The 99 and the 1

Mises Daily:
Friday, May 11, 2012
by Daniel James Sanchez

"We are the 99%!" This slogan of the Occupy Wall Street protesters
has been called the most memorable quote of the past year. Those who
rally to its cry do so in opposition to the villainous 1%.

For a handful of the protesters, being a member of the 1% means being
a wealthy recipient of a government bailout, or some other form of
corporate welfare. But for the economic egalitarians in their ranks, it
simply means being too rich. They say the wealthiest 1% of the country
are getting more than their fair share of the wealth in society, at the
expense of the 99%.

Whatever one thinks of the current plight of the 99%, throughout
almost all of history, things were much worse for the vast majority of
the population. In precapitalist ages, the average member of the
economic 99%, if lucky enough to survive infancy, was consigned to a
life of back-breaking work and poverty, constantly on the verge of
famine, disease, and death.

The only individuals who did not have such a wretched life were the
"1%" of old. This economic 1% was virtually identical with the state. It
was made up of the French kings, the English lords, the Roman senators,
the Egyptian viziers, and the Sumerian temple priests. The members of
this elite lived in Olympian splendor: servants at their beck and call,
as much food as they could possibly want, spacious homes, an abundance
of jewelry, and a tremendous amount of leisure time.

And of course, this lifestyle was borne on the backs of the masses.
It was the 99% who produced the bread that stuffed the mouths of the 1%,
who felled the trees to erect their mansions, and who mined the
precious metals and stones to adorn their bodies.

Everything the Occupy Wall Street protesters say today about the 99%
and the 1% was completely accurate then. Wealth in society was a pie of a
certain fixed size. The bigger the slice of pie that the 1% took for
themselves, the less was left over for the 99%. Every bit of luxury the
1% enjoyed was taken from resources that could have made some member of
the 99% less miserable.

Why did the 99% of old put up with the 1% lording it over them? Why
did they not rise up, and overthrow their masters? Were they simply
cowed by the mailed fists and the flashing sabers?

No; as David Hume pointed out, since "those who are ruled" always
vastly outnumber "those who rule," a regime's power can never be about
brute strength alone. The ruled many must believe that the power of the
ruling few is somehow good for them.

Perhaps the temple priests have convinced the people that the gods
would be angry if the rulers were disobeyed: that the rains won't come,
and the crops won't grow. Or maybe the populace believes that the rulers
are responsible for the peace and order in society.

Not only do the 99% put up with the ruling 1%; they put them up on their lofty pedestals. The 99% give the 1% their power.

As Ludwig von Mises made clear, real power, what he called
"ideological might," always lies in the support of public opinion. If
public opinion were ever to turn on any regime, its days would be
numbered.

Mises went even further to argue that public opinion not only
determines who is in charge but the general character of the legal
order, or as he put it, "whether there is freedom or bondage."

Ultimately the only kind of tyranny that can last is a tyrannical public opinion.

The struggle for freedom is ultimately not resistance to autocrats or
oligarchs but resistance to the despotism of public opinion.[1]

If the 99% are oppressed, they are also ultimately their own oppressors, by dint of oppressive public opinion.

So that explains the political situation of the old order (and all
orders, for that matter). What about the economic situation? Why did the
"economic pie" so rarely get bigger?

One would think that over time, people would get more efficient at
producing things, and so living standards would improve. Yet, for
millennia, things hardly got better at all.

The roots of this economic state of affairs are to be found in the political order described above.

Again, throughout most of the history of civilization, the ruling 1%
took for itself a huge portion of what the 99% produced. And if any
private person ever accumulated enough wealth for it to be noticeable,
some potentate would snatch that too. This is why buried treasure was
all the rage wherever princes were particularly grasping.

With such rampant government confiscation, there was never enough
incentive for large-scale capital accumulation. Without large-scale
capital accumulation, there can be no mass production. And without mass
production, there can be no great improvements in the lives of the
masses.

And that is basically why the 99% had such shabby lives for almost all of history.

Then in the 18th and 19th centuries, something revolutionary
happened. A group of philosophers started thinking very carefully about
property, trade, prices, and production. These philosophers were called
"economists."

From considering the economic laws they discovered, the economists
concluded that society is much more productive if private property is
more consistently respected. "Laissez faire et laissez passer,"
the economists said. Let people control as much of their property as
completely as possible, and everybody will be more prosperous.

These economic philosophers, people like Richard Cantillon, Adam Smith, and J.B. Say, were theorists. They wrote brilliant, if sometimes turgid, books that changed the minds of communicators: individuals whom F.A. Hayek called "secondhand dealers of ideas."

These included professional communicators: writers, like
Richard Cobden, and speakers, like John Bright. These writers and
speakers wrote pamphlets and gave speeches that changed the minds of
many thoughtful, if less eloquent, individuals, who might be called amateur communicators.
And this thoughtful stratum, in turn, led their nonthoughtful fellows
(who, in modern parlance might be called "sheeple") to change their
positions on public affairs.

Through this process, public opinion shifted toward the belief that
government should be as limited as possible, and property rights as
sacrosanct as possible: toward a doctrine called "liberalism."

Again, the way society is organized ultimately depends on public
opinion. So, since public opinion changed, policy changed too. Private
capital became more secure. Trade restrictions were lifted. Business
barriers were abolished. Private property reigned supreme as never
before.

And the results were miraculous. As never before in history, the
productive energies of humanity were unleashed. Items that were once
reserved for the elite 1% were soon mass produced for the 99%. Amenities
that did not even exist before were developed, first for small markets,
but ultimately for the mass market.

The production of bare necessities soared. The population in the
parts of the world touched by liberalism exploded. Marginal people who
otherwise would have died found subsistence. People who otherwise would
have lived on the edge of disaster found security. And those who
otherwise would have been mired all their days in prosaic drudgery were
able to lead lives of comfort and refinement.

In the new order there was still a 99% and a 1%. But the 99% of this
period lived better than the 1% of times past. And the chief way to
ascend to the 1% was to become a successful capitalist-entrepreneur: to
strive to serve the 99% (the masses of consumers) better than one's competitors.

In the old order, most would-be one-percenters, in order to get ahead
in life, would have had to apply their smarts and ambition to become
conquerors, rulers, and government administrators, and in those roles to
exploit the masses. In the new order, under what Mises called
the "consumer sovereignty" of the market, their capabilities were turned
toward providing for the masses of sovereign consumers.

The masters became servants: wealthy servants, but servants nonetheless.

The liberal ideological revolution had engendered an Industrial
Revolution. And what Mises called the "Age of Liberalism" lasted from
1815 to 1914: a golden century in which mankind first got an inkling of
what it was really capable of.

Tragically, the Age of Liberalism was ended by an ideological
counterrevolution: a wave of statist thinking that is responsible for
all the woes of the 20th century, as well as our present economic and
geopolitical crises.

Now, the 99%, under the thrall of unsound ideas, are once again
oppressing themselves. Thanks to the calamitous state of public opinion,
the ranks of the 1% are once again increasingly being filled, not by
capitalist-entrepreneurs serving the 99%, but by the state and its
cronies exploiting and impoverishing the 99%. And the redistributionist
remedies that the self-styled 99% clamor for would only accelerate this
trend.

If our civilization is to be rescued — if the tide of public opinion
is ever to turn again — it will be thanks to the sound ideas formulated
by theorists like Mises and the scholars who work in his tradition. But
that can only happen if those ideas are effectively disseminated by a
new generation of communicators.

For more:

http://mises.org/daily/6035/The-99-and-the-1

--Your thoughts?