The Root of the Problem

Posted on March 8th, 2010 by Daniel McCarthy

Cornell applied mathematics professor Steven Strogatz takes readers on a pleasant trip to the square root of -1. Elementary stuff, but enjoyable nonetheless. Numbers may be carefully fixed concepts, but their relationship to one another is metaphorical, even when one doesn’t realize that a metaphor is governing thought. The real numbers are part of a metaphorical number line or ruler, and certain kinds of problems cannot be solve within that metaphorical paradigm — no square roots for negatives, for example. But that doesn’t mean the problems are actually insoluble, only that a different metaphor has to govern the solution; in this case, as Professor Strogatz shows, a two-dimensional metaphor provides a new concept, 90-degree rotation, that makes a solution possible. To a degree that is not immediately obvious, the naive assumption that a ruler or line is the best way to think about numbers limits the conclusions you can reach. It’s an illustration of the power of metaphor, both to blind us to elegant and rather simple solutions and to help us think out way out of a conceptual blind alleys.

A Weekend With Douglass Adair

Posted on March 4th, 2010 by Daniel McCarthy

Last weekend I got around to reading The Intellectual Origins of Jeffersonian Democracy by Douglass Adair. The book began as his doctoral dissertation in 1943 and went unpublished until 2000, 32 years after Adair took his own life. Not many Ph.D. papers are of wide interest so long after they were written, but Adair’s was something special. As his student Trevor Colbourn recalls, the list of eminent scholars who borrowed the dissertation from Yale over the years “resembles a who’s who in early American history.”

Adair was evidently unhappy with his place within the profession. He never published the great book his friends expected of him; he regretted that academia valued mediocre monographs over brilliant articles, of which Adair wrote more than a few. (See Fame and the Founding Fathers for proof.) He was a superb editor as well, who at the helm of the William and Mary Quarterly turned that journal into the flagship publication in early American history. Although he chose not to revise and publish Intellectual Origins during his lifetime, he derived from it material that would go into several illuminating essays.

Intellectual Origins was in part a response to Charles Beard and his Economic Interpretation of the Constitution of the United States, which in the 1940s still colored the way historians saw the founding. Adair, like Forrest McDonald after him, did not simply discard Beard’s approach — the idea of considering the Founding Fathers’ economic interests still had some merit — but placed renewed emphasis on ideas as motive forces. Adair’s Founders were possessed by their reading of classical literature, with Aristotle, Tacitus, and Polybius informing their understanding of politics at least as much as John Locke did. Adair was also one of the first scholars to draw careful attention to David Hume’s influence upon the Founders, particularly Madison, who borrowed many of the elements he was to weave into Federalist 10 from Hume’s “Of the First Principles of Government,” “Of Parties in General,” and “Idea of a Perfect Commonwealth.” In Adair’s telling, insights drawn from Hume allowed Madison to break away from cliches about “mixed government” and the need for republics to be of small scale. Hume showed that a large republic could encompass a variety of interests that would check one another (a view for which Madison found support in Voltaire’s observation that England had freedom of religion because of its multiplicity of sects) and that a sufficiently indirect form of popular government did not require as a check upon democracy a “permanent will” of the sort that Hamilton wished to institutionalize in an American king and life-tenure Senate.

Hamilton suffers at Adair’s hands, presented as a man whose ideas were hopelessly out of phase with his times. Indeed Hamilton was, in the words of Gouverneur Morris, “more a theoretic than a practical man.” But for Adair, he was the prisoner of his classical reading, anticipating at any time the eruption in America of bloodshed between rich and poor on the scale of the stasis in Corcyra during the Peloponnesian War. Here one might dissent somewhat from Adair: Hamilton was hardly the only one who entertained such visions, and as Adair acknowledges he need not have looked back to Thucydides for illustrations of revolutionary violence. The Wilkes movement in England had at times threatened to become civil and class war, and only failed to do so because Wilkes was a libertine rather than an ideologue. Historian Iain McCalman has noted that the Gordon riots of 1780 “visited more destruction on London in a week than Paris experienced throughout the Revolution.” These incidents were nowhere near the level of internecine strife that Thucydides describes, but they might reasonably have smacked of a foretaste of things to come.

Be that as it may, Hamilton’s kingly hopes were certainly impractical in post-revolutionary America, and a modified version of Madison’s plan prevailed at the Philadelphia convention. One of the surprising things about The Intellectual Origins of Jeffersonian Democracy is how tightly Adair focuses on Madison, almost to the exclusion of Jefferson. But Madison was the architect of the constitutional system that made the Revolution of 1800 possible. Because the Constitution did not establish a mixed government, the Federalists had nowhere to turn — no repository for their “permanent will” — once Jefferson and Madison had outmaneuvered them at the ballot box. (The Federalists did pack the judiciary, but judges were not supposed to be government.) The Constitution had been flexible enough when “loosely” construed to allow Hamilton to erect his program, with George Washington as de facto monarch and the Treasury secretary as prime minister. But as Adair describes it, Hamilton was undone by his own success: he created a narrow cultural and financial elite with a vested interest in “high toned government,” yet in the process he also fostered a broad base of opposition, which Jefferson and Madison marshaled. Would-be kingly and aristocratic elements lost out to popular forces in what was, after all, a more popular than fixed system.

Adair is very good at drawing out the tension in Madison’s mind. On the one hand, the Virginian had come to a post-classical understanding of faction and interest that led him to a pluralistic (and national) political theory. On the other hand, he remained convinced that sooner or later the classical struggle between the poor many and the rich few would re-emerge as a result of concentration of population in cities. He subscribed wholeheartedly to the “yeoman farmer” ideal, both on account of his experience as a Virginian and from his reading of Aristotle, who had described small landowners as having a compelling interest in limited government:

They may subsist comfortably by labour, they would soon be ruined by idleness; they contrive a government, therefore, which requires as little expence of time as possible; and employ on all occasions, when it is practicable, the great machine of law to save the labour of man … Among such a people, government is carried on without salaries, without revenues, and without taxes. The affairs of the community, therefore, are left to assume this natural order; since men have no undue motive to engage them to abandon their own profitable concerns, in order to employ themselves in matters which will be much better managed without their unseasonable interference.

(Adair quotes John Gillies’s delightful 1787 edition of Aristotle’s Ethics and Politics. A later edition of the same translation is online here.)

America would not remain agrarian, however, and with industrialization would come class differentiation. Mixed government along the lines Polybius ascribed to Rome, with aristocratic and monarchical institutions (or approximations thereof) checking popular impulses, was the traditional solution to the problem of irreconcilable classes. Each permanent interest would have some institutional representation, and properly mixed the elements would balance. The poorer majority would not be able to expropriate the wealthier minority, but the former would have some say in government to protect them from depredation by the latter. Or so the theory went. What Madison did in proposing pluralism as a check on faction was revolutionary — he substituted a mixed people for a mixed government. The institutions of government would all be fundamentally popular, but in a tiered and filtered system.

Intellectual Origins doesn’t mention the national veto over state legislation that Madison wished to give Congress, but its purpose was also to ensure protections for minorities, even at the state level, against majority faction. Adair explains what majority faction had meant in the states prior to the Philadelphia convention: legislatures had in many instances acceded to majority pressure to issue paper money as a way of alleviating debts — or defrauding creditors.

“The Ancients were surely men of more candor than We are; they contended openly for an abolition of debts in so many Words, while we strive as hard for the same thing under the decent and specious pretense of a circulating medium,” Adair quotes William Grayson writing to Madison. “Montesquieu was not wrong when he said the democratical might be as tyrannical as the despotic, for where is there greater act of despotism than that of issuing paper to depreciate for the paying debts, on easy terms.” Though it might seem that small farmers would benefit from debt cancellation, Madison’s agrarianism did not lead him to inflationary populism. On the contrary: the Virginia elite’s experiences with heavy agricultural debts to British merchants had made Madison and Jefferson averse to debt in the first place. They prescribed private and public fiscal discipline, not printing-press bailouts, as remedy for the evils of debt.

A question that needs to be asked about Madison’s ingenious large-republic pluralism, however, is what it takes to sustain such a design. Pluralism should not be taken for granted as a natural condition; some arrangements are necessary to produce and maintain it. At first glance, the greatest threat to plurality of interests within a large republic might seem to come from the centralization of power, yet there are other, less direct but perhaps more pervasive, dangers. Pluralism, by scattering and diversifying interests, is meant to prevent intractable majority-minority dichotomies from arising. But a number of binary oppositions nevertheless proved to be very powerful in the antebellum republic: polarizations between Hamiltonians and Jeffersonians, North and South, free and slave states, frontier and coast, manufacturing and farming. And political parties would prove, both before and after the Civil War, to be adept at aggregating such polarities into intense partisan dualities — Federalist vs. Republican, Democrat vs. Whig, and Democrat vs. Republican, etc. Adair points to an irony:

James Madison and his friend Thomas Jefferson organized a majority party that coalesced across state lines and so was able to force its will on electors even twice removed from the people. How a situation arose in which Madison was forced to subvert his own electoral method must be discussed later. In theory, at least, he never refuted the ideal he shared with Hume, of sifting the popular will.

When I read this, I thought of a passage in Patrick Deneen’s essay “Counterfeiting Conservatism” in the current TAC:

Princeton political scientist Henry Jones Ford warned that the direct primary might take power out of the hands of party chiefs, but it would not result in a paradisiacal people’s democracy. … He foresaw the replacement of party operatives, who had historically chosen candidates on the grounds of local circumstance, experience, and party loyalty, with a “plutocracy” of monied interests that would increasingly be needed to finance expensive primary races. … The plutocracy of which Ford warned tends to reward candidates of ideological purity as they most neatly reflect a set of nationally defined partisan priorities.

There you see both the re-emergence of the economic divide that Madison feared and, perhaps more important, the consolidation of national ideological conformity against local, pluralistic interests. Even before the advent of the primary, political parties served the dangerous function of compiling grievances into national polarizations, undercutting the diverse, states-oriented federation that the Philadelphia convention seemed to envision. Yet it must be said that at the same time as parties aggregate these divisions, packaging them finally as “us” against “them,” they also tame them, channeling (for example) social or economic conflicts into political symbolism. The result of this is both a partisan dualism that nationalizes debate and a peaceful but continual consolidation of power in the central government to which both parties are appendages.

In short, binary oppositions can smash the Union, as they did in the Civil War, but they can also strengthen the Union in the worst ways. The whole scheme of pluralism is defeated when these dualistic forces either grow to national proportions of their own momentum or are assembled into national programs by political parties. If pluralism is a balance, the rise of binary oppositions upsets the balance in either an “anarchical” (in the bad sense) or tyrannical direction.

A diversity of small-scale institutions is the means of maintaining pluralism on the large scale, and the intermediary institutions beloved by traditional conservatives fit this bill. But again, one cannot take the health and survival of these institutions for granted. If they disintegrate, the foundations of constitutional pluralism are undermined. From above, these institutions are menaced by national power. From below, they are threatened by atomization, an entropic individualism that breaks down small-scale institutions into a homogenized mass of elementary particles. Not only are individuals cut loose from institutions unlikely to be able to mount the kind of power necessary to resist encroachments from above, but the decay of civil society may leave a hunger for “community” that national power (or nationalism) swoops in to fill. Robert Nisbet has described this risk in The Quest for Community and elsewhere.

The Madisonian system, then, is jeopardized from three directions: from consolidated national power, from binary oppositions that take on national proportions, and from social entropy. All of these are potent forces, and even if they chip away at constitutional pluralism only gradually, over time they will still destroy the edifice.

Does pluralism have any defense? Patrick Deneen has been willing to contemplate “subsidizing localism.” But this calls to mind a warning from Nisbet in his 1978 essay “The Dilemma of Conservatives in a Populist Society”:

The same rush to Washington, D.C. for handouts or participation in the power structure is to be seen elsewhere: in the universities and schools; in the churches – eager for some new tax exemption or to promote some new welfare reform; in the labor unions; in just about every sector indeed of American society. The family is important: there must, therefore, be a plethora of Federal laws and agencies protecting women and children. The local community is important: there must, therefore, be a vast community redevelopment act passed by Congress and an appropriate bureau established. So it goes. Given present currents, one has the sense that if the move toward decentralization and localism did become major, it would culminate in some new Federal Bureau or Department, doubtless titled “Department of Decentralization and Localism.” But I am being cynical. The dilemma of the conservative is, however, a very real one. The great question that must be faced and answered by conservatives is that of the relevance in our time of such values as the family, neighborhood, locality, religion, social rank, voluntary association, and, alone making these possible, limited political government.

An attempt to use federal power to shore up local institutions would inevitably be co-opted by the political parties and the central bureaucracy itself. This has certainly been the case with federal programs intended to alleviate poverty or help families. The highly localist Black Power movement eventually became a colony of federal power. The Religious Right has suffered the same fate. These movements had goals seemingly as radical as those of today’s Front Porch Republicans. But they played the federal game, and it played them.

A more effective approach might be to arrest the forces of decay. This would entail resisting partisan attempts to compose national-scale polarities, while rejecting ideologies of consolidation and critiquing social atomism. There is a positive as well as negative aspect to this: devolution as a political program, regardless of the substantive results of devolution; affirmation of literary humanism and local ways as counterweights to homogenization — this is the kind of “cultural conservatism” that’s most needed — and, in the denial of party-think, the preservation of independence of mind and conscience. A book like Intellectual Origins can put all of this into perspective: Adair’s work is of enduring significance for the light it casts not only upon the origins of Jeffersonian democracy, but on the prospects for republican ideals today.

Right Young Things

Posted on March 2nd, 2010 by Daniel McCarthy

My article in the current Young American Revolution mag is now online here; it’s a look at Frank Chodorov, his 50-year project, and the young Right. You can get a subscription to YAR by donating $50 or more to Young Americans for Liberty — a very good cause.

Anti-Interventionism in American Literature

Posted on March 1st, 2010 by Daniel McCarthy

The introduction and a bit near the end seem to be lost, but even an imperfect capture of Bill Kauffman on the subject of American writers against the warfare state is well worth a listen.

Origins of the Corporate State

Posted on February 24th, 2010 by Daniel McCarthy

As I mention below, Ralph Nader is not altogether wrong about what the doctrine of corporate personhood has led to. As Felix Morley explains, abuse of the Fourteenth Amendment to nationalize rights, for corporations as well as individuals, enabled the federal government to extend its powers tremendously, first in the name of laissez faire and later in the name of labor. But regardless of which ideology or which interests tried to use centralized power for their own benefit, it was power itself that benefited most — which would ultimately give us big business and (for a time) big labor prospering in collusion with and subordination to big government. The loser in all of this was the idea of a constitutional federation:

The Fifth Amendment had stipulated that “no person” shall be deprived of property “without due process of law.” The Fourteenth Amendment repeated this, but with the provision directed specifically against “any State.” Now the ingeniously simple formula was to define a corporation as a “person,” whose property under the Fourteenth Amendment was then not subject to deprivation by any State without due process of law. In practice this meant that any regulatory action by the states could be appealed to the Supreme Court, which thus gradually replaced them as guarantors of property rights. As described by Charles A.Beard: “before the end of the nineteenth century the once almost sovereign powers of the States over property and business within their borders were reduced to mere shadows of their former greatness.”

By a logical extension of the corporate person argument the railroads, again for instance, soon found it expedient to apply to national instead of State courts, under the interstate commerce clause. That procedure brought the granting of injunctions against strike action, the violation of which in turn resulted in summary imprisonment of labor leaders, without jury trial, for contempt of court. Thus the national development of industry on the one hand, and of trade unionism on the other, led through the channel of the Fourteenth Amendment to the nationalization of governmental power and the resumed weakening of federal structure. Business leadership, too “practical” to theorize on politics, welcomed this centralization of power as long as it seemed to favor laissez-faire at the expense of labor organization. There was all too little anticipation that, in the name of democracy, this favoritism would eventually be reversed.”

That’s taken from Morley’s Freedom and Federalism. His chapter “The Fourteenth Amendment” elaborates the story. Morley is not, of course, arguing that he’d like to see businesses or individuals deprived of their property or rights in a lawless fashion at any level. But the structure of government matters as well as its content, and the combination of a liberal reading of the Fourteenth Amendment with the concept of corporate personhood wrought tremendous changes in the way governments works, in its scope and machinery. Power fled the people in the states and was absorbed and amplified by the institutions of the federal government — first by the Supreme Court, to a lesser extent by Congress, but ultimately and to the greatest extent by the executive branch, whose agencies, in the name of rights, can now seize property (the DEA), kill (the CIA), interfere in business (the FTC), censor communications (the FCC), and manipulate elections (the FEC) with nary a thought to “representation” or the legislative process. The corporate state turns out to be the executive state — which probably in the end becomes the military-security state. We’re not there yet, but we’re well on our way.

Carl Oglesby Was Right

Posted on February 24th, 2010 by Daniel McCarthy

The tail end of last week was a busy time for TAC staff. Thursday, which was also the first day of CPAC, was our print date. I made it to the conclave just long enough to emcee Thomas DiLorenzo’s talk, “Lincoln on Liberty: Friend or Foe?”, before hotfooting it back to the office for a last round of proofreading.

As big as CPAC was this year, particularly with Ron Paul’s stunning straw-poll win, for me the biggest event of the weekend was a 40-person conference I attended on Saturday, a gathering of progressives, libertarians, conservatives, and radicals opposed to militarism. Some of the other attendees have already blogged about their impressions (vide Jesse Walker, Michael McPhearson, Sam Smith, David Henderson, and co-organizer Kevin Zeese). For my part, I’ve been sanguine about the prospects for Left-Right cooperation against the warfare state since the run-up to the Iraq War in 2002. Subsequently it’s only become more obvious that the old political-cultural divisions established during the 1960s are now moot. Neither the Cold War nor the culture war tells us much about what needs to be done in a world wracked by terror, hot wars, and teetering financial systems. These crises are not novel in the abstract, but their manifestations today — under conditions of U.S. hegemony and the rise of nonstate actors — are profoundly different from what Americans experienced in the mid-to-late 20th century.

Moreover, the strategic and economic crises confronting the U.S. are not entirely separate beasts. One theme that emerged at the conference from both Left and Right was the recognition that we cannot afford the foreign policy we have. Libertarians, conservatives, and progressives would all like to have that “peace dividend” we were promised after the fall of the Berlin Wall, even if we might put it to different uses. Almost any use would be better than perpetuating our self-destabilizing attempts to manage the globe, from Mesopotamia to the Caucasus to Latin America.

Surprisingly, the shift from the previous Left-Right spectrum to a new continuum has already had practical consequences. Ron Paul and Barack Obama both attest to this, albeit in radically different ways: Paul was sidelined in the old Left-Right fights, as a strict constitutionalist whose interests in monetary policy and noninterventionism seemed out of place in the era of identity politics. Yet suddenly he’s become a timely figure, a hero not only to libertarians and Old Right conservatives, but to a fair number of progressives. Obama also received support from some unexpected quarters, including conservative dissidents like Jeffrey Hart and Christopher Buckley and others not accustomed to voting Democratic (or at all all), though Obama swiftly betrayed whatever hopes his new supporters had for him. The Democrats’ meteoric descent illustrates just how poorly Obama and the congressional majority understood the forces that had elected them.

Ralph Nader, by contrast, who spoke at Saturday’s gathering, has a pretty firm grasp on what’s going on. His talk impressed me on a number of scores. At times, in emphasizing the primacy of Congress in the constitutional system and the importance of localism, he sounded almost like Willmoore Kendall. Even his anti-corporate philosophy is not something conservatives or libertarians ought to dismiss too readily. His objections to corporate personhood are very much in line with Felix Morley’s objections. Morley didn’t want to attack corporations, but he understood that the abuse of the 14th Amendment was giving the federal government and corporations together power to steamroll over the states and individuals. (See Morley’s Freedom and Federalism for more on this.)

Nader’s views on campaign-finance restrictions, on the other hand, I find quite unpalatable. David Henderson has some notes on that here. I don’t think it’s too much of a barrier to cooperation on other issues. (What’s more, there is some very quiet pro-campaign-finance-reform sentiment on the Right, though I’m in the anti camp myself.)

I’m skeptical of what under-funded advocacy groups can achieve in politics, but there are at least a few steps a Left-Right coalition can take toward cracking the ideological ice of contemporary politics. There are significant differences of principle among the journalists, intellectuals, and activists who attended the meeting, but that doesn’t mean cooperation has to be unprincipled. As my headline suggests, I think Carl Oglesby was on to something when he suggested that the Old Right and New Left have (some) common ground. Oglesby’s 1967 thoughts on the topic (from Containment and Change) were included in the conference’s reading packet, and they’re worth quoting at length:

It would be a piece of great good fortune for America and the world if the libertarian right could be reminded that besides the debased Republicanism of the Knowlands and the Judds there is another tradition available to them—their own: the tradition of Congressman Howard Buffett, Senator Taft’s midwestern campaign manager in 1952, who attacked the Truman Doctrine with the words: “Our Christian ideals cannot be exported to other lands by dollars and guns…We cannot practice might and force abroad and retain freedom at home. We cannot talk world cooperation and practice power politics.” There is the right of Frank Chodorov, whose response to the domestic Red Menace was abruptly to the point: “The way to get rid of communists in government jobs is to abolish the jobs.” And of Dean Russell, who wrote in 1955: “Those who advocate the ‘temporary loss’ of our freedom in order to preserve it permanently are advocating only one thing: the abolition of liberty…We are rapidly becoming a caricature of the thing we profess to hate.” Most engaging, there is the right of the tough-minded Garet Garrett, who produced in 1952 a short analysis of the totalitarian impulse of imperialism which the events of the intervening years have reverified over and again. Beginning with the words, “We have crossed the boundary that lies between Republic and Empire,” Garrett’s pamphlet unerringly names the features of the imperial pathology: dominance of the national executive over Congress, court, and Constitution; subordination of domestic policy to foreign policy; ascendency of the military influence; the creation of political and military satellites; a complex of arrogance and fearfulness toward the “barbarian”; and, most insidiously, casting off the national identity—the republic is free; the empire is history’s hostage.

This style of political thought, rootedly American, is carried forward today by the Negro freedom movement and the student movement against Great Society-Free World imperialism. That these movements are called leftist means nothing. They are of the grain of American humanist individualism and voluntaristic associational action; and it is only through them that the libertarian tradition is activated and kept alive. In a strong sense, the Old Right and the New Left are morally and politically coordinate.

Yet their intersection can be missed. Their potentially redemptive union can go unattempted and unmade. On both sides, vision can be cut off by habituated responses to passe’ labels. The New Left can lose itself in the imported left-wing debates of the thirties, wondering what it ought to say about technocracy and Stalin. The libertarian right can remain hypnotically charmed by the authoritarian imperialists whose only ultimate love is the subhuman brownshirted power of the jingo state militant, the state rampant, the iron state possessed of its own clanking glory.

Politics and the NBA

Posted on February 9th, 2010 by Daniel McCarthy

There’s an irony worth pointing out in the story of the “Net Book Agreement,” which sounds like it ought to be something dealing with e-books but was actually a pact between British publishers and booksellers agreed to in 1899. The NBA specified that shops should sell books for prices set by the publishers; any discounting would lead to all major publishers refusing to supply any more books to the violator. In 1997, the Restrictive Practices Court ruled that the NBA was anti-competitive and therefore “against the public interest” — and henceforth, illegal. That might seem like a liberalizing, free-market decision, right? But maybe it wasn’t, since the NBA was a form of voluntary cartelization. From a pure laissez-faire perspective, there was nothing wrong with it.

I wrapped up my post on e-books with some happy talk about how what’s good for readers is ultimately good for writers — though I hedged that assurance with some qualifications. All hedging aside, however, is it really true that readers and writers have the same interest? Doesn’t the simple supply-demand relationship between readers and authors become more complex when publishers are introduced? (You could connect this to what I discussed in my earlier post about state and society.)

The Net Books Agreement provides interesting example. It may well have been the case for a time that the best arrangement for readers, writers, and publishers, taken together, was the one that existed under the NBA. That would, in fact, be the conclusion a believer in social harmony and laissez faire (in this sphere, anyway) would have to reach, assuming the NBA was as freely entered into and enforced as its Wikipedia article suggests. By contrast, the Restrictive Practices Court, in striking down the NBA, was acting on a theory of social conflict — that is, that the interests of booksellers and publishers coincided against the interests of the public.

This goes to show, I suppose, how complicated the relationship of procedurally “conservative” and “liberal” views of society to substantially “conservative” and “liberal” policies can be. It does seem perverse, doesn’t it, to call the court’s action here “conservative,” when it broke down a settled social arrangement in the name of free competition? But then, the cause of free competition might not really have been what this was all about, since pressure to get rid of the NBA came, as one publisher’s website says, from “the enormous growth of bookseller retail chains – like Blackwell’s, Dillons, and Waterstones – which have grown to take 30 percent of the U.K. market,” and the effect of scrapping the NBA has been to put independent bookstores out of business. In short, there seem to be fewer, not more, competitors in the market as a result of trashing this supposedly “anti-competitive” agreement.

(The same publisher’s website notes, “the demise of the Net Book Agreement makes the U.K. book market more like that of the U.S., and it can be viewed as yet another step toward globalization” — that is, globalization by judicial fiat, not free trade. The difference in this case may be moot, however: the NBA was collapsing anyway as booksellers and publishers voluntarily walked away from it.)

A thoroughly laissez-faire approach to trade would permit voluntary cartels, which might in some instance, as the example of the NBA suggests, actually lead to more rather than less competition. What exists in practice under the name of liberalism, however, is not laissez faire but a blend of liberal rhetoric, some “conservative” or “socialist” assumptions about state and society, and a variety of half-disguised concrete interests (in this example, those of the big retailers). Conservatives who favor regulating trade, meanwhile, should might think about how readily regulatory power is employed in the service of an ideology of openness and “liberalism.”

There’s a temptation in thinking about these questions to want to rationalize the vocabulary — to abolish any paradoxes or inconsistencies by imposing a strict definition on liberalism (or conservatism, or whatever else). Since these terms are used in a loose way in real life, however, it may be worth preserving the paradox to understand something about how politics — and political economy — works.

Hazlitt, Buckley, Mises, Rand

Posted on February 9th, 2010 by Daniel McCarthy

Long-time readers of the Tory Anarchist will remember this post from two years back in which I called attention to a colorful anecdote involving Ludwig von Mises and Ayn Rand in William F. Buckley Jr.’s memoir of the Goldwater era, Flying High. It sounded almost too scripted to be true, and a reader wondered whether anyone else had ever corroborated the story. Since Christopher Buckley made a passing reference in his Losing Mum and Pup to his father embellishing history in some of his memoirs, I figured the whole thing might have been made up. After all, WFB wasn’t even at the dinner where Rand and Mises came to their supposed contretemps.

But Henry Hazlitt was there, and it turns out he was Buckley’s source, as a letter now online at the Foundation for Economic Education’s website shows. Buckley didn’t quite get the specifics down as Hazlitt remembered them, but the gist was right. Here’s Hazlitt’s account:

The incident did not occur at the dinner table, but later. As host, I had taken orders for drinks and was bringing them to the living room. As I entered, Ayn was saying to Lu: “You treat me like an ignorant little Jewish girl.” I had not hear what Lu had said, but I bravely started to patch things up: “Oh, I’m sure, Ayn, that Lu didn’t mean it that way.” Lu promptly jumped up and said: “I did mean it that way.”

Lu’s hearing was not good. I suspected at the the time, and have been convinced since, that he had misunderstood one of Ayn’s remarks.

One indication is that in ten minutes or so everything had quieted down. Another is that on no other occasion did I know Lu to be personally rude to anyone. (Argumentative, yes.)

Long afterwards, Ayn Rand and Lu Mises showed that they admired each other. Ayn continued to preach “selfishness”; but now in deference to Mises she added insistence on the need for “human cooperation.” She did this with no sense of inconsistency.

A few years after that dinner party — which must have been close to forty years ago [Hazlitt's letter is dated March 13, 1982] — meeting Ayn, I said: “Lu Mises and I were talking about you the other day. He called you, ‘the most courageous man in America.’” “Did he say ‘man’?” Ayn asked eagerly. “Yes,” I assured her. She was delighted.

So there you have the source of the other another legendary Mises-Rand anecdote as well. And good for Rand for taking Mises’s quip as a compliment.

Macmillan’s War on E-Books

Posted on February 7th, 2010 by Daniel McCarthy

The best analysis I’ve seen of the clash between Macmillan and Amazon over setting the prices for e-books comes from Paul Carr at TechCrunch. He provides some necessary publishing-industry background:

In the UK, way back in 1900, publishers corralled retailers into the Net Book Agreement (NBA); an agreement between British publishers and booksellers that books would be sold at the price specified on the cover. If a bookseller offered so much as a penny discount, then the publisher would simply withdraw all of their books from that bookseller and encourage other publishers to do the same. The arrangement suited everyone; book shops were the only place to buy new books and the NBA meant they didn’t have to worry about rivals undercutting them; this particularly benefited independent bookshops. For their part, publishers knew exactly how much they’d be getting for each title and authors knew how much of that would form their royalty.

All of that, however, changed in 1997, when a British court ruled the NBA anti-competitive. Discounting bookstores like Borders then opened in the UK, a great many independent bookstores closed, and both authors and publishers had to change their approach to selling books — no longer could all parties take their profits for granted:

Authors learned to adjust pretty quickly, especially as fewer than 20% of titles actually ever earn back their advance and start paying royalties. But publishers have remained annoyed. Deep discounting cuts directly into their profits. There was one area, though, where publishers could still make a killing on every sale: hardback books. The fact is that printing a hardback book, as opposed to a paperback, costs a matter of pennies more. But there is a perception amongst book buyers that they are far more expensive, a perception that it has been in no one’s interest to correct as it allows them to be sold for twice the price of paperbacks. Even with booksellers demanding deep discounts, the publishers still make a ton of profit on each hardback sale. By releasing the hardback book months before the paperback, publishers can subsidise a huge amount of their business from hardback sales, while booksellers can still discount highly to get people through the door.

But now, as Carr explains, the popularity of e-readers has raised demand for e-books to the point where the latter are cutting into hardcover sales, depriving publishers of their highest mark-ups. You can infer from this by, the way, something of just how small the difference in production costs is between e-books and pulp. You might think that publishers would be content with the lower production costs of e-books offsetting the production costs of pulp; but the latter are actually low enough that this isn’t the silver lining one might expect. Most of the money that goes into publishing a book doesn’t go for printing, it goes into profits and creative work (that it is, not just the author’s creative work, but also the editor’s and the various graphic designers and whatnot whose contributions go a long way toward making what we read more attractive on all levels).

Since e-books pose a threat to profit-rich hardcovers, old-fashioned publishers would like to kill the new technology by harboring what is, after all, in many respects an inferior product (you can’t sell or loan an e-book, or impress your friends with it by putting it on the bookshelf) with a higher price. Carr believes that the upshot of this will be to drive piracy, much as the ineptitude of record companies in the 1990s drove illegal file sharing. Carr is probably wrong, or at best half-right, about that — some kinds of books, especially vastly overpriced textbooks, might be electronically pirated. But most book readers are older and wealthier than music consumers were in the 1990s; they’re not going to try to learn their way around BitTorrent for the sake of saving $30 on on the latest Dan Brown. Those who have already made the switch to e-readers will probably just pay the higher price, though the inconvenience of having to wait longer for a release that’s delayed so as not to coincide with the hardcover may be a greater incentive for some to return to hardcover books. The dirty secret here is that even without being able to re-sell, loan, or display them, e-books are in many ways a superior product to bulky pulp products.

Macmillan’s move might retard the adoption of e-readers among people who have yet to embrace them. But even that is open to doubt: wasn’t Kindle the most popular Christmas gift for middle class families last year? Won’t the Kindle and iPad be the hot gifts for 2010, too? Discounted prices for e-books were an additional incentive, especially when e-reader technology was new, but now e-readers have momentum of their own. To kill that momentum, one would have to charge more for e-books than for hardcovers.

If Macmillan realizes this, what they might be hoping for is not to kill the e-book, but to turn the e-book into the new compact disc. When CD’s debuted in the 1980s, they were quite expensive but everyone was assured prices would come down as the technology proliferated and manufacturing costs decreased. Except for the effects of inflation, that never really happened: at the height of the CD market in the 1990s, they were still retailing for much closer to their debut price than to the price of bygone LP’s and cassettes. Record companies locked in high profits on what was first seen a premium product and eventually became the industry standard. They never had to cut prices significantly. Of course, the upshot of that was when an alternative medium, file sharing, arose, CD’s took a massive hit. But the record companies got at least a decade of high profits out of medium.

The youthful music market, however, was driven by celebrities and a few rather restrictive promotional outlets — radio, mostly, and at one time MTV, when MTV still played the occasional music video. There was also a high barrier to entry for independent record labels because of the limited physical channels of distribution. You could start a record label in your basement, you might even put out some good music, but you weren’t going to get, say, Camelot Music in your local mall to sell what you were putting out. And you certainly weren’t going to get Wal-Mart to carry your stuff.

None of that applies to books in the Internet age. The organs of publicity are things like blogs, which can take a liking to a book from a small publisher as readily as they can to some Macmillan product. And a small publisher offering e-books for significantly less than Macmillan does could cut into the big boys’ sales, although there are several complications to that strategy, among them the cut of profits demanded by Amazon and Apple for including a product in the Kindle Store or iBookstore. With higher profits on more expensive e-books (as well as the capital they already have from the traditional book market), the big publishers will be able to pay authors better, and thus attract bigger names, than the smaller publishers can. But lower prices mean more sales; in other words, it will become easier for new authors to have breakout bestsellers with publishers (small or large) that charge less for their e-books, while established authors may be chagrined to see their sales limited by the old-fashioned price models of Macmillan and its ilk. My guess is that, over time — but maybe quite quickly — the smarter or smaller publishers offering less expensive e-books will win. Consider what already happens with paperbacks: they’re much less profitable for the big companies, and they have less prestige among readers, but they sell vastly better than hardcovers. E-books eliminate the distinction between “cheap softcover” and “pricey, prestige hardcover” for readers, so why not choose cheaper e-books over Macmillan’s? Even some authors will be tempted to forgo higher profits at the major publishers if they can sell significantly better through a cheaper publisher — and since the cheaper publishers might cut down on costs for the middle men (i.e., Macmillan executives), authors might not wind up with much worse deals anyway. Advances would be smaller for authors — vastly so — but percentages on sales could be quite a bit higher.

The authors who are really hurt by the transformation e-books are wreaking are not the Dan Browns, who will sell very well regardless of what channels are used, and who may in fact claim higher percentages on profits through e-books, nor the toiling would-be authors who can hardly get a break from the publishing industry as it exists now — e-publishing should make getting published much easier, even if you might not get an advance. No, the authors who are really hurt are the second-tier types, like those who produced the spate of Freakonomics knock-offs a few years ago. To understand why this is, you just have to know the cardinal rule of modern publishing: publishers are extremely risk-averse and prefer to produce variations on books that have already sold well rather than put their money behind an uncertain venture. When authors pitch a proposal to a publisher, they’re usually expected to suggest a few “similar” books that have sold well. So if you can write well for a mass audience and you want to publish something, you pitch a knock-off on Twilight, maybe with werewolves instead of vampires. Publishers now are willing to pay big advances for such rubbish, on the accounting logic that by paying healthy advances to a handful of such authors each season, one is guaranteed a reasonable profit if even one of them succeeds in becoming the next Stephanie Meyer. If there are three or four failures for every success, well, one big success can still pay for them all.

Needless to say, I don’t think the quality of our literature would be harmed in the least by the absence from the Kindle store of Twilight With Werewolves or More Economics for Hipsters. The only worry I have is that I’m not sure just how much the midlist will be affected — a proliferation of new authors and unsaleable books is good, since a few will be worthwhile; the sustained power of big-name, low-quality authors will be the same under any model; but what happens to authors who have published a couple of good books who want to make more money in order to continue writing? The largesse of the publishing industry has sometimes been good for them, although there’s been a lot less largesse in recent years. My guess is that we’ll see some inventive financial models arise — perhaps even a return in part to the old traditions of patronage and subscription.

We’ll see. But in all this, there’s a general rule to keep in mind: what’s good for readers, including lower prices and wider channels of distribution, should ultimately be good for writers, at least in purely commercial terms. Whether we would all be better off without the printing press, let alone e-readers, is a question a few great minds have taken up, but I won’t get into that here.

Ralph McInerny, RIP

Posted on February 3rd, 2010 by Daniel McCarthy

The great Thomist scholar and author of the Father Dowling books died Jan. 29. His passing has been little noted in the American press, but the Scotstman has an excellent obituary here.