Democracy is based on the principle that people have the
inherent right to rule themselves, and thus to select the form of government
and society best suited to their needs, as long as it respects fundamental
human rights. How a specific government
or society meets that requirement is up to the people who come together to organize
it, and can take many forms, but the substance must remain, or the system is
unjust.
The problem is that both the politics and the economics of what
we’ve mentioned several times on this blog as the “Currency School” assume
concentrated economic and political power that is in direct opposition to a
democratic social order. It comes as no
surprise, then, that Keynesian economics assumes the authoritarian State as a
given.
Walter Bagehot, for instance (who admired Thomas Hobbes),
criticized the U.S. Constitution for not providing for a dictator in times of
national emergency. At least one
prominent 20th century Keynesian included a chapter in his textbook
titled, “If I Were Dictator” (John M. Clark, Social Control of Business.
New York: McGraw-Hill Book Company, 1939, 520-525). Dr. Harold G. Moulton claimed that Keynesian
monetary and fiscal policy forces an economy into a choice between runaway
inflation and totalitarian control — with no guarantee of effectiveness to
solve economic problems in either case.
(Harold G. Moulton, The New
Philosophy of Public Debt.
Washington, DC: The Brookings Institution, 1943, 86-90.)
Pope Pius XI described this “dictatorship” in extremely
uncomplimentary terms, i.e.,
“105. In the first place, it is obvious that not only is
wealth concentrated in our times but an immense power and despotic economic
dictatorship is consolidated in the hands of a few, who often are not owners
but only the trustees and managing directors of invested funds which they
administer according to their own arbitrary will and pleasure.
“106. This dictatorship is being most forcibly exercised by those
who, since they hold the money and completely control it, control credit also
and rule the lending of money. Hence they regulate the flow, so to speak, of
the life-blood whereby the entire economic system lives, and have so firmly in
their grasp the soul, as it were, of economic life that no one can breathe
against their will.” (Quadragesimo Anno, 1931)
Underlying all of this is that the State is somehow the
source of all rights; that human beings have nothing until and unless the State
permits it. The conflict with the Just
Third Way, of course, is that, since the Just Third Way is founded solidly on
principles of personal sovereignty, it is necessarily opposed to any form of
elitism.
