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Nigel Biggar, a recently retired professor of theology at Oxford University, has never shunned controversy, as the title of one of his books, In Defence of War, suggests. In this week’s column, I’d like to examine an article of his, “A Christian Defense of American Empire,” that appeared in the October 2022 issue of First Things. As you might anticipate, I disagree with the article, but I’d like especially to call attention to an odd feature of it, other than the failure of its defense of the American empire. This feature will emerge in due course.

Biggar is entirely in the right that an American empire exists. He says,

Americans instinctively think of themselves as anti-imperialist…. Yet, in one of the ironies of history, America itself accumulated a considerable empire during the twentieth century, especially in its final decades. The American empire may be laundered by international institutions and slogans such as the “rules-based international order,” but it is an empire in all but name. It is not, perhaps, administered in the same direct fashion as Britain’s was, but it is certainly as vast and important, and as rigorously policed and controlled. (p. 38)

The American empire exists: Is this good or bad? Biggar thinks it is good because without it, there would be a Russian or Chinese empire dominating the world, and that would be worse. “Since the American imperial system offers a far better future for the peoples of the world than do its Russian or Chinese alternatives, Americans need to be clear-minded about its moral legitimacy and their duty to defend it” (p. 38). Biggar reiterates his argument in the article’s concluding sentences: “So now our freedom, and that of many others, depends on the will of Americans to sustain their nation’s imperial dominance. Let it not be said that Christians in the United States [who oppose empire] undermined that will and contributed to a world in which we all fall under Beijing’s yoke” (p. 42).

Biggar’s argument depends on the premise that there must be a single nation controlling the world. But why must there? Why not instead a system in which there are a number of competing nations, each eager to assert its own interests but none powerful enough to control all the others? It’s no doubt true that if a “power vacuum” exists, strong nations will rush to fill it, but it doesn’t follow from this that the end of the American empire would entail a vacuum of this sort?

Biggar might respond that his argument for American empire doesn’t entail the premise I have attributed to him, though I am confident it is one he in fact holds. He might say that whether or not there must be a single nation controlling the world, at present China and Russia aim to, so that is why America must stop them. He offers no evidence that either nation seeks world domination; although these nations seek to extend their influence, it does not follow that they aim to bring large numbers of foreign peoples under their control, and Biggar’s lament for the fate of the Uighurs is thus an ignis fatuus. Putin seeks a “Greater Russia,” but that is hardly global dominance.

Suppose, though, that I am mistaken and that these nations do seek world dominance. It would not follow that America needs to maintain an empire to stop them. If you fear that someone is going to take over your neighbor’s house, you need not take over the house to prevent this: perhaps judicious aid to the owner would suffice.

Let’s turn from the alleged need for an American empire to interdict the formation of other empires to the goodness or badness of empire in itself. Biggar acknowledges that empires sometimes do bad things but counters that they do good things as well. He offers no systematic attempt to weigh these goods and bads but rather leaves his readers with the unsupported claim that on balance the effects of empire have been good.

There is an odd feature of the way Biggar presents his case for American empire, though we haven’t yet reached the odd feature I said at the outset I would discuss. Suppose—though I certainly think this is false—that on balance the effect of American dominance over foreign countries has been positive (I suspect there are Vietnamese and Iraqis who would not think so). Why would America have the right to intervene in foreign countries to “improve” matters? If I see that you are profligate in your household expenditures and would benefit from sound financial planning, I do not thereby acquire the right to seize your bank account and impose a budget on you.

One gathers that Biggar would be averse to such talk of rights, at least where “inferior” peoples are concerned, and he has written a book, What’s Wrong with Rights?, skeptical of rights’ universal scope. He says at the start of his article, “There was a time when many people, at least in Europe, thought that empire was a good thing: It had ended inter-tribal warfare and brought humanitarian emancipation, modern science and technology, and moral and religious enlightenment to the benighted places and peoples of the earth” (p. 37), and I cannot escape the feeling that Biggar shares the sentiments of those who sought “Dominion over palm and pine”—of course in selfless service  to others.

It is now time to make good on my claim that Biggar’s article has an odd feature. If you are writing in defense of the American empire, it seems obvious that most of your remarks should be directed to the good features of this empire, as it now exists. But in fact, Biggar devotes a substantial part of the article to arguing that the American revolutionaries against Britain exaggerated the evils of the British Empire. The colonists, he thinks, had some justified complaints, but the imperial authorities on the whole acted well. Even if this is right, so what? It does not at all help Biggar in making his case for American empire.

Readers of Biggar’s article old enough to recall the old Perry Mason television program may perhaps think of the oft-repeated phrase of Hamilton Burger, the district attorney, when making an objection: “Incompetent, irrelevant, and immaterial.”

Daniel McAdams of the Ron Paul Institute joins Jeff and Bob to discuss the economic and political ramifications of the Nord Stream 2 pipeline sabotage. 

Read “The Economics of War” from Human Action: Mises.org/HAP363-1

Read a study Bob co-authored on Europe’s energy crisis: Mises.org/HAP363-2

The link between the transatlantic slave trade and industrial growth in Britain is a recurring theme in public discussions. There is a widespread assumption that the profitability of the slave trade requires Britain to compensate the descendants of Africans, since slavery helped to enrich some institutions. It is true that the slave trade made profits, but its contribution to the economy was marginal. Technological change rather than the slave trade was the force that propelled the Industrial Revolution.

Studies examining the profitability of the slave trade have also failed to account for the impact of British human capital and institutional innovations on the viability of the trade. Slave trades have been ubiquitous throughout history, yet we know considerably less about how non-Westerners deployed human capital to increase the viability of slave trading. If human capital and institutions had not been leveraged, the transatlantic trade would have delivered meagre returns for Britain and her peers in Europe.

Economists are wrong to assume that all regions could efficiently entertain trade on a global scale. Before the eighteenth century, shipping in Europe was already a high-tech industry employing quality labor. Maritime workers were known for having higher levels of human capital, and the English were particularly talented. Europe not only constructed sophisticated ships, but the quality of its shipboard personnel was also relatively high.

Stephen D. Behrendt opines that human capital was a seminal factor in Liverpool’s eventual dominance in the British slave trade. The availability of experienced personnel made it easier for merchants to organize ventures and expand market options in Africa. Suffering from a shortage of human capital could severely derail the productivity of the slave trade. For example, the paucity of trained personnel in London restricted the volume of trade in Africa to 15–25 voyages annually.

Success in the slave trade was inextricably linked to human capital and organization. Africans and Arabs traded slaves for centuries, but they failed to build formal structures that could increase competitiveness beyond a nontrivial level, as Europeans did. Institutions like the Dutch East India Company, the Dutch West India Company, and the Royal African Company were launched to aid the efficiency of European trades. Europeans applied an economic approach to the business of exploitation, and the British were the most successful.

Literature on the Dutch, Danish, and French slave trades suggests that merchants in these countries were less equipped to minimize problems linked to the slave trade. Unlike Britain, her closest competitor, France did not modernize its entrepreneurial and banking practices during the seventeenth and eighteenth centuries, and as a result, the lack of innovation in the financial sector impeded industrial expansion. However, Britain pursued several strategies to boost the performance of the slave trade.

Nicholas Radburn credits Britain’s success in the trade to the “bills in the bottom” credit mechanism: “First introduced by Liverpool merchants in the 1750s, merchants received bills of exchange for the proceeds of their American slave sales in the ship or ‘bottom’ that delivered the captives, in lieu of produce or the planters’ own bonds. These bills were drawn upon and guaranteed by British bankers, a departure from earlier credit arrangements, which had only been between a captain and a planter or factor.”

By deemphasizing personal networks that relied on family and kinship ties, these bills fostered broader collaborations that led to the emergence of modern financial institutions. Quoting the research of Robin Pearson and David Richardson, Radburn purports that the use of such bills explains the difference in performance between the French and the British:

“Bills in the bottom,” argue Pearson and Richardson, “promoted the unprecedented expansion of [the British slave trade] between 1750 and 1807,” and enabled British slavers to escape the pitfalls of colonial debt security, which had plagued the trade in the 1730s. French slave traders, by comparison, employed the “triangular trade” method of remittance throughout the eighteenth century, in which slaver captains brought home a portion of the sales in tropical commodities, and the balance as credit extended directly to the planters.

Insurance was another key mechanism that stimulated the British slave trade. The availability of insurance for ships and human cargoes incentivized the slave trade by mitigating risks in the event of a loss. The British slave trade gained profits due to the incorporation of mechanisms that made it feasible to trade humans. Discussing the slave trade evokes emotions, but it was also a commercial activity, and in business, better organized and smarter people will evidently outperform their rivals.

Indeed, the slave trade was horrible, but logic should temper emotions. By analyzing the issue, it becomes obvious that the slave trade yielded profits due to the human capital and institutional advantages of Britain and her European peers. The slave trade was not unique to Europeans, but theirs was relatively successful because of European human capital. Moreover, if people require apologies for past atrocities, they must also demand atonement from Africans and Arabs for their participation in slavery and the slave trade.

Some might argue that the success of Europe stems from exploitative activities like the slave trade and colonialism to comfort themselves, but the truth is that Europe’s prosperity is largely a result of human capital and European institutions.

Ryan and Tho talk with Mises.org author and German native Rosanna Weber about the energy crisis in Germany. German policymakers have greatly worsened the ongoing energy crisis in Germany by abandoning nuclear energy and taking a hard line on Russian natural gas. Now with the damage done to the Nord Stream pipeline, German consumers face even fewer options as winter approaches. 

Rosanna Weber is a graduate student in Economic History at the London School of Economics and a freelance journalist.

Recommended Reading

“Germany’s Nuclear Choice: Russian Energy Crisis Forces a Reckoning” by Rosanna Weber: Mises.org/RR_101_A

“Eat or Heat: Europeans Already Are Facing Previously Unthinkable Dilemmas” by Claudio Grass: Mises.org/RR_101_B

“Europe Ditched Russian Energy. Now People Are Sitting in Line For Days to Buy Coal. Is Biden to Blame?” by Alice Salles: Mises.org/RR_101_C

“Germany’s (and Europe’s) Self-Inflicted Upcoming Energy Crunch” by Weimin Chen: Mises.org/RR_101_D

“The ‘Stunning Success’ of the Green Revolution Is Yet Another Progressive Myth” by Kristoffer Mousten Hansen: Mises.org/RR_101_E

Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.

Today marks the birthday of Ludwig von Mises, and day 4 of our annual Fall Campaign.

Mises was the most important scholar of the twentieth century, a man who not only revolutionized our understanding of economic science, but was both the most powerful champion of liberty and property and the greatest enemy of socialists of all kinds.

In the streets of all our major cities, we are seeing what he feared: a generation of modern barbarians groomed by our universities to engage in socialist destruction. It is a direct failing of our schools, of our political thinkers, and of all Western institutions that have ignored Mises’s works.

This is why our mission is so important, and why we need your support. Join today for just $5 a month or become a Member (or renew) for $50, and you will receive our timely booklet How Inflation Destroys Civilization, by Guido Hülsmann. We will also list you on mises.org as a Supporter!

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Many years ago, in his “Unscrambling Socialism” (Notes from FEE, November 1964), Leonard Read wrote:

Any adept student of human action knows that it isn’t enough merely to “drop anchor” in today’s sea of socialism, that is, to stop where we are. The U.S. is already playing host to more parasitic socialism than the economy can sustain … [and] there comes a point in time in growth when any parasite will destroy its host.

That statement seems far truer today than nearly any time in my memory, where what Albert Jay Nock once called octopean government has seemingly grown even more appendages and used them more aggressively against citizens. And calling socialism a parasite on the economy is insightful because it helps us see how socialism resists planned efforts to displace it:

Consider socialism’s double-barreled definition: the state ownership and control of the means and/or the results of production. Give it entry into any area and socialism insinuates itself into the warp and woof of the activity; it becomes embedded in the mores, the traditions, the way of life. Immediately there develops a stubborn vested interest to assure its continuance; it infects the economic, social, and political bloodstream.

Read then turned to the thorny question of how to successfully rid ourselves of this parasite, now even more important after several decades that have left us far more socialized than when he wrote:

How are we to break out of … any of the … many socializations? … thousands are asking how to engineer the dismantling of this labyrinthine growth, but not a one can blueprint the procedure; none ever will. Drafting a plan for riddance of socialism is like trying to find a formula for unscrambling an egg.

Read explained why a socialistic centralized plan will not work to defeat socialistic parasitism:

Escape is predicated on … dismiss[ing] the thought of engineering or planning socialism’s uprooting, and … an expanding appreciation of how a seeming chaos of initiatives and skills will miraculously combine, when free to do so, into ordered patterns of creative phenomena. In short, a growing comprehension of the miracle of the free market—a comprehension all too rare today.

Using the example of how someone trying to design how mail would be delivered in a free market, Read goes further:

Unable to think how he would deliver mail … unable to design or engineer the project in his own mind—that is, being unaware of how the market really works—he will likely draw the socialistic conclusion…. Mail delivery is a job for government.

[But] No one person can or ever will attain to such comprehension … free market mail delivery would be accomplished, not by any masterminding but in precisely the same manner as has voice delivery and all other creative phenomena: millions of tiny “think-of-thats,” in a chaos which defies cataloguing, ending up in … fantastic order.

It is this seemingly chaotic (in the sense of not being subject to anyone’s unilateral control) order that has advanced people’s well-being, rather than unilateral controls and those who impose them, which undermines it:

Natural and spontaneous configurations of creative ideas account for our economic and social blessings.

However, no one knows how to correct all the embedded socialist errors that have crept into almost every nook and cranny of society. In fact, it is harder than how to make a pencil, Read’s most famous illustration, because the protection of individual property rights mean that voluntary arrangements need only be worked out among those whose rights are involved in making a pencil, while every socialistic restriction hinders all efforts to instead produce nonparasitic results:

The point we must bear in mind is that socialism itself is but the political outcropping of a plurality of false ideas, notions, passions, plausibilities and emotions … all the way from doing good to feathering one’s own nest—all at the expense of others! To conclude that anyone can engineer or blueprint the eradication of these errors is no more valid than to believe that someone knows how to make a jet plane or to deliver mail. Plan an erasure of these myriad misconceptions from the minds of millions of unknown persons? … To fasten the eye on a design or an organized scheme or a blueprint to bring about socialism’s demise is to fritter away one’s time and energy.

Read suggests that rather than trying to plan the demise of socialism, we should instead focus our attention on building a good society:

A good society cannot emerge from the drafting board. Rather the good society is a dividend which automatically flows from antecedent virtues and talents…. And the shrinking or the withering away of socialism will come about, if at all, as a natural by-product of numerous antecedent actions that are meritorious in and of themselves.

Unsound ideas lead to socialism, just as sound ideas make for a good society.

Unsound ideas will produce their bad fruit until sound ideas prove acceptable. In short, its largely a matter of displacement or replacement. Any idea, right or wrong, will revert to an insignificant role if the value judgements of men do not approve it.

So how would a focus on a good society displace socialistic errors? Read continues:

Unsound ideas will lose authority whenever their intellectual source peters out, that is, whenever the intellectual source of sound ideas attains a dominant position … [so] socialism will shrink into historical oblivion whenever little or nothing is done to preserve it.

With the unsound ideas which underlie socialism: take no steps to preserve them but, instead, fasten attention on the sound ideas which give support to the free market and the good society. When we pursue high purposes, natural forces do their clean-up work for us as a dividend for having set our sights aright.

[Consequently, under this approach] We do not need to know how to mastermind or blueprint the unscrambling of socialism; we need to know little else than how to win Nature as an ally … with men of good faith, she will cooperate.

Leonard Read believed that a single plan for eliminating socialism everywhere was a pipe dream, because no one knows enough to make such a plan effective. In contrast, better ideas and better results from freely chosen, voluntary arrangements, when and where they are implemented, have the potential to unfasten parasitic government from draining our lives, liberties, and properties in those areas, and inspire other similar efforts. It is still a daunting task, but only principles of self-ownership and freedom, in the minds and hands of principled adherents, make it possible at all.

It may sound like a bad joke, but several central banks actually claim this. On the website of Sweden’s central bank, the Riksbank, you can read it both in English and Swedish. In English, the statement says: “The Riksbank is Sweden’s central bank. We ensure that money retains its value (over time).” The Swedish version translated to English says the same but with the words “over time” added.

England’s central bank, the Bank of England makes a similar statement on their website, saying: “We guard the value of your money by keeping prices stable.”

Then there is Bank of Canada: “We are Canada’s central bank. We work to preserve the value of money by keeping inflation low and stable.”

I sent an email to the Riksbank about this and asked them how they could possibly make such a statement, and how they define the term value. A week later I received an answer where they said that by “money retaining its value” they mean that the Consumer Price Index (CPI) should steadily increase in a “slow” pace (2 percent per year).

“Most other central banks, like the FED define price stability in this way,” they added. Sure, most central banks try to fool us into thinking that we need inflation to survive and that prices must rise to keep the economy going.

What Is Wrong with the Central Banks’ Statements

As you can see, they claim that as the CPI rises due to an increased money supply, money retains its value (price). But if CPI rises, then logically the value of the marginal unit of money falls. Price stability is defined by most central banks as an increase in CPI by approximately 2 percent per year.

However, prices for various goods and services do not increase evenly when the money supply is inflated. Orange prices may rise 1 percent, while house prices may rise 15 percent. Blind to the fact that the use of any good is subjective, it should be noted that most countries do not include houses in CPI since they view them as capital goods.

The fact that money is not neutral benefits the earlier recipients of new money at the expense of the later recipients. Newly injected money into the economy, hence, create larger price increases where they are first injected, known as the Cantillon effect.

Central banks also confuse value with price and the price of money with the price of CPI. Not surprisingly, central banks are created on faulty economic theory. It is common in everyday speech to refer to price as value, but they are two different things.

Price is a current exchange ratio between goods and/or services and money being traded. Carl Menger explained the concept of value brilliantly in his book Principles of Economics: “Value is a judgment economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men.”

Conclusion

Kings and governments found out early that they could expand their power and increase their wealth by monopolizing the issuing of money. Thus, by making the rulers’ money the only legal tender, even fiat money was still valued by the majority, since alternatives were illegal.

After the gold standard was suspended, the governments normally kept the gold and let the paper money circulate without being redeemable. Since the unredeemable fiat money is still the only legal tender, not too many people think twice about it.

In a way, you can say that the central banks in collusion with the governments preserve the value of money. But the only way it preserves the value is by forcing people not to use any alternatives and thereby the great majority values government money, no matter what.

If people really were to think about it, would they value money that went up in price over time or money that went down in price? Consider the (approximate) prices of these commodities during the last one hundred years:

– The price (the purchase power) of the US dollar is down 94.34 percent

– The Swedish krona is down 96.61 percent

– The Canadian dollar is down 94.05 percent

– The British pound 97.08

Meanwhile the silver spot price is up 3033 percent and the gold spot price is up 8591 percent.

It should be noted that gold and silver prices rise due to monetary inflation, as does any other commodity. However, in terms of measuring CPI, the two metals serve as a “hedge against inflation.” The precious metals have been valued for thousands of years for its monetary advantages, beauty, and industrial purposes. Fiat money, on the other hand, is valued because it is the only legal option as money and because most people do not understand basic economics.

All that being said, a more appropriate statement by all central banks should read: “We are a central bank, and we ensure money is still valued by monopolizing the issuing of money.”

But that, of course, is wishful thinking.

Why does money have value? Typical economists claim that money is valuable because the government declares it so. But that is impossible, given the true origins of money, which are best explained by Austrian economists.

Original Article: “Do People Accept Money Because Government Endorses It?”

This Audio Mises Wire is generously sponsored by Christopher Condon.