Feudalism, Fascism, Libertarianism and Economics
Eric Zuesse has written a provocative and challenging volume, though in my opinion he sometimes goes too far in his criticisms and claims. This book proposes two new postulates to replace existing ones that are at the foundation of microeconomic theory. It cites the existing body of empirical findings in economics as being the reasons for them, and it presents a strong empirical case for each of its two new postulates as being true and the one that it is replacing as being false. I regard his book as the work of a serious, committed scholar whose views deserve to be taken seriously.
Existing microeconomic theory is proven false by a now overwhelming body of empirical evidence. That theory is no longer scientifically tenable, but it wasn’t even created with the aim of being true; it was created instead with the aim of serving as the basis for the conservative political ideology that the aristocracy needed so as to “justify” their having almost all of society’s wealth. They needed it in order to replace the declining authority of their previous, and increasingly outmoded, ideological stanchion: religious-Scriptural, church-developed, belief in the perfect benevolence of The Almighty (i.e., the belief that aristocrats’ wealth indicated they’d been chosen by God and so deserved to be rich). This was now to transform into the supposed “invisible hand” of God controlling the entire economy in the interests of everyone, not just of God’s blessed. The academy (scholars) were thus to replace the clergy (clerics), as aristocrats’ new ethical stanchion, during an increasingly secular Age.
This corruptness of microeconomic theory goes back even farther than Adam Smith, to the end of the feudal Age: to Pierre Samuel du Pont de Nemours and to his “Physiocrats” in the 1760s, their laissez faire “justification” of the aristocracy, prior to the French Revolution. The source of microeconomic theory is actually the need those aristocrats felt, to “justify” their wealth. That’s what produced this theory – the theory that’s now known to be false (but that remains helpful to today’s aristocrats and is thus still financed heavily by them).
Our historical account starts by describing the attempt by the DuPont brothers and other American aristocrats in 1933-34 to overthrow FDR and to replace him by a dictator patterned upon the neo-feudalists (“fascists”) Hitler and Mussolini. The leaders of those aristocrats, the DuPont brothers, still believed in the Physiocracy that their founder, Pierre Samuel du Pont de Nemours, had helped in the 1760s-80s to create. When their scheme to establish an Industrial-Age form of Physiocracy (neo-feudalism, or “fascism”) in the U.S., became thwarted in 1934, the organization that they had set up to carry out their scheme, the American Liberty League, was re-purposed to become the first of what we today would call a “libertarian” think tank and lobbying and PR organization (the predecessor and model for the Koch brothers’ Americans For Prosperity, Cato Institute, etc.), and its leaders pumped millions into helping to establish the Chicago School of Economics, the Mont Pelerin Society, the Nobel Memorial Prizes in Economics, and other powers shaping today’s economics. Their money thus shaped current economic theory. The fascist aristocrats were the potent enemy of John Maynard Keynes, and they finally overwhelmed his macroeconomic theory, beginning around 1970 onward, but Keynes’s macroeconomic theory is now proven, by massive empirical evidence, to be true. Keynes’s theory contradicted existing microeconomic theory, and unfortunately it included no microeconomic theory of its own, thus leaving it vulnerable.
This book closes by presenting an empirically confirmed new microeconomic theory, to replace the fictitious one that Pierre Samuel du Pont de Nemours and his friends had created during the second half of the 1700s. This new microeconomic theory is consistent with Keynes’s macroeconomic theory and can thus serve as its base. Rather than a “libertarian” microeconomics (a microeconomic theory for a fascism), this is an authentically scientific microeconomics: a microeconomic theory for a democracy, instead of for a fascism.
The evidence shows that this new economics will likely have two major impacts: (1) reducing wealth-inequality while increasing total wealth; (2) correcting the big error that has caused cost-benefit analyses to vastly underestimate costs of environmental harms such as global warming.
I: History – How Economics Came to Fail – 4
Introduction: The Origin of Libertarianism – 4
1: The Fascists’ Plot – 11
2: FDR’s Ideological Enemies – 25
3: Continuation of the Ideological War – 50
4: “Fascism” Then Is “Libertarianism” Now – 69
5: The Timeless Ideological War – 94
6: Libertarianism Dominates Economics – 110
7: Thus, Economic Inequality Has Soared – 115
Sources – 116
II: Theory – How Economics Gets Fixed: A New Microeconomic Theory – 117
Summary – 117
Introduction – 119
I: ‘Demand’ – 126
II: ‘Welfare’ – 153
III: Fascist vs. Democratic Economics – 209
IV: Conclusion and General Discussion – 218
Appendix – 275
References – 277
Endnotes – 283
Author’s Bio – 288
This book is available to download in PDF, EPUB (for iPad etc.) and MOBI (for Kindle etc.)