While economics depends on man’s rational side, humanity nonetheless clings to the irrational. We want to have our cake and eat it. We want a free lunch, free health care, free schools, and free retirement. But nothing is free. Someone must pay. Economic science says so.
When we say economics is a science, the ordinary man thinks of physics and biology. But economics is a different kind of science. According to the Austrian school, economics is an a priori science which assumes that purposeful behavior can alleviate a “felt uneasiness.” The process by which the greatest alleviation is made possible is called capitalism, or the free market. Whatever anyone wishes to say against market freedom, there is no workable alternative.
According to Mises, writing in his book The Anti-Capitalist Mentality, “The emergence of economics was one of the most portentous events in the history of mankind. In paving the way for private capitalistic enterprise it transformed within a few generations all human affairs more radically than the preceding ten thousand years had done.” Yet more amazing still, economic science and the capitalist transformation of human life was accomplished by a very small number of authors whose books influenced a similarly small number of statesmen. As Mises explained, “Not only the sluggish masses but also most of the businessmen who, by their trading, made the laissez-faire principles effective failed to comprehend the essential features of their operation. Even in the heyday of liberalism only a few people had a full grasp of the functioning of the market economy.”
It was a freak of history that a handful of thinkers began to understand economic science. It was rarer still, in terms of politics, that a handful of statesmen were able to make use of that understanding. As Mises explained, “Western civilization adopted capitalism upon [the] recommendation … of a small elite.” As such, capitalism has always hung by a slender thread. For how often do we find sufficient intelligence within ruling elites? How often does genius go unrecognized? After all, every man is a genius in his own mind. Consider how the many geniuses who produce so little of worth from their swollen egos today must naturally malign anyone whose thinking stands on higher ground. In fact, the grim history of humanity suggests that a true and worthy social science (or economic science) is as unlikely as a mouse chasing a cat. For that which touches on society and institutions must necessarily fall victim to powerful interests and political passions.
Yet economic science performed its miracle. Wonders of technology and wealth now abound. Our ancestors could hardly imagine the modern world. At the same time, a dark cloud approaches. The intelligent few seem to have been overwhelmed by the many-too-many. None should be naïve enough to imagine that history is only a story of progress. If we have been paying close attention, we might remember the saying, “What goes up, must come down.”
If praxeology is the deductive study of human action, then we ought to allow that two kinds of actions exist: (1) rational actions; (2) irrational actions. One finds in mankind a dark side – often self-destructive and paranoid, aggressive and homicidal. In observing the reality of this, Sigmund Freud described what he called the death drive (in German, Todestrieb). His hypothesis was of a death instinct that could effectively thwart rationality and civilization. One of the other major thinkers in modern psychology, Carl Jung, proposed the existence of “the shadow,” which refers to instinctive and irrational elements within the psyche which are prone to psychological projection. As first described by Freud, psychological projection is a defense mechanism in which our own moral deficiencies are perceived as belonging to someone else. It is a species of paranoia found in the thief who believes others are planning to rip him off. It also may be seen as a feature of the anti-capitalist mentality. Here the market becomes a screen upon which all the evils of human society may be projected. The market is therefore depicted negatively while malignant personalities opposing the market are assigned entirely saintly motives.
Jung warned that a human being who engages in psychological projection can become “possessed” by his shadow. Jung wrote: “A man who is possessed by his shadow is always standing in his own light and falling into his own traps….” Throughout the early twentieth century Jung feared that shadow possession was on the rise. With the advent of totalitarianism and the decline of laissez-faire, Jung noted that religion was being replaced by political ideology to such an extent that increasingly large numbers of people were subject to shadow possession. Worse still, Jung said that a person may be possessed by the opposite sex side of their own personality; for each man has a small part of women within, and each woman has a small part of man. If a man becomes possessed by his female side it is called anima possession. If a woman becomes possessed by her masculine side it is animus possession.
On this subject Jung wrote that “in the state of possession” by anima/animus “both figures lose their charm and their values.” Here one finds a world in which men become women and women become men. Only the men are not women of charm or grace, being merely weak and tepid. At the same time the women make a play of strength and principle but are domineering and erroneous. Everything is thereby placed on its head, disorder replacing order, darkness replacing light, the desire for death unconsciously gaining the upper hand over life. One of the first symptoms, as noted by Jung, is the decline of great art. Being the wellspring of creativity, the unconscious having taken the place of the conscious, can no longer perform its creative function. Instead, art portrays something akin to Freud’s death drive. As Jung wrote in the Undiscovered Self, “The development of modern art with its seemingly nihilistic trend toward disintegration must be understood as the symptom and symbol of a mood of universal destruction and renewal that has set its mark on our age. This mood makes itself felt everywhere, politically socially, and philosophically.” We might add, as well, that this mood ultimately manifests itself economically.
The ongoing destruction of the global economy is no accident. The irrationality at the root of this destruction was understood long before the twentieth century began. The crashing of our global economy, and of civilization, was alluded to in the writings of nineteenth century visionaries like Dostoevsky, Kierkegaard, and Nietzsche. It was Dostoevsky who foresaw that socialism would kill 100 million people in Russia during the twentieth century. Decades earlier Kierkegaard had warned against the vacuous arrogance of public opinion, hedonistic democracy, and a toxic culture of self-deception. More famous still, but even less understood, Friedrich Nietzsche warned that Christianity was inwardly dying, that God was entombed in the churches. Nietzsche foresaw a period of dissolution and gradual destruction lasting for 200 years, from 1888 to 2088, in which the “advent of European nihilism” would lead to Caesarism (i.e., totalitarianism) together with destructive wars of unprecedented scope. Nietzsche could not abide what he called “economic optimism.” In his thinking, egalitarianism had swept away the authority and intelligence that had once commanded the high ground of civilization. Without rank order and intelligence at the helm, everything was destined to collapse.
In attempting to understand the economic situation we should not merely look at economics. We must look at history and psychology, political science and religion. Jung said we were living through an era of the metamorphosis of “principles and symbols.” The transition we are undergoing is full of danger because our own technology can now destroy us. Not only is economic science disregarded by those in power, as Ludwig von Mises lamented, but there is the problem of what Jung called “the general moral backwardness which has failed to keep pace with our scientific, technical, and social progress.” Just as Mises embraced methodological individualism so Jung said that everything depended on valuing the individual as “that infinitesimal unit on whom a world depends, and in whom, if we read the meaning of the Christian message aright, even God seeks his goal.”
The mass man of today, possessed by his shadow and hailing from the underworld, opposes the free market out of envy or ignorance. But the individual needs freedom and the free market because the socialist alternative threatens to blot him out of the equation. This is something we cannot allow, though it is happening before our very eyes. Somehow, somewhere, we must reverse the present trend toward universal death and destruction. Men must be men and women must be women. Ignorance must be dispelled and the envious underworld suppressed. We must if we are to survive.