Monday, September 8, 2014

ISIS And Austrian School Economics: Why Ludwig von Mises Wouldn't Have Feared Islamic State

John Tamny writes at Forbes:

It’s a guess that Islamic State wouldn’t have much fazed Mises.

That’s the case because ISIS found its footing in the very kind of “less developed” society that Mises referenced as non-threatening in his classic book, Socialism. Without trying to minimize the horrors of 9/11, the sickening doings of ISIS, or the ability of terrorist or extremist groups to visit further horrors on the greatest symbol (the U.S.) of the developed world, it’s fair to presume that Mises would wonder what all the Islamic State fuss is about. It’s not as though the latter was formed inside a sophisticated country, or countries.

In reality, the entity that has left and right up in arms in search of a muscular response was born in a part of the world that is one of the least productive economically, that can’t claim to create even one consumer good (the oil wealth there is largely a creation of western ingenuity) that is desired by global consumers, that can’t claim even one university that would appeal to the best and brightest. Despite this, numerous wise eyes are on ISIS?

Even more puzzling is the reporting about this nascent group. A recent Wall Street Journal front-page headline referenced “The Islamic State’s Economy of Extortion.” The article explained that ISIS is a largely self-financed entity by virtue of it “exacting tribute from a population of at least 8 million,” along with other funds raised through “criminal and terrorist activities.” Ok, so a group that is financed by plunder is a threat to the most powerful, capitalistic nation on earth?

Mises likely would have mocked today’s consensus precisely because the basis of ISIS’s existence is one of theft, coercion, or both. As he similarly wrote in Socialism, “Our whole civilization rests on the fact that men have succeeded in beating off the attack of the re-distributors.” We thrive because we’re largely free, yet a terrorist entity that is financed by thievery supposedly “cannot be contained.” What’s interesting about this is how many on the American right buy into the latter narrative. Though incentives and reduced barriers to economic activity properly animate their policy views as applied to the health of the U.S. economy, apparently redistributionist economics can create vibrancy and effectiveness in the Middle East?

Even more interesting is how allegedly skillful are those inside ISIS. To read the previously referenced Journal article without a skeptical eye is to believe that ISIS is run by a team of McKinsey consultants, as opposed to the radical militants who are actually in charge. As Nour Malis and Maria Ari-Habib wrote, the “radicals from the group administer an orderly extortion system of business and farm tributes, public-transport fees and protection payments from Christians and other religious minorities who choose to live under the militants rather than flee.” Would such a scenario birth resource-abundant growth in the U.S., or any other part of the world? It surely wouldn’t, and economic logic suggests it’s not doing so for ISIS...

basic economic logic suggests that skepticism about the power of ISIS is warranted. It is because eventually groups like it splinter of their own contradictions. As Mises put it in Socialism, “Only temporarily do the nations in a lower state of organization manage to co-operate for great military enterprises. Internal disunity has always dispersed their armies very quickly.”

Ludwig von Mises is sadly not here today to participate in the Iraq/ISIS debate, but his writings from long ago suggest that he would cast a skeptical eye on all the handwringing about the latest alleged terrorist threat. Maybe this time IS truly different, but if so, it would have to be that basic economics has become very dumb.

Read the full article here.

1 comment:

  1. If mises were here, he'd be ignored, like his acolytes are, and just as he was back then. I'm surprised forbes even mentions him.