Philip Pilkington: The 19th Century Long Depression: How it Fostered Oligopolistic Capitalism and Serves as a Model …

By Philip Pilkington, a writer and journalist who is in the process of moving to London. You can follow him on Twitter at @pilkingtonphil

You can live in this illusion You can choose to believe You keep looking but you cant find the woods While youre hiding in the trees

Nine Inch Nails Right Where it Belongs

Many people that I meet who are vaguely interested in economics usually people in academia outside of the economics departments or working in lower tier sectors of banking and finance are enamoured with libertarianism and its economic doctrines. Meanwhile the Republican Vice Presidential nominee an Ayn Rand obsessive has channelled such ideas into a truly otherworldly budget proposal.

Libertarianism-lite has become the last refuge for the ideological conservative. The ideals of mainstream conservativism appear absurd in light of the 2008 crisis. It then became clear that the entire economic system was far from the meritocracy structured according to free entry and competition that many supposed, but instead one dominated by incestuous ties between quasi-government institutions and big corporations. And the ugly part was those collusive relationships arose as a direct result of deregulation. Less regulation allowed for large companies to exercise unbridled market power, and they channeled those profits into the political process, to further skew regulations in their favor.

However, rather than recognize that free market doctrines lead to concentrations of power, many responded to the aggressive promotion by business and economists of this ideology, leading them to move further to the right in the wake of the crisis, become antagonistic and even a little extremist toward the system as it actually exists and embrace radical aspects of the libertarian doctrine. Mainstream politicians then cherry-pick certain aspects of these doctrines and feed them back to their base.

This is, in a very real way, where we are today. No, libertarianism has not gone mainstream. But aspects of it have permeated the mainstream. And this makes some of its purer arguments interesting to consider.

Deflation and Nostalgia

The most popular aspect of the libertarian doctrine today is probably the idea that deflation is not such a bad thing indeed, it may even be a morally purifying cure. Uncomfortable like a cold shower but necessary to rid a gluttonous populace of its worst excesses.

The economic argument among actual libertarians for this view runs broadly that prices in a competitive economy should generally be tending downwards rather than upwards. The rational argument as is typical of extremist ideologies for the most part masks a more deeply embedded emotional appeal. Simply put, the argument plays to the hoarding impulse so prevalent among gold-bugs, who appear to overlap strongly with libertarians.

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Philip Pilkington: The 19th Century Long Depression: How it Fostered Oligopolistic Capitalism and Serves as a Model ...