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“What we’ve got here is a failure to communicate.” This became an often-repeated popular line after its use in the 1967 movie Cool Hand Luke. A 1950s Florida prison warden (played by actor Strother Martin) says those words after an insolent remark by one of the prisoners (played by Paul Newman) results in the warden lashing that prisoner with a whip.
In the film, the message the warden is clearly trying to get other prisoners working on a chain gang to understand is that if you do not do as you are told or if you talk back to those with physical power over you, there will be consequences. Words, in other words, do matter, and you better make sure you understand what they are saying.
But being sure what meaning or message that words convey is not always unambiguous. This becomes a problem in any exchange of ideas when what you think the other person means by the words they are using is not what they have in mind. And sometimes the ambiguity surrounding the use of a word might even be intentional.
Imposter-Terms Like “Progressive” Confuse Our Understanding
The classical liberal author Albert Jay Nock (1870–1945) published an essay in the February 1936 issue of the Atlantic Monthly on what he called “Imposter-Terms,” that is, words that are used in ways meant to confuse or misdirect understanding. He actually took the phrase from the famous utilitarian philosopher Jeremy Bentham (1748–1832), who coined the term in his Book of (Political) Fallacies (1824).
More precisely, imposter-terms are words that are used to make more acceptable some idea or fact that would be viewed far more negatively if expressed in a more direct and clear manner — that is, something that would be doubted or even rejected as undesirable if described in words that capture the true nature of the subject or object. Imposter-terms, therefore, as explained by Bentham and Nock, may be intentionally applied precisely for purposes of deception and misunderstanding.
One instance of this, may I suggest, is the political use of the word “progressive.” Now, clearly, it originates out of the word “progress.” According to the Oxford Dictionary, progress refers to “forward or onward movement towards a destination,” or “development towards an improved or more advanced condition.”
“Progressive,” then, means “happening or developing gradually or in stages.” The dictionary makes clear that a progressive movement to a “more advanced condition” can be either positive or negative, as in the worsening severity of an illness. It also says that a “progressive” is someone who is “an advocate of social reform.”
Now, rightly understood, who can be against human and social progress? Who would not like a progressing decrease in poverty, or a progressing increase in literacy and longer, healthier lives for humankind? Who is not for progress toward more respect and regard for every person as a distinct individual with only one life to live? Who is not for all of these and far, far more than could be listed and lyrically expressed about the world and all those who live in it?
There have been a few who have called for an ascetic existence, a renunciation of anything but the mere essentials of human life, with no care for the material things of this earth. But the vast majority of those who have lived during every generation of human beings on this planet have wanted and wished for a material and social life better, richer, and healthier than the one that preceded them, and hoped that their children would have an improvement over theirs. For most people to think this way is, well, just human nature.
Classical Liberals Saw Human Progress Through Freedom and Markets
The question is, what are the best means and methods to achieve it? The classical liberals of the 18th and 19th centuries argued that the best hope for mankind in this “progressive” direction was for the elimination of political control and command over people’s lives.
The guiding classical liberal principles were: recognize and respect every individual’s right to freely and peacefully live his life as he personally chose; have the requirement that all human relationships be based on voluntary association and mutual agreement in the marketplace of exchange and in the area of civil society; make the narrow and primary duty of a limited government be the protection of each individual’s right to their life, liberty, and honestly acquired property, and the enforcement of all voluntary agreements among them. With the establishment of this type of social environment, the most will have been done that would be conducive to the possibilities for human progress.
This, also, was considered to be based on an appreciation of human nature. Individuals basically know their own circumstances and abilities better than any other who would presume to plan and direct their life for them. This was concisely stated by Jeremy Bentham in his Manual of Political Economy, written in the 1790s:
The interest which a man takes in the affairs of another, a member of the sovereignty for example in those of a subject, is not likely to be so great as the interest which either takes in his own; still less where that other is a perfect stranger to him….
In not one of these particulars is the statesman likely to be more than upon a par with the individual whose choice relative to the subjects in question he is so ready to control; in almost all of them he is constantly and necessarily inferior beyond all measure….
A first Lord of the Treasury … of a Trade, or any other member of the Legislature, is not likely in the instance of any one of the many thousands of trades existing in the world, to form relative to the best mode of carrying on that trade a choice so good as that would be formed by a person embarked, or intending to be embarked, on the trade in question; still less in the instance of everyone one of those trades.
Freedom Produced Progress in America
Following the principles of freedom and free markets succeeded, wherever they were reasonably recognized and respected, and slowly but surely brought about a progressive improvement in the social and economic conditions of those respected in their personal liberty and in their peaceful and voluntary associations with others for mutual gain.
The idea and growing reality of human progress in improving or bettering social, cultural, and material conditions of mankind was one that most reflecting individuals were delighted to point to when making observations as the 19th century progressed. For instance, in his 1867 Harvard lecture, “The Progress of Culture,” the noted American essayist Ralph Waldo Emerson (1803–82), asked:
Who would live in the stone age or the bronze or the iron or the lacustrine? Who does not prefer the age of steel, or good, or coal, petroleum, cotton, steam, electricity, and the spectroscope? …
Consider, at this time, what variety of issues, of enterprises, public and private, what genius of science, what masters, each in his separate province, the railroad, the telegraph, the mines, the inland and marine explorations, the novel and powerful philanthropies, as well as agriculture, the foreign trade and the home trade . . . manufactures, the very inventions, all on a national scale.
Even in the immediate aftermath of the destructive events of the American Civil War that had ended only two years earlier, Emerson wondered at and was enthused about the continuing material improvements for so many that surrounded him in the United States at that time — though he was very far from being an uncritical observer of American political, social, and cultural life.
His references to coal and petroleum may shock some today, but it needs to be remembered what wonders of industry and communications, and gains in the quality of everyday life, were made through these means of supplying energy for reducing the exhaustion of physical labor and increasing the output of every worker’s daily efforts.
Coal and oil were and have been liberators from the niggardliness of seemingly uncooperative nature, that have assisted in lifting humanity from its natural condition of poverty. It has been forgotten how really nasty, brutish, and short human existence was for almost all those on earth before these energy engines of material progress. (See my article “Preserved Primitivism Versus Freedom and Prosperity.”)
Socialism and Impatience With the Speed and Forms of Progress
But some were impatient about the degree and directions of all this progress. They questioned the ethics of its forms and distributions. They wanted and wished for the political power to redirect its content and benefits. In the early and middle decades of the 19th century, many such individuals called themselves socialists or communists. Of course, they differed among themselves about how they saw a future of “progress” recast, but they mostly shared certain ideas about the means to bring about their, respective, images of a better collectivist future.
Almost all of them believed in the abolition of most or all private ownership of the means of production and ending private enterprise determining the direction of production. This would be transferred into the hands of the state, manned by those claiming to speak for the “true” and “real” interests of “all the people,” and not for only a handful of profit-oriented private businessmen narrowly guided by antisocial self-interest.
These new social engineers speaking and acting for humanity would set all things straight in the world. Production would be for “need” instead of “greed.” Wealth would be redistributed according to an asserted egalitarian justice that the central planners just knew to be the right and good one.
Critics of Socialism Warned of a Frightful and Violent Future
But soon voices were raised warning that with government economic control to do things for the people would also come the power by those in control to do things to the people — that is, to make all in society live within and conform to the designs and demands of those holding the levers of government authority in their hands.
For all of the nice-sounding words and promises, another word came to mind at the same time: tyranny! What freedom would remain when everything produced and every opportunity to work and live one’s life was dependent on an omnipresent and omnipotent government, from which there existed no autonomous area of escape for an independent and self-governing personal life?
The famous German poet and essayist Heinrich Heine (1797–1856) gloomily warned in 1842:
Communism is the secret name of the dread antagonist setting proletariat rule with all its consequences against the present bourgeois regime. It will be a frightful duel. How will it end? No one knows but gods and goddesses acquainted with the future. We only know this much: Communism, through little discussed now and loitering in hidden garrets on miserable straw pallets, is the dark hero for a great, if temporary, role in the modern tragedy….
Wild, gloomy times are roaring toward us…. The future smells of Russian leather, blood, godlessness, and many whippings. I should advise our grandchildren to be born with very thick skins on their backs.
The Danger of Tyranny From Collectivist Control of Society
Forty years later, the classical liberal French economist Paul Leroy-Beaulieu (1843–1916) detailed what that collectivist future of government central planning would look like and lead to in his amazingly prescient treatise Collectivism (1885; English translation, 1908). He summarized its meaning for mankind:
The employee (and all will be employees) would be the slave, not of the state, which is merely an abstraction, but of the politicians who possessed themselves of power. A heavy yoke would be imposed upon all, and since no free printing presses would exist, it would be impossible to obtain publicity for criticisms or for grievances without the consent of the government. The press censure exercised in [Imperial] Russia would be liberty itself compared to that which would be the inevitable accompaniment of collectivism… And a tyranny such as has never been hitherto experienced would close all mouths and bend all necks.
And as if anticipating those who, today, say, “But it will be ‘democratic’ socialism,” Leroy-Beaulieu added:
How could human progress continue in a society subject to universal constraint and authority? Authority whatever its source, is always slow, pedantic, and a slave to routine; when derived from a democracy, these defects would be exaggerated; an immense bureaucracy would be established, and individuals who are exceptional in any way would be shouldered on one side and crushed by its complicated machinery…
Thus, collectivism implies a prodigious loss both to the individual and to civilization in general. At first a slackening of economic enterprise, then its complete cessation, soon to be followed by retrogression; these would be the inevitable consequences for humanity, or for any section of humanity that adopted this regime.
American Intellectuals and the German Historical School
How, then, could the socialist idea be saved from a growing inseparable connection to social and economic tyranny that would also threaten to end the progress seen all around the more liberal-oriented areas of the world, even if the speed of improvement and pattern of distribution in existing liberal society did not perfectly fulfill some people’s wishes?
Especially in America, where socialist ideas seemed particularly anathema to the spirit and beliefs of most people in individualism, free enterprise, and local and decentralized power and authority, how could the notion of greater government control and direction of social and economic life be successfully introduced?
The linguistic and rhetorical trick was to not use the term or minimize the negative connotations of what socialism would mean in society. This was brought about by an entire generation of American intellectuals who went over and studied at German universities in the last decades of the 19th century and in the first decade of the 20th century.
They came back to America after finishing their graduate degrees imbued with the conceptions of the German historical school, a group of German historians, political economists, legalists, and sociologists who insisted that the classical liberal ideas built on the classical economics of the first half of the 19th century were completely wrong. The classical economists insisted that there were universal and ever-present “laws of economics,” concerning supply and demand, and that there were social institutions invariably essential for human progress, namely private property, free markets, and a wide range of economic liberty.
The German historicists denied all of this. They declared that each time, place, and nationality had its own relevant “laws” of appropriate human relations and institutions that changed with the social, economic, and political evolution of each society.
In the words of American economist Edwin R.A. Seligman (1861–1939), in 1886, who did his apprenticeship at the feet of these German professors: “The economic theories of any generation must be regarded primarily as the outgrowth of the peculiar conditions of time, place and nationality under which the doctrines were evolved, and that no particular set of tenets can arrogate to itself the claim of immutable truth, or the assumption of universal applicability to all countries or epochs.”
Or as another important American economist and “progressive” of this period, Richard T. Ely (1854–1943), said at around the same time: “Political economy … is not regarded as something fixed and unalterable, but a growth and development, changing with society. It is found that the political economy of today is not the political economy of yesterday; while the political economy of Germany is not identical with that of England or America.”
A German or an American social reformist did not have to worry that the laws of supply and demand might challenge the likely effects resulting from government-fixed prices or mandated minimum wages. German economics was not the same as American economics. And, in addition, the “laws of economics” in the America of the 1850s were not the same as the ever-changing and relevant economic relationships and possibilities in the United States of 1895 or 1905 or 1925. (See my article “American Progressives Are Bismarck’s Grandchildren.”)
“Progress” Required Political Paternalism and Governing Elites
Instead of generally using the word “socialism,” the advocates of moving away from limited government and free market liberalism — those American students of the German historical school — spoke of a new social or neo-liberalism, that could and should not be merely “negative” in protecting people in their older notions of life, liberty, and property, but should be “positive” in extending, securing, and guaranteeing certain opportunities in life that required regulating markets, redistributing income, and greater centrally directed planning for social development. The new social or neo-liberalism incorporated, therefore, the reasoning and rationale of an extensive and invasive interventionist-welfare state. (See my article “Why Neo-Liberalism Is Really Neo-Socialism.”)
But broader than simply the political agenda of this neo-liberalism was a conception of the wider requirements for human betterment. This was an outlook that transcended the now-declared atavistic ideas of self-interest, individualism, and personal autonomy. Mankind was evolving from the individualistic ethos to a larger and more inclusive societal sense of “community” that was greater than the mere person.
“Progress,” it was now said, was evolving from self-interest to social awareness and collective responsibility. The group was a transcendent reality over the individual. The increasing complexity of society could no longer be left to its own devices of “anarchistic” markets and decentralized philanthropy. There needed to be a centralized sense of purpose and direction, with those properly trained and guided by a higher sense of social responsibility leading the way and taking charge for the good of all.
“Progressivism” represented this social outlook, and the “progressives” who shared and advocated its vision were its standard bearers. There was an almost religious fervor in the enthusiasm of its proponents. For example, here is Richard Ely’s articulation, in 1895, of what this better “progressive” arrangement of society would require and look like:
Looking into the future we may contemplate a society with real, and not merely nominal, freedom, to pursue the best; a society in which men shall work together for the common purposes, and in which the wholesale cooperation shall take place largely through government, but through a government which has become less repressive and has developed its positive side.
We have reason to believe that we shall yet see great national undertakings with the property of the nation, and managed by the nation, through agents who appreciate the glory of true public service, and feel that it is God’s work which they are doing, because church and state are as one.
We may look forward to a society in which education, art, and literature shall be fostered by the nation, and in which the federal government, commonwealth, local community, and individual citizens shall heartily cooperate for the advancement of civilization…. We may anticipate an approximation of state and society as men improve, and we may hope that men outside of government will freely and voluntarily act with trained officers and experts in the service of government for the advancement of common interests.
Progressivism Has Served as the Imposter-Term for Socialism
This was and is the promise of the “progressives” well over a hundred years ago and today. Oh, the reference to a unity of state and church is no longer appropriately “politically correct,” and a declared focus on “great national undertakings” needs to be rephrased so that it doesn’t sound too, well, “Trumpian.” But the “progressive” message of then is still the same now: trained bureaucratic experts and elected officials who are only and always dedicated to nothing but the “public purpose” will guide the rest of society into the new promised land of paternalistic economic planning, coerced redistribution of wealth, and expected cooperation by all other members of society under this enlightened and superior leadership.
But what is this but the socialism and communism advocated in the 19th century and implemented in various places in the 20th century? For more than a hundred years, an “imposter-term” has been used to hide from view something through the rhetorical trick of not calling it by its real name.
“Progressivism” has been promises of something different and better than what exists under “capitalism” or market-oriented liberalism: with references to social ends that are higher than and superior to merely personal private purposes in the marketplace; with an implied denial that there are any economic laws reflecting an invariant human nature to stand in the way of undermining property rights, controlling markets and prices, and confiscating the wealth and income of some to give to others; and with an imposition of coerced plans on all in society while denying that it implies any loss of any important freedoms.
All of this has served and is serving the advancement of a socialist rearrangement of society without, most of the time, saying Heinrich Heine’s “secret name.” But now having persuaded so many over so many generations in America that a good and decent society requires all of these planning, regulating, and redistributing policies and institutions, it has come full circle.
All of this time, my fellow Americans, you have been listening to and incrementally been going along with, under the banner of “progressivism,” the premises and policies that when fully introduced and implemented reflect a socialist-type system imposed on society.
The imposter-term has done its job. We are nearly all socialists now, while not knowing it. And some of those who are still shocking us with the actual use of this term, though prefaced with the word “democratic” to still ease our conscience, are merely telling us the reality of the world and country we live in, and the beliefs too many of us now accept and cannot imagine life without.
Richard M. Ebeling
Related Articles – History
What Arthur Burns Broke, Paul Volcker Fixed
Paul Volcker, who served as chairman of the Federal Reserve from 1979 to 1987, passed away this week at the age of 92. He is widely credited with ushering in a new era in Federal Reserve policy making, where much more attention is given to controlling inflation.
When President Carter appointed Volcker to the Fed, inflation was approaching double digits for the second time in less than a decade. Arthur Burns, who began his tenure as Fed chair in 1970 when inflation was around 4.90 percent, saw inflation rise to 11.51 percent in 1974 Q4, fall to 5.13 percent by 1976 Q4, and begin climbing again thereafter. Inflation rose from around 6.43 to 8.52 percent during G. William Miller’s brief tenure from 1978 to 1979.
Before Volcker, Fed chairs occasionally denied their ability to control inflation. Arthur Burns referred to cost-push inflation (in contrast to the demand-pull inflation caused by faster money growth). “The rules of economics are not working in quite the same way as they used to,” he told Congress in 1971.
There were dissenting views, to be sure. But, for most of the 1970s, they were coming from outside the Fed. Milton Friedman, for example, called Burns out at the December 1971 American Economic Association annual meeting. It was not cost-push inflation, Friedman claimed, but “erratic and destabilizing monetary policy [that] has largely resulted from the acceptance of erroneous economic theories.”
Volker changed that. He acknowledged that the Fed could bring down inflation and then set a course to do just that. Moreover, he did so with great resolve.
Engineering a disinflation is a costly proposition. The central bank must cut the growth rate of money to bring down inflation. However, cutting the growth rate of money also tends to fool producers into thinking there has been a decrease in the relative demand for their products. As a result, they produce fewer goods and services — which often means laying off workers — until they realize the error and adjust their prices down accordingly.
The underproduction problem can be mitigated, to some extent, by credibly announcing the policy in advance. If producers reduce their inflation expectations in line with the policy, they will not be fooled into underproducing.
But that is easier said than done. It is difficult to credibly announce a policy in normal times. Most folks just don’t pay that much attention to — or understand — monetary policy. It is harder still when the central bank has failed to live up to expectations in the past, since even those who do pay attention and understand how monetary policy works are unlikely to believe the Fed will do what it says it will. Hence, even when such measures are called for, cutting the growth rate of money virtually guarantees a recession.
Volcker’s disinflation was no exception. Real GDP growth fell from 6.51 percent in 1979 Q1 to −1.62 percent in 1980 Q3 and remained low through 1983 Q1. Unemployment shot up, from 5.7 percent in 1979 Q2 to 7.7 percent in 1980 Q3; by 1982 Q4, it had reached 10.7 percent. Home builders around the country pleaded for cheap credit by sending two-by-fours to the Marriner Eccles building in D.C.
But Volcker didn’t relent. Inflation came down and stayed down. Indeed, the public came to believe the Fed chair was willing to do whatever it takes to keep inflation low and steady. For every ounce of institutional credibility Burns had lost, Volcker gained a pound.
William J. Luther
Related Articles – History
How To Stop the Proliferation of Municipal Bond Issues
It seems rather strange that in a putative democracy a handful of people can legally, if figuratively, reach into the pockets of their neighbors but it happens all the time all across America via municipal bond ballot measures.
The main problem is that the measures “pass” if the majority of those who actually vote are in favor, even if hardly anyone votes. That leads to abuses. We should change the rules and mandate that bond/tax measures must obtain the affirmative approval of over 50 percent of eligible voters, not just those with sufficient incentive, education, and information to vote.
In most areas of our lives, no means no in the sense that no decision defaults to no action. You do not have to actively dislike the advertisement of a stationary bike company to avoid buying one of its products, you can vote “no” by not taking steps to purchase one. Heck, you may even approve of its ad but that does not give the manufacturer the right to drop ship one of its high-tech torture machines to your house and dock your checking account in exchange.
The same goes for physical intimacy. A stranger does not get to lawfully have sex with you because you did not actively swipe left on his or her Tinder profile. And Tinder does not get to establish a Tinder profile for you because you did not explicitly tell it not to. Wells Fargo found that out the hard way (though arguably not hard enough).
The need to obtain explicit consent before taking somebody else’s money (or bodily fluids) is one of the key remaining features of liberty. Without it, life begins to look a lot like slavery or authoritarianism.
But the rules change when the compulsory monopoly we call government makes the rules. The original impetus behind municipal bond measures was the notion that voters need to explicitly accept the tax increases needed to service the bonds. No taxation without representation and all that. When most people voted, and where taxpayers and voters were roughly the same people, bond ballot measures approximated consent. (Why fifty percent is often considered the best threshold is another matter, but I will stipulate it here.)
Statewide bond measures pass about four out of five times. Local ones appear to pass at the same rate, even at the 55 percent threshold established in California. And issuers who fail to gain approval can try again year after year, unlike in corporate proxy resolutions where shareholders are banned from reintroducing resolutions that fail to garner sufficient votes. (The SEC, incidentally, wants to raise those thresholds.)
It is a minor miracle when voters in a town like Monument, Colorado repeatedly put the kibosh on bond measures because the issuer, often a school district, is a concentrated interest with the budget authority to hire consultants who appear to make scientific, objective cases for the “necessity” of the bond. Some of those consultants even conduct market research studies designed to help the issuer use words and arguments most likely to sway voters to click “yes” come election day. Opponents are typically individuals with jobs, families, and lives.
Unlike in the commercial sector, municipal bond issuers do not need to persuade people to their cause, they just need to create enough uncertainty, confusion, or complexity to induce most voters to abstain. While often rational in other contexts, inaction on bond measures often means tax increases because the denominator for passage, regardless of the threshold, is always the number of people who actually voted on the measure rather than the number of registered voters.
Issuers know that and use it to their advantage. A suburb of Sioux Falls, South Dakota recently passed a bond measure 1,085 to 129. That seems like a mandate except 14,700 people were eligible to vote on the measure, which went up for vote on 10 September, a time when most East River South Dakotans are busy settling their kids in school, hanging tree stands, and “gettin’ the beans in” (soybeans of course). In other words, only about 1 in 15 people explicitly approved of the bond measure but the outcome is somehow counted “democratic.” (I don’t live in that town, incidentally, and the measure did not raise taxes but merely did not lower them as a previous bond recently matured.)
Other issuers put their measures up in November but only in odd-numbered years, when voter turnout is even lower than during even-numbered years. Often, public discussion of bond measures is muted because debate might draw out voters, which issuers want to avoid because when turnouts are low measures can be won simply by mobilizing teachers and naive statists.
In response to those obvious problems, some have called for minor reforms, like mandating that all municipal bond measures come up for vote on regular election days in even-numbered years. While that would be an improvement, it misses the main point, that no (action) should always mean no (money or booty). In other words, passage of anything authorizing use of the coercive power of the state to take citizens’ money should require the assent of fifty percent plus of eligible voters, not those who turned out at the polls.
When I proposed this recently at a meeting of the South Dakota chapter of Americans For Prosperity, someone immediately objected “but then no bond measure would ever pass!” “Exactly,” was my response. But of course truly important bond measures would pass, after mature consideration and extensive public debate clarified the issues at stake.
Consider again Monument, which sits on the Front Range betwixt Denver and Colorado Springs. Traditionally, taxes and public spending there were low so it attracted childless singles and older couples. Recently, younger couples with children began moving in because it was relatively cheap and improvements on I-25 promise to reduce commute times to both metropoles. Once ensconced, though, those couples began demanding more and better schools, even though that would mean higher taxes and, ceteris paribus, lower real estate values via what economists call tax capitalization.
I do not live in Monument either and would not presume to tell its residents what type of community they should try to create. But I do believe that a nation that purports to be a democracy should encourage citizens to debate the merits of proposals openly and to have to gain explicit approval for taxes, not a bare majority of a few percent of eligible voters in an inconvenient, secretive ballot. Robust debates could raise awareness of charter schools or maybe signal to parents with young children that they should live elsewhere. Or maybe they would lead to even more financial support for public schools. At the very least, full public discussion might expose the exorbitant fees that many municipalities now pay to consultants and issuers. The point is that to win approval, issuers would have to make a case and not just slide in under the radar.
Yes, voters could turn out to defeat bond measures, as they sometimes do, but the burden of proof should fall on the issuer, especially when public school districts seek funding because they have, with few exceptions, failed to create the type of citizens who vote. NGOs like iCivics are trying to improve civics education but the real problem, especially when it comes to bond and tax issues, is the failure of public schools to teach the basic principles of economics and public finance.
Without that background, most people do not feel comfortable voting on complex bond issues. So, as behavioral finance theory predicts, many abstain and the issuers win.
Robert E. Wright
