Kim Gentes

Of the thousands of pages of text among the dozens of now iconic books written on economics, there is no more succinct and penetrating exploration of the ties of economic capitalism with political liberalism than the relatively short work of "The Road To Serfdom" by Friedrich A. von Hayek. Having read several of these voluminous texts myself, I can say unequivocally that "The Road To Serfdom" is the singular text that simultaneously explains the simplicity and benefits of the free market system while profoundly destroying the notion that personal liberty could be found within the socialist economic framework. Hayek, as he admits of himself, is an academic and technical economist who felt compelled to write a defense of the basics of liberalism (in the 19th century classical definition) as the unique and necessary combination of economic freedom and personal liberty only after it was clear that many of his influential political contemporaries in WWII Europe had vastly misunderstood the workings of socialism, and that it's ultimate outcome would always be totalitarianism- either in the form of Communism, as in Russia, or in the form of Fascism, as in Nazi Germany.

In fact, this book outlines the progression of what exactly happened in Germany to produce the society and opportunity for Hitler's regime to become the tyrannical monster of the modern world. Hayek clearly and convincingly explores how the fears of individuals based in economic instability of a free market system can lead people to eventually surrender their individual liberties in hopes of economic and nationalistic security. This surrendering becomes a downward spiral of personal liberties as the willing (at least initially) cost of an ever-expanding socialist economic state. A state in which the individual hopes of security and sustenance become permission for an eventual autocracy that maintains all decisions for all peoples at all times.

The observations of Hayek are not meant merely as a history lesson, but were a clear warning to England and America of the dangers of socialist economic thinking (and socialism in general), because Hayek believed that the rise of socialism in those countries would eventually set the stage for a totalitarian regime to be possible. In fact, Hayek's thesis and warnings are so cutting, and so well defended that he almost single-handedly inspired a renaissance of 20th century liberalism (though it more often went by the label of conservatism by its adherents such as Margaret Thatcher and Ronald Regan).

"The Road To Serfdom" is not just about the political and economic threads that led to Nazi Germany, it is about the true balance of power between personal liberties and state control. If you have never read an economics book in your life, you MUST read this one. It is by far the most powerfully written, yet simply understood, philosophical explanation of liberalism and the free market system- and why the combination of free market economy is the central component to ensure the other freedoms that accompany modern liberty (emancipation, universal suffrage, free speech and more). The ability to make self-determined decisions about work and economic exchange imbues in itself the power to allow both individuals and entities to pursue success. The natural balance of the free market is not only clearly articulated, Hayek contrasts it with the inherent weaknesses of the planned economic socialist state.

This is a political book, but whatever your politics are- you cannot afford to ignore this book. Whatever your political understanding or persuasion, this book is an absolute "must read" text. While books like Mises' "Human Action" and Adam Smith's "Wealth of Nations" provide more technical details and examples on how the free market system works, neither of those books provide so clear and convincing a treatise on the benefits and perpetual health of a economic liberalism, as "The Road to Serfdom".

Once beginning to read this book 4 days ago, I could not put it down. I am now on my third time through and continue to find it as enthralling and engaging each time through. A truly brilliant articulation of economics, freedom, free market, and the dark path of socialism that eventually leads to totalitarianism. If you believe you understand economics and have never read this book, you have missed one of the greatest texts in this field, in history.

Amazon Link: http://amzn.to/XJKd8j

Review by Kim Gentes

In the last four years I have read many thousands of pages of materials in researching an understanding of economics, history and culture. In that time I have read little that was as well-written and insightful as David Graeber's "Debt: the First 5,000 Years".

What initially holds Graeber's work above others is his contrarianism related to the foundations of Adam Smith's capitalism, especially the historical telling of barter as the nascent form of exchange that led eventually to our current modern version of free market capitalism. The author makes the point that debt, rather than barter and money, was the foundational language and system of exchange and has remained so for 5,000 years.  The book claims that Smith's story related to the origins of markets, as found within "The Wealth of Nations", is a contrived fiction in which barter is used as the seed explanation for how currency/money/economy developed.

The grander plot of the book is that reciprocation can expose itself in two primary ways - owing a favor, or owing a debt. As he says poignantly-

the difference between owing someone a favor, and owing someone a debt, is that the amount of a debt can be precisely calculated.1

The book starts off with a modern day controversy about global (specifically, third world) debt. The question is raised about whether paying back debt is a moral question. From this launching point, the author traces back, through his anthropological background, five millennia of understanding human societies and how their systems of debt have become the framework for our understanding and conversations about virtually every aspect of life, especially (and including) morality. Graeber states-

If one looks at the history of debt, then, what one discovers first of all is profound moral confusion. Its most obvious manifestation is that most everywhere, one finds that the majority of human beings hold simultaneously that (1) paying back money one has borrowed is a simple matter of morality, and (2) anyone in the habit of lending money is evil.2

Part of the reason that morality and debt are so closely and importantly linked for the author is that he goes to great lengths to connect the idea that the moral failure surrounding debt is not with the debtor (as current culture suggests) but the with creditor. Graeber makes this important distinction not purely on the present circumstance (in which one person places themselves in debt to another as part of an exchange), but uses historical and anthropological examples (and theory) to expose the fact that for thousands of years debt has been enforced by the most heinous means- from debt peonage, slavery, prostitution, imprisonment, war, violence and more. At the root of the human ability to harm and debase one another over a debt is the fact that debts devalue not just the items exchange, but the very people themselves.

From this perspective, the crucial factor, and a topic that will be explored at length in these pages, is money’s capacity to turn morality into a matter of impersonal arithmetic—and by doing so, to justify things that would otherwise seem outrageous or obscene...3

...The way violence, or the threat of violence, turns human relations into mathematics will crop up again and again over the course of this book.4

The book develops a long and complicated understanding of various ages of exchange in which society went from credit based exchange to coin/currency exchange and back and forth for various reasons. Graeber's work is compelling if not confusing. While he is obviously a brilliant researcher and thinker, he languishes several times in the book to keep himself on task to his earlier promises. Many points that look to be big items drift off aimlessly into side issues and what seems like favorite quotes from the authors research work rather than essential points to the thesis. One of Graeber's important points about exchange/market systems is that they are integrated tightly with government constructs of debt and war.

modern money is based on government debt, and that governments borrow money in order to finance wars.5

All of this actually does matter in his final thinking, but he mars the straight lines of thought by randomly attacking capitalist thinkers like Milton Friedman and Adam Smith because he doesn't like that they said things built on utopian models (though he admits that what they said ended up being true and actually working in the real world).  Graeber is right in one sense- it matters why society thinks the way they do, and how ideas that changed history came into being. But while he is proving his points he meanders unsuccessfully through some issues by pretending that his ability to invert the predicate logic of a phrase (i.e. "what does society owe us?" into "What do we owe society") is appropriately addressing the real issue.  But in the end, his book is much better than the faults he makes in crafting his narrative- because he asks some great questions.

The biggest of these is about the nature of exchange and the nature of value. At the core failure of humanity in relationship to debt is a devaluing not of goods, but of the human person itself. Graeber is at his best when he challenges us to recognize that our history and our current practices have run rampant not because we use one economic system or another (capitalism or such), but because we allow the exchange system to carry us too far -- we allow it to exchange human life for goods. In essence, our systems of debt exchange place a value on human life as a way of equating what can be paid back when the currency is not. This happens in slavery, debt peonage, debtors prisons, and even wage labor.  It is ultimately a very compelling point, since he basis it on solid history and plenty of modern examples.

Some may decry this book as anti-capitalist, but I think Graeber is reaching for a higher ideal than that. I think he is looking for valuing human life right on forward to the present. That we provide protection for wage laborers, abolish debt peonage systems (that still exist in some countries today), even human slavery and worse.  He is also advocating the questioning of some systems that were built on these premise and have become unchallenged (such as new NGO loan systems, World Bank and the IMF), leaving whole nations in essentially debt servitude to multi-national corporations and countries such as the US.

Though he says these things, Graeber is not a raving anti-capitalist. His book is well worth reading. It sparks of brilliance in places and requires serious thought.  The corruption of the value of human life has been enmeshed into the exchange of the marketplace, and for Graeber this must be untangled if we are to make better decisions for the future. For this, he deserves huge praise and an honest reading of the material. 

Amazon Book Link: http://amzn.to/WZkw0w

Review by Kim Gentes

1. Graeber, David (2011-07-12). Debt: The First 5,000 Years (Kindle Location 8120). Random House Inc Clients. Kindle Edition. 

2. Ibid., Kindle Locations 202-204

3. Ibid., Kindle Locations 310-312

4. Ibid., Kindle Locations 320-321

5. Ibid., Kindle Locations 7694-7695

There are very few studies which garner more yawns than economics. Despite it's practical application to literally every person, it's been popularly bantered about as boring and only understandable by the "math and theory geeks". As this book proves, nothing could be further from the truth.

For myself, as a student of history, I've been looking for a concise review of capitalism and the development of economic theory and thought in modern times. "The Making of Modern Economics" by Mark Skousen has impressed me as both a highly readable narrative and a diligent study of all the major people, theories, schools, history and events that shaped the landscape of modern economics. Skousen's transparent espousal of Adam Smith's foundation of natural liberty sets the tone for this capitalist understanding of this essential modern discipline.

Skousen navigates through 250 years of what amounts to revolutionary change in the way human beings work, think, save, spend, and manage resources. At its core, economics is the essential study of how humans deal with a world of resources constrained by scarcity. According to Skousen, Adam Smith is the first known figure to compile a major work that addresses the issue of economics and provides a structural framework for how understanding it can best deal with scarcity. The result is the nacient birth of the free market capitalist system that is built upon the theory of natural liberty that Smith proposes in the book, and which is counterbalanced by the impact of another of Smith's theories- the invisible hand.

Skousen postulates that Smith provided the "house" on which all economic thought has been built since. But more than just giving his philosophical grading to Smith, Skousen traces person by person through history- comparing each character's work against the original ediface constructed by Smith (and against one another). In doing this, Skousen creates a narrative that is bound to the benefits of free market capitalists. Characters that wrote and taught theories opposing Adam Smith (such notables as Marx and Keynes) are given clear articulation in points both positive and negative. Likewise, advocates such as Milton Friedman and Friedrich Hayek each recieve sections celebrating their comebacks and chastising their errors.

This book leaves most of the minute details of economic data and statistical study out of the text (or relagated as references), which makes it an historical study more than an econometric or financial review of theories.  As a readable, understandable and enjoyable history, this book is exceptional.  If you are a free market advocate, it will be a delight.  Skousen clearly has written this as much as a defence of Smithian economics as he has for an historical understanding of the development of political economy into modern economics. But he succeeds at both!

Really, if you have any interest in the story of freedom as it is manifested in the light of economics, then this book is a "must read". Thoughtful and enjoyable writing on every page (of which there are nearly 500).

Amazon Book Link: http://amzn.to/PXGbVZ

I strongly recommend this book! Available in multiple formats. I read it in Kindle eBook format and listened to part of it in Audible book format. It is also on paperback and hardback.

Review by Kim Gentes