Archives for posts with tag: Paul Jacob

Thomas Sowell retired from writing his syndicated column a few weeks ago. And so the tributes have been coming in. As they should.

img_1961I note that Paul Jacob at, and Gene Epstein on the Tom Woods Show, both have praised Sowell for his astute and well-explained economics popularizing while expressing their chagrin that Sowell never seemed to apply the same “thinking beyond Stage One” approach to foreign policy.

This was a point I made in one of my earliest published reviews, of Thomas Sowell’s A Conflict of Visions, to be found in the premiere issue of Liberty, way back in 1987. (Which you can read on this site, now — O, lucky you!)

So, if we are all pretty much saying the same thing, what can I say differently?

Well, I could mention my favorite Sowell book, his first: Say’s Law: An Historical Analysis. This is probably his most difficult book, in no small part because Say’s Law is itself a surprisingly difficult concept. It has been years since my last reading — and I have read it at least three times, even now wishing to return to it, give it another go.

I first read the book in tandem with W. H. Hutt’s quirky A Rehabilitation of Say’s Law. Each book helped me understand the other.

One of the really tricky things about Says Law is that it is a macro theory; but many authors found its chief resonance on the micro level. Indeed, though Say’s Law was first marshaled to debunk one theory of economic depression, the general glut theory, W. F. Lloyd, in his classic essay on value, tied that macro problem very closely to what became the theory of marginal utility, the micro theory par excellence. And Say’s Law according to Say’s disciplines — the Third School, or Catallactic economists — turned into a theory of “harmonies,” not equilibrium. It was another macro approach based on a micro insight that in turn was used against not merely general glut theories, but also protectionism and socialism. Sowell, if I remember correctly, does not extend his analysis into the third school, except insofar as he deals with Walras’s Identity.

As an economic popularizer and as an economic historian, particular of race and cultures, Sowell was magnificent. Yes. But as a social philosopher he was perhaps even better. More necessary.

There is a caveat to this judgment, however. Jacob and Epstein and Woods all discussed their favorite Sowell contributions. I have done the same, with his recondite Say’s Law survey. But let me offer a balance: his worst book, something neither Epstein nor Jacob bother with.

I nominate Marxism: Philosophy and Economics (1985). This book is easier to read than Say’s Law, my favorite, and it probably packs more punch . . . at least in terms of surprise value. But one of the big surprises is a huge whopper of an error. It is an error, of all things, about value.

Sowell asserts, in Marxism, that Eugen von Böhm-Bawerk was wrong on Marx’s labor theory of value.

When I read this, I had not only read Böhm’s classic “Zum Abschluss des Marxschen Systems,” translated under the provocative-if-puzzling title Karl Marx and the Close of His System (first English language edition, Alice MacDonald, 1898), but also two other important books related to the subject: Destutt de Tracy’s A Treatise on Political Economy (Thomas Jefferson, 1817) and a crucial chapter in Karl Marx’s infamous Das Kapital (1867).

You might be wondering: what the heck — what’s with the Tracy? Well, Tracy makes much of the Condillac thesis of both parties to an exchange gaining value in the transaction. So when I read Marx’s obscurantist dismissal of that thesis, wherein the old socialist crank mocks Condillac and Tracy’s mutual gain thesis, I was prepared for Sowell’s disagreement with Böhm.

The key Marxian error, in my opinion, is that repudiation of mutual gain through trade. It was there that Marx necessarily went off track, not seeing how value is increased as goods flow through the market nexus. The marginalist view of value is intricately entangled with the mutual gain concept, and by rejecting mutual surplus of value in each trade, Marx took his most decisive turn the wrong way. Adam Smith and David Ricardo and the British economists had sent economics down the wrong path in 1776, and Marx took their labor theory of value to its absurdist conclusion. Sowell basically apologizes for Marx. He insists, without much evidence (and with the evidene right there in Das Kapital, on the pages citing Condillac and Tracy), that Marx’s formalistic definition of value as (somehow) incorporating socially necessary labor time was indeed compatible with marginalism. This thesis seems not in the tiniest degree defensible.

A few years later (if memory serves), David Ramsay Steele cleared all this up in his magnificent book on the socialist calculation problem, From Marx to Mises (1992), speculating that Sowell was merely regurgitating the views of his Marxist-apologist professors in the days before his conversion.

In any case, Sowell has, since his conversion from Marxism under the influence chiefly (I think) of Milton Friedman, remailed too closely tied to the British Classical School. He seems uninterested in, perhaps dismissive of the Third School tradition starting with Condillac and moving through Tracy, Comte and Dunoyer, Bastiat, Perry, Henry Dunning Macleod, and Gustave de Molinari. (Half of these economists are French or Belgian or Swiss, so the tradition is often called the French Liberal School. But that is too narrow a reading of this dissident, proto-marginalist tradition.) The later Third Schoolers ran off-track, too, in not accepting the important proof of the basic idea in the marginalist advances of W. S. Jevons, Carl Menger, and Leon Walras. While Menger did not go on at length about what he owed to the Third School economists, Jevons sure did, while heaping scorn upon the Ricardians. And Walras, it is worth noting, was himself the son of a Third School economist, Auguste.

This lack of interest in these economists seems especially strange to me, since Sowell has repeatedly dipped into the rhetorical well so ably primed by Third Schoolers Frédéric Bastiat and Yves Guyot. (See my forewords to Bastiat’s and Guyot’s classics, available on Amazon/Kindle and iBooks.)

But it has been a long time since I read Sowell’s Marxism. Perhaps my memory is fuzzy. And my view of the Marxian surplus value and exploitation theories needs refreshing. So, after just now re-reading my three decades’ old review of A Conflict of Visions, I won’t direct my attentionimg_1963 to The Vision of the Anointed: Self-Congratulaton as a Basis for Social Policy (1995), which I had been planning to do. I will go back and re-read Böhm-Bawerk’s take-down of Marx, instead.

So perhaps I will follow up this post with a corrective, soon. I should not be this fuzzy on something so basic as “surplus value.”


Leading up to and immediately following Britain’s “Brexit” vote, I was scribbling incessantly on social media, trying to explain my position. But before I collect those thoughts for this blog — if I ever do — here are two columns by other writers (Paul Jacob & Dan Sanchez) whose appraisals are up my alley.

Hysteria, Assassination, and Big Government

The biggest political story of the month? Brexit.

The people of Great Britain will vote, this week, whether to remain in, or exit, the European Union. (Britain+exit=“Brexit,” you see.)

Establishment forces in Britain have engaged in hysterical, hyperbolic overkill, warning of grave disaster were Britain to leave the union. America’s President Barack Obama contributed to this, recently, when he warned that an independent Britain might find itself placed “at the back of the queue” in trade talks.

Tragically, things got more troubling last week when anti-Brexit, pro-union campaigner Jo Cox, a Member of Parliament and prominent Labour Party activist, was brutally slain last week in front of her local library. The man had just left a mental health facility, after requesting help.

At first, major media reported that the killer had shouted “Britain First,” an old patriotic motto as well as the name of a pro-Brexit political party, while shooting and stabbing her. Of the several eyewitnesses to have allegedly testified to this murderous shout, only one is sticking to the story . . . a member of the British Nationalist Party, which is antagonistic to Britain First. Other eyewitnesses deny the story.

Next, both sides promised to cease campaigning, out of good taste. Still, polls fluctuated, while remaining close.

Much of the furor has risen over immigration policy, especially fears about EU laxity towards Muslim refugees.Paul Jacob

But the bedrock issue is Big Government. The EU is not effectively controlled by citizens; indeed, membership representation is mostly show, a mockery of republican government.

That is why, if I were British, I’d vote to Brexit.

This is Common Sense. I’m Paul Jacob.

Printable PDF This commentary first appeared on Paul Jacob’s Common Sense site on June 21st. Reprinted with permission.


Brexit Wins: Why That’s Great News for Europe, Too

British voters have elected to leave the European Union in a national referendum. The UK Independence Party (UKIP) leader Nigel Farage declared Friday Britain’s “independence day.” That is quite a statement given British history. A little over two and a quarter centuries ago, America had its own first Independence Day, and the British Empire was the super-state from which Americans declared independence.

Independence is not isolation.

History has come full circle; in a sense, today we are seeing the American Revolution in reverse. In many ways, the European Union is a lever of US global hegemony. By seceding from the EU in spite of threats from Washington, Britain is declaring partial independence from America.

It must be noted that independence is not isolation. This is the key distinction that is intentionally blurred by the “Better Together” rhetoric of the “Remain” camp. When they scaremonger about “leaving Europe,” it conjures images of Britain abandoning Western civilization. But “the West,” as in the US-led alliance of neo-colonial powers, is not the same thing as Western civilization. And the European Union is not the same thing as Europe. Exiting a mega-state in defiance of an imperium is not withdrawing from civilization. In fact, such an exit is propitious for civilization.

Small Is Beautiful

Political independence fosters economic interdependence.

Advocates of international unions and super-states claim that centralization promotes trade and peace: that customs unions break down trade barriers and international government prevents war. In reality, super-states encourage both protectionism and warfare. The bigger the trade bloc, the more it can cope with the economic isolation that comes with trade warfare. And the bigger the military bloc, the easier it is for bellicose countries to externalize the costs of their belligerence by dragging the rest of the bloc into its fights.

A small political unit cannot afford economic isolationism; it simply doesn’t have the domestic resources necessary. So for all of UKIP’s isolationist rhetoric, the practical result of UK independence from the European economic policy bloc would likely be freer trade and cross-border labor mobility (immigration). Political independence fosters economic interdependence. And economic interdependence increases the opportunity costs of war and the benefits of peace.

The Power of Exit

Super-states also facilitate international policy “harmonization.” What this means is that, within the super-state, the citizen has no escape from onerous laws, like the regulations that unceasingly pour out of the EU bureaucracy. Dan Sanchez

But with political decentralization, subjects can “vote with their feet” for less burdensome regimes. Under this threat of “exit,” governments are incentivized to liberalize in order to compete for taxpayer feet. Today’s referendum was a victory both for Brexit and the power of exit. That’s good news for European liberty.

During its Industrial Revolution, Britain was a beacon of domestic liberty and economic progress that stimulated liberal reform on the European continent. An independent Britain in the 21st century can play that role again. In doing so, Britain would help Europe outside the EU far more than it ever could on the inside. Brexit may be a death knell for the European Union, yet ultimately a saving grace for the European people.

Dan Sanchez

Dan Sanchez is the Digital Content Manager at FEE, developing educational and inspiring content for, including articles and courses. His articles are collected at

This article was originally published on Read the original article.

Here are two samples from my many squibs on social media:






Simple corruption in politics we understand, clearly. The paradigmatic corrupt act? Bribery.

But it is obvious that there is more than one form of corruption. I’ve been touching on this in my latest LocoFoco videos, and, on-again, off-again, in this and other forums.

Paul Jacob deals with this, too, in his most recent bout of Common Sense, titled “When in Rome”:

Americans concerned with government corruption really should study Italy.


“You know Italians,” septuagenarian Elio Ciampanella was quoted in the New York Times last week. “If there is a law, they will try to find ways to go around it!”

But it is not just ordinary citizens — the people — who are evading bad laws. It is government workers who won’t do their jobs, and who engage in a wide range of corrupt deals and shady incompetence.

I know, this seems awfully unfair to the Italians. What I’ve said is the case with governments around the world. But not equally. (Scandinavian countries have a long history of government worker probity, if not ultra-competence.) And Italians do have a well-earned reputation for government corruption.

Arguably, it’s the form freedom takes in Italy.

Be that true or not, Mr. Ciampanella’s story, as related in the Times, is a fascinating one. He asked for a government-subsidized apartment, and had to wait ten years to get one . . . only to discover the problem wasn’t a lack of apartments, but a surfeit.

Yes, the government owned too many apartments to keep track of!

And so they didn’t.

And gave special deals to “special people.”

In other words: incompetence and corruption as a way of life.

Market institutions that behave so chaotically and with so little attention to efficiency go out of business. But government? That’s “necessary,” so: too big to fail. And so, commonly excused.

No wonder, then, that the common-sense approach to government is to limit it.

This final idea, the idea of limiting corruption by limiting its very opportunity — by circumscribing the scope of government itself — is one that I have been trying to formulate well in the past few years. It seems foreign to my contemporaries, however. The whole mindset of statism, at least in this instantiation in the modern progressive, resists the idea, as if it were anti-matter. The commonsense notion seems almost unmeaning to progressives.

What I learn from Paul Jacob, however, is that incompetence and corruption might be linked.

And that is worth thinking about.

The image is shamelessly nabbed from This is Common Sense.

A great book about the political and economic nature of the Incan empire.

A great book about the political and economic nature of the Incan empire.

Yesterday, when not reading Democracy in America for one project, I scoured the Net, in service of other projects. A few interesting stories I stumbled upon:

  • A Phalanx of Lies,” by Mark Steyn. He identifies “government health care” as fundamentally redefining “the relationship between the citizen and the state into one closer to that of junkie and pusher.”
  • The Climate Inquisitor,” by Charles C. W. Cooke. This National Review Online story covers the Michael Mann libel suit against the above-mentioned Mark Steyn and NRO itself. I haven’t finished reading it, but it looks interesting enough to go back to. In my opinion, public intellectuals don’t get to sue each other over disagreements like this. Steyn has a great case in defense of the ludicrous lawsuit. And Mann should be ashamed of himself.
  • What Private Builders Build,” by Paul Jacob. I actually entered into the comments section of this short opinion piece. I used to do this a lot, commenting all over the Web, usually under my initials “TWV,” as here. Perhaps I don’t do this very often, any longer, because of a tendency on the Web for people to behave like anal openings, repeatedly spewing mean-spirited and poorly reasoned diatribes of a personal nature. I tried to move the discussion into a respectful territory, something to do with the facts of the history in question. But this sort of thing is probably futile. Haters gonna hate.

Interestingly, while grabbing text for this post, I just found on Paul Jacob’s site a great quotation from one of my favorite social philosophers, Herbert Spencer:

It is not … chiefly in the interests of the employing classes that socialism is to be resisted, but much more in the interests of the employed classes.… Under that compulsory cooperation which socialism would necessitate, the regulators, pursuing their personal interests with no less selfishness, could not be met by the combined resistance of free workers; and their power, unchecked as now by refusals to work save on prescribed terms, would grow and ramify and consolidate till it became irresistible. The ultimate result … must be a society like that of ancient Peru, dreadful to contemplate, in which the mass of the people, elaborately regimented in groups of 10, 50, 100, 500, and 1000, ruled by officers of corresponding grades, and tied to their districts, were superintended in their private lives as well as in their industries, and toiled hopelessly for the support of the governmental organization.

Here we find an acknowledgment of the basic realism of Public Choice economics: that folks in government are as selfish as anyone else, and their behavior should be explained in similar terms as, say, “greedy” market participants. We also find a reference to Incan socialism, something I first encountered from conversation with the late R. W. Bradford, but later heard from French economists Yves Guyot and Louis Baudin. For more rumination on this subject, read my foreword to Laissez Faire Book’s recent re-publication of Baudin’s classic on the Inca empire. Or Mises’ introduction. Or, best yet, the book itself. It’s magnificent.

Well, I have to go back to reading De Tocqueville. But it’s not one of my random readings, as when I take up Evelyn Waugh or a science fiction author. Nope, this is part of actual work. Other books, for the next year, that add onto this project list include

  • Fiat Money Inflation in France, by Andrew Dickson White
  • The Man vs. The Welfare State, by Henry Hazlitt
  • On Liberty, by John Stuart Mill
  • The Production of Security, by Gustave de Molinari
  • The Outcome of Individualism, by J. H. Levy

A great list of interesting books. I will no doubt write more about them, later.