'..It was an ethic of individual rather than group rights, so man had a right to the product of his labor and did not have to surrender it to a collective. This gave rise to capital formation by ordinary men, whose property was protected by the rule of law, which also was derived from natural law and was affirmed over the centuries by such documents as the Magna Carta..'<blockquote>'Members of an Austrian School of economics forum to which I belong have been discussing the source of economic progress. It began with the usual elements of capital, technological development, and managerial expertise before getting more philosophical when a member suggested the acceptance of rationality in all things. I felt this was not a proper answer, because the definition of “rationality” is itself debatable and can be used by political authorities to suppress unpopular ideas.
For example, in the Soviet Union, to question the inevitable victory of communism and the ultimate transformation of man’s nature to communist man would land one in an insane asylum. If you didn’t believe all that communist propaganda, you must be crazy! I prefer Murray N. Rothbard’s definition of rationality as believing that one’s actions will bring about the result desired. Admittedly this is a narrow definition of the term and more suited to economics rather than psychology. Rothbard’s definition of rationality admits the possibility that rational men might disagree on the proper action to take to bring about the same goal, such as whether or not price fixing will bring about universal prosperity. Men who believe in price fixing are not irrational according to Rothbard; they are simply wrong and must be shown the error of their ways.
In my search for the answer to the question of the foundation of economic progress, I used Mises’s regression theory for my thought experiment. I started with the assumption that a completely unhampered free market produces the most prosperity. (If you do not agree, then stop right here.) The primary elements of such an economy would be capital accumulation, defense of property rights, and the rule of law. It would not include collectivism, which elevates the group — rarely defined and a moving target when it is defined — above the individual..
..
In summary, in the West men believed that they were formed in the image of God, that they were equal as all other men as a result, that their rights were “natural rights” and not given to them by a king with divine rights, and that these natural rights included economic rights. It was an ethic of individual rather than group rights, so man had a right to the product of his labor and did not have to surrender it to a collective. This gave rise to capital formation by ordinary men, whose property was protected by the rule of law, which also was derived from natural law and was affirmed over the centuries by such documents as the Magna Carta. Immanuel Kant explained in philosophical terms what had been increasingly accepted for 1,500 years by all strata of society, including the political elite; i.e., the primacy of the individual, who is formed in the image of God. This view led eventually to what Ludwig von Mises called modern economics, which led to the Industrial Revolution in the first country, England, that liberated the individual politically and economically..'
- Patrick Barron,
Economic Progress and the Primacy of the Individual, April 19, 2014</blockquote>
<blockquote>'The traditional gold standard was so effective because it in fact provided an “automatic stabilizer.” If Credit was created in excess, an economy would suffer a loss of gold. The reduced gold reserve would dictate higher rates and a (stabilizing) contraction in lending. Bankers and politicians understood the mechanics of the system (and were committed to sustaining the monetary regime), so they would tighten their belts when excess first emerged. In this way, the gold standard for the most part provided a stabilizing and self-correcting system. These days, everyone knows the Fed will not respond to excess. Our central bank, however, will be predictably quick to print additional “money” at the first sign of a faltering Bubble, liquidity that will reward financial speculation. Excess begets excess. Today’s system is the very opposite of “automatic stabilizer.” '
- Doug Noland,
Automatic Stabilizer? April 18, 2014</blockquote>
Context Banking Reform<blockquote>
With or Without a God: Natural Law and Property Rights(Praxeology) - Review: Money, Bank Credit, and Economic CyclesThe Eroding Power of Central Banks, April 16, 2014