Leading Austrian Economist: Some Conspiracy Theories Are True → Washingtons Blog
Leading Austrian Economist: Some Conspiracy Theories Are True - Washingtons Blog

Friday, February 12, 2010

Leading Austrian Economist: Some Conspiracy Theories Are True

Many people are starting to appreciate the Austrian school of economics, and its recognition that unrestrained bubbles lead to economic crashes.

But many of those who respect Austrian economics dismiss all "conspiracy theories" as being crazy.

But in fact, leading Austrian school economist Professor Murray N. Rothbard wrote in 1965:

It is also important for the State to inculcate in its subjects an aversion to any "conspiracy theory of history"; for a search for "conspiracies" means a search for motives and an attribution of responsibility for historical misdeeds. If, however, any tyranny imposed by the State, or venality, or aggressive war, was caused not by the State rulers but by mysterious and arcane "social forces," or by the imperfect state of the world or, if in some way, everyone was responsible ("We Are All Murderers," proclaims one slogan), then there is no point to the people becoming indignant or rising up against such misdeeds. Furthermore, an attack on "conspiracy theories" means that the subjects will become more gullible in believing the "general welfare" reasons that are always put forth by the State for engaging in any of its despotic actions. A "conspiracy theory" can unsettle the system by causing the public to doubt the State's ideological propaganda.
And in 1977, Rothbard wrote:

Anytime that a hard-nosed analysis is put forth of who our rulers are, of how their political and economic interests interlock, it is invariably denounced by Establishment liberals and conservatives (and even by many libertarians) as a "conspiracy theory of history," "paranoid," "economic determinist," and even "Marxist." These smear labels are applied across the board, even though such realistic analyses can be, and have been, made from any and all parts of the economic spectrum, from the John Birch Society to the Communist Party. The most common label is "conspiracy theorist," almost always leveled as a hostile epithet rather than adopted by the "conspiracy theorist" himself.

It is no wonder that usually these realistic analyses are spelled out by various "extremists" who are outside the Establishment consensus. For it is vital to the continued rule of the State apparatus that it have legitimacy and even sanctity in the eyes of the public, and it is vital to that sanctity that our politicians and bureaucrats be deemed to be disembodied spirits solely devoted to the "public good." Once let the cat out of the bag that these spirits are all too often grounded in the solid earth of advancing a set of economic interests through use of the State, and the basic mystique of government begins to collapse.

Let us take an easy example. Suppose we find that Congress has passed a law raising the steel tariff or imposing import quotas on steel? Surely only a moron will fail to realize that the tariff or quota was passed at the behest of lobbyists from the domestic steel industry, anxious to keep out efficient foreign competitors. No one would level a charge of "conspiracy theorist" against such a conclusion. But what the conspiracy theorist is doing is simply to extend his analysis to more complex measures of government: say, to public works projects, the establishment of the ICC, the creation of the Federal Reserve System, or the entry of the United States into a war. In each of these cases, the conspiracy theorist asks himself the question cui bono? Who benefits from this measure? If he finds that Measure A benefits X and Y, his next step is to investigate the hypothesis: did X and Y in fact lobby or exert pressure for the passage of Measure A? In short, did X and Y realize that they would benefit and act accordingly?

Far from being a paranoid or a determinist, the conspiracy analyst is a praxeologist; that is, he believes that people act purposively, that they make conscious choices to employ means in order to arrive at goals. Hence, if a steel tariff is passed, he assumes that the steel industry lobbied for it; if a public works project is created, he hypothesizes that it was promoted by an alliance of construction firms and unions who enjoyed public works contracts, and bureaucrats who expanded their jobs and incomes. It is the opponents of "conspiracy" analysis who profess to believe that all events — at least in government —are random and unplanned, and that therefore people do not engage in purposive choice and planning.

There are, of course, good conspiracy analysts and bad conspiracy analysts, just as there are good and bad historians or practitioners of any discipline. The bad conspiracy analyst tends to make two kinds of mistakes, which indeed leave him open to the Establishment charge of "paranoia." First, he stops with the cui bono; if measure A benefits X and Y, he simply concludes that therefore X and Y were responsible. He fails to realize that this is just a hypothesis, and must be verified by finding out whether or not X and Y really did so. (Perhaps the wackiest example of this was the British journalist Douglas Reed who, seeing that the result of Hitler's policies was the destruction of Germany, concluded, without further evidence, that therefore Hitler was a conscious agent of external forces who deliberately set out to ruin Germany.) Secondly, the bad conspiracy analyst seems to have a compulsion to wrap up all the conspiracies, all the bad guy power blocs, into one giant conspiracy. Instead of seeing that there are several power blocs trying to gain control of government, sometimes in conflict and sometimes in alliance, he has to assume — again without evidence — that a small group of men controls them all, and only seems to send them into conflict...

Rothbard's points are well-taken: there are in fact conspiracies involving powerful people. But people that go off half-cocked with baseless allegations unsupported by the evidence do a disservice to everyone, and do nothing but muddy the waters.

We must treat conspiracy theories like judges are trained to do: as claims to be proven or disproven based on the evidence.


  1. Is "praxeologist" an SAT word?

  2. Is "approval" paranoid, as per the above commentary?

  3. Conspiracy and collusion are a necessary outcome of capitalist free society as we know it. In order to prove or disprove a conspiratorial hypothesis one must have actionable evidence, which in a free society is hard to obtain.

    We can take a larger view of conspiracy. The expectation of it should be written into the rules of the political system. Campaign finance rules leave politicians with plenty to gain from special interests.

    The rules should be written in such a way as to provide politicians and prospective politicians with adequate funds and completely outlaw or strictly limit any private sector monetary influence on the operation of government.

  4. I just recently read a book called "Conversations with the Crow - The Final Conversations of Robert Trumball Crowley"

    Crowley was the former head of the CIA's dirty tricks department and this is the closest thing one might come to a "death bed confession".

    These are transcribed conversations between two former spooks whose lives seemed to overlap and you get to listen in as they are talking shop.

    Wickedly funny, disturbingly revealing, utterly fascinating. Thought you might want to see it.


  5. Unfortunately, conspirators do indeed create groups and countergroups to distract and provide disinformation. Historian Quigley clearly identified the Republican and Democrat parties as filling that bill.

    Thus, there are circles within circles. The Republican and Democrat parties, for example as well as the actions of the CIA throughout its history as well as School of America's doctrines/teachings provide proof that "that a small group of men controls them [edit: certainly 'some'] all, and only seems to send them into conflict."[edit: a common tactic of cointelpro]

  6. "The rules should be written in such a way as to provide politicians and prospective politicians with adequate funds and completely outlaw or strictly limit any private sector monetary influence on the operation of government."

    Of course, it's the politicians who will write the rules. I've got a better idea. How about removing their power as well as their funding (taxes)? The reason the special interests get involved is that our glorified lawyers and political science majors have too much power and money at their disposal.

    I would think that the last thing we need is another entitlement program for politicians.

  7. If what you have seen with your own eyes defies any rational extension of Ockham's Razor, it is no longer a theory.

    "Don't let your luggage define your travels"


  8. Lengthy articles, but essential reading, below. Thorough descriptions of the mechanisms that were employed to neuter US Americans' ability to stand up for themselves. Articles by none other than David Horowitz, for Ramparts magazine, before Horowitz turned hard right:




  9. whether one admits of conspiracies or not, due to the prevailing inhibitions, limitations, and tendencies of an imperfect human nature we all lend ourselves to the conspiratorial every day in large matters and in small and more so the the extent we participate in the organizations and institutions which compose the framework of our society.

    The necessary rules, proscriptions strictures, bylaws etc.. which typify the boundaries demarcating and separating each particular social enclave one from another and from the populace at large and thus admitting one while excluding the other, form a "conspiracy" signifying that there is a certain shared knowledge which is exclusive to the various members of that particular enclave while restricting the access to its proprietary concerns.

    if one admits the Book of Genesis, we can immediately discern the web of a conspiracy. Eve conspired with the serpent who provided her with inside information concerning the forbidden fruit which was being withheld from our unwitting Edenic progenitors by God who was thus obviously conspiring against them with unknown agencies (perhaps the serpent himself!). Thus Adam and Eve contrived to conspire against the Creator and did not Cain conspire to slay Abel as well. and so here we are, conspiring endlessly with each other one against the other.

    even the most minimal understanding can discern that history is rife with interwoven webs of conspiratorial workings and what would the sublime works of art from the ancients to Shakespeare be without the manifold intrigues, plotting, treachery and beguilement of the dramatis personae. this is not to speak of innuendo, slandering, and outright blackmail that makes up a considerable part of everyday existence.

  10. My rules for conspiracies are:

    1) Consiracies exist. Ask anyone convicted of the crime: "consiracy to committ <insert Felony here>"

    2) Many conspiracies have been both large and secret; e.g. the Mafia in america circa 1920-1950 and prior to Joe Valachi.


    3) Never ascribe to conspiracy what self-interest and stupidity will cover.

  11. Occam's Razor is no more 'extensible' into the realm of sociological phenomena than the theory of relativity is extensible into realm of sociology and politics. This is often misquoted and taken out of context, usually innocently, in defense of the status quo by those who do not know better. This is somewhat similar to those who misquote Emerson in saying, "Consistency is the hobgoblin of small minds," which is also incorrect and typically taken out of context. The original quote is "A FOOLISH consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." (emphasis added) That word "foolish" make all the difference in the world, as does the context of the use of Occam's Razor. It is interesting to note the Emerson's observation WAS directed toward the realm of politics and philosophy and, as such, can easily be interpreted as an argument for whim worshiping and walking the slippery slope. Those who cite it are often revealing themselves.

  12. A conspiracy comes into existence every time three teenage girls walk into a school restroom, while a fourth waits in the hall. Let's get real. Conspiracy is human nature.


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