=> I will respect you in the morning.
=> Your cheque is in the post (read that, Mint).
=> I am from the government and I am here to help you.
In this post I will focus on the third line. That these words are almost proverbial illustrates how wrong human society has gone in understanding the “science of government.” Government today, universally, has become a source of income; it is no longer an expense. At fault are seriously deranged ideas – welfarism, socialism, and, of course, Keynesianism, which funds all this insanity with fiat paper.
[Speaking of fiat paper, when Mayawati accepted a garland of RBI-backed fiat paper notes, she displayed her ignorance of the fact that it is these notes that suck the blood out of the poor, eroding their savings, eating into their capital. Ambedkar was well clued on “sound money”: Chandra showed me some of his writings on the subject. Mayawati should study these writings of her idol.]
There was once a “science of government.” At the East India College in Haileybury, where HEICS officers were trained, the subject of classical liberal political economy dominated their intellectual grounding. The late Professor S Ambirajan has left behind a detailed study of how classical liberal political economy was the philosophical system that guided British colonial policy in India – the idea of laissez faire in economic matters, the emphasis on Property, the clear understating of the “moral” responsibility of The State in a free society.
This science of government was very much studied in the Vienna of the Hapsburgs: Ludwig von Mises himself graduated from the department of government, and nowhere in his writings does he talk in favour of anarchism - the political ideal of modern libertarians, who clearly see that The State has lost its moral prestige.
In Vienna, as I have just discovered, the science of government was very much alive even earlier, when Carl Menger, the acknowledged founder of the Austrian School of Economics, lived and worked in this fair city. The year is 1876, exactly a hundred years since the Wealth of Nations, and just five years since Menger’s Principles of Economics (1871), which ushered in the “marginalist revolution.” With this book, Menger obtained a position in the University of Vienna, as a professor of economics.
Barely two years into his professorship, in 1876, when he was just 36 years old, Carl Menger was selected to deliver a course on classical liberal political economy to the young Crown Prince Rudolf, the only son of the Hapsburg Emperor Franz Joseph. Rudolf’s notes of those lectures, edited by Menger, have survived, and are now available in a volume, thoroughly annotated, and with a detailed foreword showing their importance, because of the worthy efforts of Professors Erich Streissler and Monika Streissler, both of the University of Vienna.
In his foreword, Streissler mentions that the selection of Menger as tutor, in an age when conservatism and liberalism were the dominant influences in court and politics, while socialism and communism were being much pandered about among the common people, reveals the hand of the Empress, who was a convinced liberal herself – in the classical sense. The selection of Menger had much to do with Menger’s own liberal leanings. But it is the course that is fantastic, for Menger speaks not a word about marginal utility or subjective value – ideas for which he is justifiably famous – but focuses entirely on the classicals who preceded him, and their teachings.
His course begins with Adam Smith, and the Wealth of Nations, then exactly a hundred years old, was the primary “textbook” used to train the mind of young Crown Prince Rudolf. The idea was to train the future Emperor in a way that he would see his essential “duties” – and, for that, what better guide is there than Adam Smith, and his “three duties of the sovereign.” For the record, I once again quote this important passage from the Wealth of Nations.
According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.
How did Carl Menger, founder of the Austrian School, teach a young Crown Prince of a centuries-old dynasty the “science of government”?
Menger begins, as Adam Smith did, with the “division of labour,” going on to illustrate the benefits of the “international division of labour” through free trade. He shows how this is a natural process that should be left well alone by the government. He places, instead, a moral duty on the government – to be “economising” just as the citizenry is. The government must spend on essentials only, just as citizens do. The government must encourage industry and thrift – and practise these virtues itself. Government must never be wasteful of public money.
Further, Menger then goes on to discuss Machinery, showing how these are great improvements indeed, which enhance the division of labour, which improve productivity and quality, and which are really in the long run interests of the toiling poor - whose toil they lessen. The fatal errors of Luddism (and Gandhianism) were never allowed into the mind of the young crown prince.
Menger then goes on to explain the importance of Property – and how this legal institution underpins the division of labour society. He briefly discusses Communism and Socialism as enemies of this order, dismissing their nefarious schemes as unworthy of the Crown Prince’s attention. He instills in the future ruler the importance of Private Property and why the State must always protect it.
Thus, he instructs the future Hapsburg Emperor to use his State to oppose Communism, Socialism and Luddism.
This was the first lecture.
In the second lecture Menger goes on to discuss why men economise, why life is hard, why economic resources are scarce. He instills in the mind of his young ward the conscious realisation that life for the citizen is a daily struggle, and that the State should never make it harder. Rather, the State should lighten the burden, and make it easier on the citizen by doing only those things that the citizen cannot do himself – the “third duty of the sovereign” that Adam Smith prescribed.
In this area, Menger directly enters into a discussion of transportation, and why it is vital that there be excellent transportation links between people, their properties, and physical markets.
It was here that I paused in my reading.
I realised why everything had gone so wrong, especially in India.
It is this knowledge of the “science of government” that has to be discussed seriously in the modern world, and especially so in India. Here, forget Haileybury or Menger, the IAS Academy in Mussoorie teaches Maoist collectivism – as I recently discussed. There is little that differs between the intellectual training of an IAS recruit and the indoctrination that a young guerrilla receives at one of Kishenji's Maoist camps. The chief ideologue of the Maoists in Nepal received his PhD from Jawaharlal Nehru University in New Delhi.
My foray into Economics began around 1976, exactly a hundred years after the Rudolf Lectures and exactly 200 years after the Wealth of Nations, in Delhi University – and it was a course in craponomics.
The Lesson: Bad ideas have consequences – bad consequences.
But the good ideas are there with us. The IAS Academy can buy the Rudolf Lectures of Carl Menger. They can buy Professor Ambirajan’s study of the classical liberalism that guided British civil servants. They can imbibe the right ideas.
Ultimately, it is a moral question – that too, in two parts.
The first: How can the Individual morally survive?
And two: What are the moral responsibilities of The State?
We in India have lost sight of both.
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