent of the Austrian school.”

Perhaps because of the connotations of the noun, Austrians have stressed that what is at issue ismethodological individualism. Israel Kirzner (1987, p. 148) cites Machlup’s criteria of Austrianism, including methodological individualism as the first. He warns parenthetically, however, that this is “not to be confused with political or ideological individualism;” it refers merely “to the claim that economic phenomena are to be explained by going back to the actions of individuals.”

Lawrence H. White (1990, p. 356), too, seems to wish to distance methodological individualism from any hint of politics. White criticizes Max Alter for alluding to a “political” battle in this connection, commenting, “in fact the phrase methodological individualism was coined precisely to distinguish it from other varieties of individualism, including the political variety.”

But the interesting question is not whether the characteristic method of the Austrian School isidentical with individualism in the political sense (usually more or less a synonym for liberalism). Obviously, it is not. The question is whether the method itself has any political implications.

It is certainly possible for someone to adopt methodological individualism and not endorse liberalism (Boehm 1985, pp. 252–253). Jon Elster, for instance, is able to insist on the necessity of methodological individualism in the social sciences, while continuing to view himself as a Marxist (Elster 1985, pp. 4–8). Yet it is significant that Elster dismisses certain claims of Marx on the grounds of their inconsistency with methodological individualism.

In general, it seems clear that the Austrian approach in methodology tends to preclude holistic ideologies that happen also to be incompatible with liberalism, such as classical Marxism and certain varieties of racism and hypernationalism. To this extent, then, it is not simplymethodological individualism.

Political factors played a role in the debate over Austrian methodology from the start. The very fact that “nation” and “state,” understood as holistic entities, were not primaries in his system set Menger apart from important currents of economic thought in the German-speaking world of his time. Indeed, it was on the basis of Menger’s methodology that Gustav Schmoller, leader of the German Historical School, instantly politicized the whole debate. In his review of Menger’sInvestigations, Schmoller accused Menger of adhering to Manchestertum (laissez-faire), since his abstract and “atomistic” method might better be called “the Manchesterist-individualist” method (Schmoller 1883, p. 241).

Friedrich von Wieser (1923), himself one of the founders of the Austrian School, introduced a curious political note in discussing the origins of Austrianism. Wieser recalled how, as young economists, both he and Eugen von Böhm-Bawerk had been struck by the contradiction in classical economics:

While the chief accusation that was raised at the time against the classical economists in Germany concerned their [political] individualism, we found that they had become unfaithful to their individualistic creed from the start. As true individualists they would have had to explain the economy from the meaning of the individuals engaged in economic activity who were joined together in the economy. (p. 87)

Many decades later, Hayek, in a sense, concurred with Schmoller and Wieser. The central idea of his most extensive work on methodology, The Counter-Revolution of Science, is precisely the historical and theoretical connections between the denial of methodological individualism and the growth of socialism. Hayek (1955) assails “methodological collectivism,” with

its tendency to treat wholes like “society” or the “economy,” “capitalism” … or a particular “industry” or “class” or “country” as definitely given objects about which we can discover laws by observing their behavior as wholes.… The naive view which regards the complexes which history studies as given wholes naturally leads to the belief that their observation can reveal “laws” of the development of these wholes. (pp. 53, 73)

The supposed discovery of such laws has resulted in the construction of philosophies of history on which major socialist projects have been erected — Marxism, of course, but particularly Saint-Simonianism, the system Hayek dissects in his book. The Saint-Simonians were practitioners par excellence of scientism, the illegitimate application to the study of society of the methods of the natural sciences.

And it is scientism — the negation of methodological individualism — that, according to Hayek, “through its popularizers has done more to create the present trend towards socialism than all the conflicts between economic interests”(Hayek 1955, pp. 100–101). By the same token, political opponents of liberalism, in criticizing Hayek in this area, have assumed that his methodological individualism was closely connected with his political philosophy.

Marxist critics have made a further point regarding Austrian methodology. In their view, it stunts our understanding of social reality. According to Ronald Meek (1972), marginalism — including Austrian economics — took refuge in a schema centering on the psychology of isolated, atomistic individuals, thus (unconsciously) diverting attention from the crucial questions of political economythat had been the focus of classical economics (including Marxism). As a result, “real-life” issues, such as the division of the social product among competing classes — “those great problems of capitalist reality which worried the man in the street” (1972, p. 505) — have been systematically ignored.

This Marxist criticism would seem to be misguided, however. The abstracting approach of Austrianism pertains — necessarily — to its theory. Many Austrians, it may be conceded, have neglected to apply their theory to the understanding of concrete, “real-life” issues. That this failing is not intrinsic to Austrian economics, however, is shown by the fact that at least one well-known Austrian economist, Murray N. Rothbard, has devoted himself not only to “pure economics,” but also to highly important questions of political economy, both on a theoretical level and in specific historical contexts (e.g., Rothbard 1963, 1970; on methodological individualism, see Rothbard 1979).

IV. Subjectivism

Austrian economics begins with and constantly emphasizes the action of the individual human being (Mises 1949, pp. 11–29; Rothbard 1962, pp. 1–8). According to Lachmann (1978), for the Austrian School,

the thought design, the economic calculation or economic plan of the individual, always stands in the foreground of theoretical interest.… The significance of the Austrian school in the history of ideas perhaps finds its most pregnant expression in the statement that here, man as an actor stands at the center of economic events (p. 47, 51).[9]