The Confusion Of Terms in American Politics and Economics

by Jessica Pacholski

When people throw names around, I hear many terms used that don’t actually fit what they are trying to describe. Labels like liberal, conservative, fascist, communist, free market, monopoly, and the like are bantered back and forth to a point where their original meanings have been obliterated. To understand what is what is increasingly difficult since our language has ceased to make sense in terms of politics. 

The left and right symbolism in politics comes from French Parliament. Those who sat to the right were Royalists or conservatives, those who sat to the left were Liberals or radicals. Liberals, after the Revolution, at first advocated Laissez Faire capitalism, while the right wanted to keep the Aristocratic Mercantilism model. Early on in our own country we saw a mimicry of this, the original Left or liberals were the Anti-Federalists, men like Thomas Jefferson and Patrick Henry, and the Right were the Federalists, Alexander Hamilton and John Jay. The battle was one between a loose federation of states and freedom in trade and banking, similar to the one outlined by the Articles of Confederation, and a centralized consolidation of power, trade and banking through the government. The compromise of these two competing ideologies was the formation of a Constitutional Democratic Republic. This is technically what the government of this country is supposed to be, a Republic, meaning a nation ruled by law as outlined in the Constitution, which was written to constrain the power of the new Federal government and insure the rights of it’s people.

This leads to the next question: What was the economic system proposed by the “right” of the time? Hamilton and his supporters wanted to recreate the English government and banking system here, Mercantilism. What is Mercantilism? Mercantilism is where there is a strong and vigorous central government control of banking and credit and trade, by use of policies such as protectionist tariffs, at the expense of the people. It produces monopolies and a powerful guilds that use their political power to keep themselves free from competition. This leads to the next question: What is laissez faire capitalism? A free market where the government puts little constraint on the peoples’ trades and banking systems with competition in currency based on a gold or silver standard. In other words, the people reserve the right to work and create their own currencies without the coercion of government. There is no central, or fractional reserve, banking and the laws are protective of the consumer rather than the corporation. Redress of grievance is possible because the rights of the people outweigh the rights of the corporations and the government.

Let’s look at the terms I mentioned in this light. Do we have a “free market” system here? No, we do not. We have a Keynesian system. Keynes advocated protectionism, tariffs, inflation of currency, and government interference in industry with central control of currency and banking, in other words a neo-mercantilism. Central control of money and credit and industry are also facets of “socialist” economics and governments. Two examples of socialist governments are fascism and communism. Mussolini was attributed as describing “fascism” as “corporatism” where the government and the corporations were tied together, however the real author is still unknown. It is an accurate description as far as I can tell. It really was just a 20th century form of Mercantilism, the bureaucratic and wealthy corporate classes taking the role of the old Aristocracy. There is also the strong militaristic streak and a promotion of nationalism. Communism takes many of the same steps fascism does, central control of industry and banking are crucial. Based in Marxism, it describes the power struggle as being one between the workers and the bourgeosie. His theory was that the government running industry and banking can end this and make everyone absolutely equal in society. However, it has the same side effect that fascism does in that the bureaucrats become the all powerful class and there must be constant pressure on the people to conform to their ideology through the use of force. Socialism is the economic system to both of these political philosophies and is used often to grow the power of the state has over it’s citizens.

The U.S. is already a “socialist” country, we are simply told we have a “free market” “capitalist” system of economics now. Not only that, we are an Empire as well. We have the worst of both worlds, jingoistic militarism and redistribution of wealth through taxation that has led to the ever widening gulf between the rich and the poor here. Our corporations and government have completely merged and our two party system would better be defined as fascist vs communist rather than republican vs democrat. Limited government, free market, pro-civil liberty, anti-war individuals are now know as “libertarians” (although I’ve been called a “fascist” more than once, usually by a Democrat, and I’ve been called a commie more than once, usually by a Republican) and are the smallest group in the voting population. It’s a strange idea, that the principles this country were founded on could be considered “fringe” or “kooky”. Yet I believe what Patrick Henry believed, “Give me Liberty or give me Death!”. That means to me freedom in my professional, as well as my personal life. I want freedom in economics as well as in speech, freedom to bear arms as well as freedom to love whom I want. I want to live my life and let others live. If that makes me a part of the fringe, then I stand proudly with them.

One of the economists that helped to eliminate mercantilism in Europe and help advance the idea of laissez faire capitalism.

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6 Responses to The Confusion Of Terms in American Politics and Economics

  1. ganja4liberty December 28, 2008 at 1:45 am #

    George Orwell had warned us that “meaningless terms” would be used by our politicians during these troubled times. Bush/Obama makes absolutely no sense at all, when he says that we’re spreading “freedom” and “democracy” in the middle east. Just looking at our own personal and economic liberties being eradicated at home should give you a good idea on how we treat individuals from other nations.

  2. Vincent Mross January 16, 2009 at 5:47 pm #

    Nice short treatise, and I was happy to learn about the origins of the left/right paradigm. I will say that you seem to be against tariffs, to which I would reply that they are sometimes necessary to protect a country’s economy from being undercut by foreign markets that may be controlled by forces other than a free market (as in our current situation with Chinese goods produced under what we might call slave labor conditions). The complete absence of tariffs via agreements like NAFTA allows multinational corporations to wipe out middle class infrastructure and production capabilities.

  3. Patrick January 16, 2009 at 6:08 pm #

    Vincent: that is a myth about tariffs. Free-market economists have long ago debunked all the arguments for tariffs.

  4. Jessica Pacholski January 24, 2009 at 1:27 pm #

    Vincent, NAFTA is a manged trade agreement, that is why it has undermined financial freedom and production in this country. I suggest you read Hazlitt’s “Economics in One Lesson”, he does a very good job explaining the issues of protectionist tariffs to non-economists. Adam Smith’s “The Wealth of Nations” was the first true theory of free market economy and it was the philosophy that this country was founded on. No person can be free without the right to his own property and no country can be free without free trade.

  5. compare led tv June 24, 2009 at 1:30 am #

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  6. Prans November 10, 2015 at 1:45 pm #

    Historically, I was a big believer in peak oil which arpapently was supposed to happen in 2001.I remain a skeptic of this stuff. I think that there are vast, untapped liquid fuel resources in russia, greenland and even some remote areas like the southern atlantic. I’m also strangely optimistic about the US’s energy consumption. I think we’re right around the corner from technology that allows for dramatic cuts in consumption. In less than 2 years, solar PV will hit cost parity with coal, and there’s no reason the cost curve won’t continue below that. Electric vehicles will also begin to have mainstream appeal and not for ecological piety, but simply the fact that they’re cheaper to operate and have better performance. I think we’re actually closer to another tipping point when ecologically friendly technology enters the mainstream buoyed by the traditional market behaviors that reward efficiency. We’ve already seen this in the semiconductor manufacturing. Up until 6 years ago, the whole industry output had been focussed on speed, since then the industry has been focussed on power consumption. This change happened from purely organic market forces both data farms, cloud storage and mobile devices demanded lower power consumption. We will see the same phenomena happen in other parts of the economy as there are tremendously inefficient activities that will be ripe for improvement. I’m willing to look foolish on this. My only defense are cheap aphorisms like If I went 20 years back in time and told people that in 2013, ring tones would be a 13 billion industry, everyone would call me crazy. My point is, big changes in consumer behavior and culture can happen, much of it happening quietly without acknowledgement.

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