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Has BC Got It Yet?

I think this should tell a big story here. This goes in detail of how BC Finance Minister Carole
Taylor negotiated a deal with the BC Nurses Union. The union was demanding, and it played
hardball, but Taylor got a negotiation with them in place. The same occurred with the BCGEU.
The only union not to sign any collective bargaining agreement: the BCTF.

Tory Time has taken a critical stance against the BCTF for the longest time. My personal belief is
that the BCTF is a harshly partisan organization that cares more about their agenda than the
children. They constantly put politics before people, and live not to work for this "fair deal" they
speak of, but to antagonize the BC government. In case you didn't see the ads, they are a lapdog
for the BC NDP. Furthermore, they are a militant union that do more harm than good in our
educational system, apoint I will back up later.

First, however, the Campbell government, since its rise to power in 2001, has been painted as
some harsh, right-wing, anti-union machine, when, in fact, nothing could be further from the truth.
The spending cuts made to the unions were made because of the poor job the NDP did in
managing the economy (I'm being nice here too; by poor job of managing, I truly mean they ran
the economy into the ground). It is regrettable, but when you are in harsh economic times, bad
things happen. The BC Liberals spent the first term in power as janitors, cleaning up the mess the
NDP left them. Now, however, the economy is prosperous enough that things can be
business as usual. Their union negotiations with the BCNU and BCGEU is evidence enough that
they are not anti-union, that they can deal with a union so long as the union is willing to sit down
and negotiate.

The behaviour exhibited by the BCTF contained the maturity of a child in Kindergarten, to put it
bluntly. Their call for a "fair deal" for the students was laughable, considering that they were
denying their students an education to get them this "fair deal". More to the point, during the
CUPE strikes, they had to take it a step further, by blockading UVic with picket lines. Not
enough to stop their students from getting an education, they had to stop us from doing so too,
when we weren't even involved in the negotations.

They had to cut bus lines, cut off cafeteria workers, the whole works, to people who had no
involvement in the negotiations. Real fucking professional.

The sad part in all of this is: the majority of BC residents supported the BCTF. Most of this
province bought the sob story the BCTF was selling about class sizes and that BS. Sure, some
teachers may actually care, but at the highest level, it was more political antagonism and
partisanship than actually giving a flying fuck what the students get. Never have I been more
disappointed in my newly-declared home province than I was then.

Not only is the BCTF partisan in practice, it is militant. I am sure you have all heard the stories.
They force all teachers to join the union, teachers who don't support strikes getting intimidated,
teachers who actually care about their job and the children teaching kids in their houses and their
basements. When it gets to the point where teachers have to resort to giving kids an education
within the confines of their house or else risk bullying and intimidation from their colleagues, it is
there that the line has been crossed.
The BCTF also makes it pretty much impossible to get any teacher fired. Today, over MSN, a
friend in Grade 12 here in Victoria was telling me about her physics teacher, and how he is
specifically mean to girls and Asians. She even quoted a racial slur he made to one Asian student.
Some members of the student body there have tried to get him fired, but to no luck. The school's
hands are tied. After all, what would happen? The BCTF would take the school to court. So, an
incompetent teacher can't even get fired. These people are supposed to set our children on the
right path to our future, and if they're as ad as this guy, what chance do our children have? Forget
a fair deal for teachers, lets get one for students. Give us teachers who can actually teach. And,
how about the BCTF doesn't sue ever time someone gets fired?

I would like to ask the question: has BC got it yet? Do they understand that we don't have a
provincial government that is full of neo-Nazis? Do they get that the BCTF is an organization of
partisan hacks who are full of shit and care nothing about children? I sure hope so.
posted by BCT 2.0 @ 12:52 AM


At April 05, 2006 6:58 AM, Miles Lunn said

I think the BC Liberals were quite clever here. By settling offering a reasonable deal with every
union, any union that turns it down will look like idiots. The BCTF may try to go on strike again,
but the optics won't be nearly as good as last fall. And lets remember they may be NDP partisans,
but even when the NDP was in power, they criticized them for not being left wing enough. I have
a great deal of respect for the hardworking teachers who do a good job, but the BCTF is nothing
more than a radical militant union.

The BC Liberals are a right leaning party, but they are also competent managers of the economy
who took BC from last to first. In fact what they accomplished in their first term is nothing short
of miraculous.

At April 05, 2006 12:04 PM, BC Tory said

I absolutely concur. The BC Liberals played the traditional custodian role in their first term,
cleaning up the economic mess left by the NDP. Other parties have been in such a role (e.g.
Ontario PCs in 1995), but I doubt there has been any party that has done such a good job as the
BC Liberals.

I had the privilege of attending private school back in Toronto, and all my teachers were smart
and inspirational- in short, they wanted to be there and genuinely cared about kids. The militant
style of the BCTF makes it impossible to weed out the bad apples of teachers in the province.
That's why I think theiir influence must be reduced, as the first step to this "fair deal" is to make
sure all teachers in the schools are fit to teach. As I put it, let's give students the fair deal they
deserve first, then worry about the teachers after ensuring they are all worthy.
At January 11, 2008 11:25 AM, Kelly_41m said

B.C. Legislature May 27, 1991


HON. MRS. GRAN: It gives me a great deal of pleasure to stand and speak in favour of this

Before I get into the specifics of the budget, I'd like to spend some time reflecting on why I
personally became a member of the Social Credit Party and not the NDP. The best example that I
can use is a piece of material that the NDP don't like to talk about: it was called the Waffle
Manifesto. It's required reading for anyone who cares about their country, their province or their
future. The interesting thing about that manifesto was that it told us very clearly that what the
NDP intended to do was to infiltrate the unions, education and women's groups, and they would
then control any given government. In this case it was British Columbia. One of the authors or
editors of that Waffle Manifesto was an individual called Ken Novakowski. He is now the
president of the B.C. Teachers' Federation. I don't know if that means that they control education,
but I think it tells us that they've been successful in some measure.

Joseph Stalin ( Speech 1952 )

We will never have to fight a Democratic society.

We will not have to fire a single shot nor shed a drop of blood.
All we have to do is infiltrate and control their labor unions,
their educational systems and make them
spend themselves into destruction!

At January 25, 2008 7:57 AM, Kelly_41m said


A humorous but otherwise accurate analysis of the NDP's Waffle Manifesto can be found at the
above link
At January 25, 2008 8:16 AM, Kelly_41m said

Hansard -- Monday, February 25, 1974 -- Afternoon Sitting

That Waffle Manifesto, I recall, Mr. Speaker, was signed by the Premier (Hon. Mr. Barrett) ;
it was signed by the Attorney-General (Hon. Mr. Macdonald) ;
it was signed by the Minister of Education (Hon. Mrs. Dailly) ;
it was signed by the Minister of Municipal Affairs (Hon. Mr. Lorimer) ;
and it was signed by yourself (Mr. Speaker). It's been followed in principle to the letter in B.C.

Those who signed the waffle manifesto

Dave Barrett
Alex Macdonald
Eileen Dailly
James G Lorimer
Speaker Gordon Dowding

At January 27, 2008 12:07 PM, Kelly_41m said

Hansard -- Monday, March 4, 1974 -- Night Sitting

1974 Legislative Session: 4th Session, 30th Parliament HANSARD

HON. MR. BARRETT: That's what a Conservative Attorney-General said. Now, I want you all
to sleep well tonight. Remember, it was a Conservative who said it, not a socialist, so don't have
any nightmares. He went on to say that the Queen can do no wrong. Forgive him - he's a Tory,
one of those radical, dangerous fellows who somehow think that the people have a right to their
own government to determine what the laws should be. Forgive him, for he does not know what
.... What is it, Harv?

At January 31, 2008 5:16 PM, Kelly_41m said

BC Legislature Firday, April 5th, 1974

Speaking - Hon. Mr. Gardom:

The mining industry and prospecting are absolutely petrified. Rental housing has ground to a halt.
Forestry - the small loggers can't get trees. Farmers and consumers are continuing to be set upon
by antiquated marketing boards, all espousing the kind of control and regulation that is practiced
and preached by this government and by this Minister.

The business community, believe it or not, Mr. Minister, has heard of the most red, radical
doctrine on the library shelves of this country since Das Kapital: the Waffle Manifesto. It's very
innocuously labeled, but it's vicious in direction. I'm going to ask this Minister whether he accepts
or whether he rejects this premise:

"Capitalism must be replaced by socialism, by national planning of investment and by the public
ownership of the means of production in the interest of the Canadian people as a whole." Do you
accept that or do you reject that premise? And, secondly, it says this:

"They include extensive public control over investment and nationalization of the commanding
heights of the economy, such as the key resource industries, finance and credit, and industries
strategic to planning our economy."

Does the Minister accept or reject that?

That covers all of the primary products industry in the Province of B.C. as well as finance and
credit. And he wonders why the business community in the Province of British Columbia is
scared. What these people are espousing, Mr. Chairman, is everything under one roof, under one
red roof. I'm going to ask the Minister: is that going to be the master plan of this government for
the Province of B.C.? I think he should keep right out of business because you're going to wreck
the economy and, I'd say, wreck the province. You're not going to end up being a government but
a wrecking gang. Government, Mr. Chairman, should not be in the facility doing the job; it
should be sort of the cattle prod to the stern and the carrot to the front. Provide the incentives and
provide the guidelines and provide some effective degree of intelligent regulation, but don't do the
job yourself and don't place everybody in-house.
At February 05, 2008 11:35 AM, Kelly_41m said

For those interested in 20th century political history, political science or simply general academic
reference, the following material, considered mandatory reading by many reviewers ( some by
doctoral students, Amazon.com,) is worth having at least a look at.

Socialism: An Economic and Sociological Analysis

Ludwig von Mises (Uncontested dean of the Austrian School of
http://www.amazon.com/SO CIALISM -LUD W IG -VO N -M ISES/dp/0913966630/ref=pd_bbs_sr_3?ie=UT F8&s=books&qid=1206548507&sr=8-3

Lethal Politics
Dr. R.J Rummel, PHD Political Science

Death By Government and its companion book,

The Statistics of Democide.
Dr. R.J Rummel, PHD Political Science

Execution by Hunger, The Hidden Holocaust

M. Dolot, Professor of Languages, Ukranian forced famine survivor.

The Black Book Of Communism,

A collaboration of various institutes throughout Europe.

General Interest: Something I'm currently having a look at.

The Rise and Fall of the Swedish Model

Mauricio Rojas PHD Economic History

On line material.
The Rise and fall of the Swedish Model, An interview with Swedish
Economist Rudolf Meidner
The Rise and fall of the Swedish Model, Stefan de Vylder PHD
Economics Stockholm
At March 13, 2008 11:34 AM, Kelly_41m said

HANSARD 1976 British Columbia Legislative Session: 1st Session, 31st Parliament
TUESDAY, MAY 11, 1976, Afternoon Sitting, Page 1559

HON: MR. G.S. WALLACE (Oak Bay):

A second basic question is the membership of teachers in the B.C. Teachers Federation as a
compulsory aspect of being employable in the public school system in British Columbia. On
principle I am opposed to that kind of compulsion in a profession. Again, that is nothing to do
with this government or the last government or any other government. I just believe that the
intertwining in the teaching profession of what are strictly political issues with professional issues
is wrong. We have one organization - the BCTF. I think every profession should have the right to
set up an association which is dedicated to getting the best conditions of work and the best
salaries and the best pensions, et cetera, for its members. But when you have that same
association responsible for the strictly professional academic standards and retraining and
attempts at in-service training and all the other aspects of continuing professionalism, then I think
there is an inevitable conflict.

Although it doesn't seem to be acceptable to the majority of the teaching profession, I still want to
know why we cannot have two bodies in the teaching profession, one of which, as a professional
college, would grant certificates to qualified teachers and supervise the whole question of
continuing standards, upgrading of standards, and all the purely professional aspects, and have on
the other hand a separate organization, such as the B.C. Teachers Federation, which continues to
follow its own specific objectives which are much more political in nature.

Mr. Chairman, I talked to many teachers who are not that active within their organization. They
are certainly , very concerned about the militancy of the B.C. Teachers Federation and the degree
to which the B.C. Teachers Federation can, for example, pass a motion that $1 million of their
contributions be set aside in a separate fund for political action. Not only that, but every teacher
who wants to continue to teach in this province has to be a member of that organization and
contribute towards the $1 million fund whether they like it or not.

Historical Parallels.
In 1934 the National Socialist Teachers League was declared to be the official organ of German

"National Socialist Lehrerbund" or (NSTL): English: National Socialist Teacher's League, was a
professional organization for teachers established to coordinate the political and National
Socialist German Workers Party (Nazi) ideological training of teachers to ensure they conformed
with doctrine. [William Shirer "Rise and Fall of the Third Reich" p. 249.] It was virtually
impossible to teach without being a member of the NSTL. One of its main functions was reporting
on teacher loyalty to ensure proper placements and promotions within the National Socialist
German Workers Party educational system. G. [Kjos, p. 4.]. The NSTL operated through both
propaganda and intimidation. It prepared reports on the political reliability of teachers. These
reports were for appointments to new positions and promotions. The NSTL was also responsible
for the ideological indoctrination of its members. [Noakes and Pridham, p. 431.]
At March 18, 2008 2:41 PM, Kelly_41m said

Excerpt: The Rise and Fall of the Swedish Model
Dr. Stefan de Vylder PHD Stockholm School of Economics.
The tax and transfer system that developed was, to begin with, based on the citizens honesty.
However, as marginal taxes came to exceed sixty per cent for a majority of wage earners, tax
evasion became both very profitable and common. Attitudes towards tax evasion underwent a
concomitant transformation. While tax evasion in the 1960s was regarded as a shameful crime,
forcing respected citizens even to commit suicide if caught, the honorable tax payer became, in
the 1980s, almost regarded as a ridiculous relic of the past.

While the social insurance system thus became open to abuse from ordinary citizens, the financial
crashes of the early 1990s served to reveal massive economic mismanagement and criminality
within the Swedish economic elite. The successful financial speculator was depicted in almost
heroic terms during the boom of the late 1980s; however, later developments made public
confidence in the financial sector virtually disappear. To this may be added that a large number of
"scandals" involving leading businessmen, public officials and politicians have been exposed by
mass media in recent years.

British Columbia: 1991 to 2001 (BC NDP)

Fast Ferry Fiasco
Bing Gate
Hydro Gate
Legal Aid Fund fiasco
Fake Jobs Accord (Forestry)
FRBC (Forestry Renewal B.C.) 1.3 billion unaccounted for (defined in parliament as
disappearing into a black hole)
Implementation of taxation polices: Defining British Columbia as one of the highest taxed
jurisdictions in North America.
Blitzkrieg of Legislation Over 400,000 pieces passed or Amended 1991-2001. Vast
majority of British Columbian's unaware of. (Democracy!
what's that?)
Provincial Budget deficit scandals etc., etc.

Supreme Court of British Columbia.

Private Forest Company VS Crown (BC NDP 1999)
Judge rules in favor of Forest Company and, based on all available information, leveled
characterizations of arrogant, deceitful, duplicitous and unethical at the then BC NDP.
Personal Note
Interesting how, irrespective of country or language, (when it comes to socialism) history repeats
itself over and over and over again.

On a final note regarding Sweden: If interested, a graph on Page 84 in the document at the
following link is a good indication of how Sweden's economic melt down came into being on one
page. http://www.hacer.org/pdf/Sweden.pdf

The aforementioned graph also offers insight into President Putin's policies to direct the Russian
Economy where, in the near immediate future, private vs public employment is hoped to be 60/40,
60% being private, 40% public. Wait it out for a bit, see how things transpire with long term goal
of 75/25 (75 private) if all goes well. This is being accomplished (enticing people into business)
through a 13% flat tax policy. Following Link: Russia's Flat-tax Miracle
It appears that Mr. Putin along with his degree in economics, is knowledgeable in historical
aspects of economics also. In an ironic turn of events it has been said in the U.S. Senate, perhaps
we should be taking lessons from Russia.

At March 21, 2008 10:22 AM, Kelly_41m said

Final Posting
Ludwig von Mises Institute
Socialists throughout Europe and the United States worried about the problem of economic
calculation under socialism for about fifteen years, finally pronouncing the problem solved with
the promulgation of the market socialism model of the Polish economist Oskar Lange in 1936.
Lange returned to Poland after World War II to help plan Polish Communism. The collapse of
socialist planning, in Poland and the other Communist countries in 1989, left establishment
economists across the ideological spectrum, all of whom bought the Lange solution, mightily

Some prominent socialists, such as Robert Heilbroner, have had the grace to admit publicly that
Mises was right all along (the phrase Mises was Right was the title of a panel at the annual 1990
meeting of the Southern Economic Association at New Orleans).
China: Documentary Aired in 1992/3: Ten Year Tide [Shinian Chao])
Deng Xiao-Ping, considered the economic architect of modern China made these statements when
up against hard line opponents who value Socialist Purity over Prosperity. Learn from capitalism,
be daring, liberate your thoughts, ANY OTHER ROAD IS A DEAD END.

Deng Xiao-Ping: 1992 whilst on tour of southern China expressed further the revelation in a
speech: The "leftist" elements of Chinese society were much more dangerous than "rightist" ones.

Final Notes:
I hope I've forwarded enough information that those reading this gain insight into B.C. becoming
classified as technically bankrupt and a have not province after just 10 years of NDP Socialism. It
is also my hope understanding is gained that events in B.C. under NDP Socialism are not unique
and have been attempted by various societies throughout the 20th century applying generally the
same political (Infiltrating unions and such) and economic strategies resulting in generally the
same catastrophic results. What have we learned from all this? Pretty much what Mises set down
on paper back in 1922. Socialism has some very good idea's, but when you look at the whole
framework of society, human nature, and various other factors, and as proved out by the Union of
Soviet Socialist Republics, Sweden, Germany, China, etc. etc., in it's pure ideologic form,
generates chaos.

Myself personally, after reading Alan Bullocks, Hitler, A Study in Tyranny, concur with his
evaluation of history, in that after all his research, he defines himself as a mild socialist, and
the points he makes on this matter I tend to agree with. The other side of the coin however is
that of all the political structures, socialism is the one that history has shown to be the most
corruptible, even if mildly implemented. If you've taken the time to read this material, checked out
at least the reviews of the books listed on Amazon.com (better if you actually read the books) and
with the knowledge of what has transpired in other countries globally in their experimentation
with socialism over the last century, you'll be able to make a much more informed judgment of
who your candidate will be come voting time.

This is my final post.

I hope this has helped to enlighten those who've
taken the time to read this material.

At April 10, 2008 7:16 AM, Kelly_41m said

One More Addition as is relevant

Robert Heilbroner, the bestselling writer of economics, died early this month at the age of 85. He
and John Kenneth Galbraith may well have sold more economics books than all other economists
combined. Alas, their talents lay more in the writing than the economics. Heilbroner was an
outspoken socialist; if only a libertarian could write an introductory book on economics that could
- like Heilbroner’s The Worldly Philosophers - sell 4 million copies.


He writes: Socialism defined as a centrally planned economy in which the government controls all
means of production was the tragic failure of the twentieth century. Born of a commitment to
remedy the economic and moral defects of capitalism, it has far surpassed capitalism in both
economic malfunction and moral cruelty. Yet the idea and the ideal of socialism linger on.
Whether socialism in some form will eventually return as a major organizing force in human
affairs is unknown, but no one can accurately appraise its prospects who has not taken into
account the dramatic story of its rise and fall.


The Concise Encyclopedia of Economics

Socialism defined as a centrally planned economy in which the government controls all means of
production was the tragic failure of the twentieth century. Born of a commitment to remedy the
economic and moral defects of capitalism, it has far surpassed capitalism in both economic
malfunction and moral cruelty. Yet the idea and the ideal of socialism linger on. Whether
socialism in some form will eventually return as a major organizing force in human affairs is
unknown, but no one can accurately appraise its prospects who has not taken into account the
dramatic story of its rise and fall.

The Birth of Socialist Planning

It is often thought that the idea of socialism derives from the work of Karl Marx. In fact, Marx
wrote only a few pages about socialism, as either a moral or a practical blueprint for society. The
true architect of a socialist order was Lenin, who first faced the practical difficulties of organizing
an economic system without the driving incentives of profit seeking or the self-generating
constraints of competition. Lenin began from the long-standing delusion that economic
organization would become less complex once the profit drive and the market mechanism had
been dispensed with "as self-evident," he wrote, as "the extraordinarily simple operations of
watching, recording, and issuing receipts, within the reach of anybody who can read and write and
knows the first four rules of arithmetic."
In fact, economic life pursued under these first four rules rapidly became so disorganized that
within four years of the 1917 revolution, Soviet production had fallen to 14 percent of its pre-
revolutionary level. By 1921 Lenin was forced to institute the New Economic Policy (NEP), a
partial return to the market incentives of capitalism. This brief mixture of socialism and capitalism
came to an end in 1927 after Stalin instituted the process of forced collectivization that was to
mobilize Russian resources for its leap into industrial power.

The system that evolved under Stalin and his successors took the form of a pyramid of command.
At its apex was Gosplan, the highest state planning agency, which established such general
directives for the economy as the target rate of growth, the allocation of effort between military
and civilian outputs, between heavy and light industry, or among various regions. Gosplan
transmitted the general directives to successive ministries of industrial and regional planning,
whose technical advisers broke down the overall national plan into directives assigned to
particular factories, industrial power centers, collective farms, or whatever. These thousands of
individual subplans were finally scrutinized by the factory managers and engineers who would
eventually have to implement them. Thereafter, the blueprint for production reascended the
pyramid, together with the suggestions, emendations, and pleas of those who had seen it.
Ultimately, a completed plan would be reached by negotiation, voted on by the Supreme Soviet,
and passed into law.

Thus, the final plan resembled an immense order book, specifying the nuts and bolts, steel girders,
grain outputs, tractors, cotton, cardboard, and coal that, in their entirety, constituted the national
output. In theory such an order book should enable planners to reconstitute a working economy
each year provided, of course, that the nuts fitted the bolts, the girders were of the right
dimensions, the grain output was properly stored, the tractors operable, and the cotton,
cardboard, and coal of the kinds needed for their manifold uses. But there was a vast and
widening gap between theory and practice.

Problems Emerge

The gap did not appear immediately. In retrospect, we can see that the task facing Lenin and
Stalin in the early years was not so much economic as quasi-military mobilizing a peasantry into a
work force to build roads and rail lines, dams and electric grids, steel complexes and tractor
factories. This was a formidable assignment, but far less formidable than what would confront
socialism fifty years later, when the task was not so much to create enormous undertakings, but
relatively self-contained ones, and to fit all the outputs into a dovetailing whole.

Through the sixties the Soviet economy continued to report strong overall growth roughly twice
that of the United States but observers began to spot signs of impending trouble. One was the
difficulty of specifying outputs in terms that would maximize the well-being of everyone in the
economy, not merely the bonuses earned by individual factory managers for "overfulfilling" their
assigned objectives. The problem was that the plan specified outputs in physical terms. One
consequence was that managers maximized yardages or tonnages of output, not its quality. A
famous cartoon in the satirical magazine Krokodil showed a factory manager proudly displaying
his record output, a single gigantic nail suspended from a crane.
As the economic flow became increasingly clogged and clotted, production took the form of
"stormings" at the end of each quarter or year, when every resource was pressed into use to meet
preassigned targets. The same rigid system soon produced expediters, or tolkachi, to arrange
shipments to harassed managers who needed unplanned and therefore unobtainable inputs to
achieve their production goals. Worse, in the absence of the right to buy their own supplies or to
hire or fire their own workers, factories set up fabricating shops, then commissaries, and finally
their own worker housing to maintain control over their own small bailiwicks.

It is not surprising that this increasingly Byzantine system began to create serious dysfunctions
beneath the overall statistics of growth. During the sixties the Soviet Union became the first
industrial country in history to suffer a prolonged peacetime fall in average life expectancy, a
symptom of its disastrous miss allocation of resources. Military research facilities could get
whatever they needed, but hospitals were low on the priority list. By the seventies the figures
clearly indicated a slowing of overall production. By the eighties the Soviet Union officially
acknowledged a near end to growth that was, in reality, an unofficial decline. In 1987 the first
official law embodying perestroika restructuring was put into effect. President Mikhail
Gorbachev announced his intention to revamp the economy from top to bottom by introducing
the market, reestablishing private ownership, and opening the system to free economic
interchange with the West. Seventy years of socialist rise had come to an end.

Socialist Planning in Western Eyes

Understanding of the difficulties of central planning was slow to emerge. In the midthirties, while
the Russian industrialization drive was at full tilt, few voices were raised about its problems.
Among those few were Ludwig von Mises, an articulate and exceedingly argumentative
free-market economist, and Friedrich Hayek, of much more contemplative temperament, later to
be awarded a Nobel Prize for his work in monetary theory. Together, Mises and Hayek launched
an attack on the feasibility of socialism that seemed at the time unconvincing in its argument as to
the functional problems of a planned economy. Mises in particular contended that a socialist
system was "impossible" because there was no way for the planners to acquire the information
"produce this, not that" needed for a coherent economy. This information, Hayek emphasized,
emerged spontaneously in a market system from the rise and fall of prices. A planning system was
bound to fail precisely because it lacked such a signaling mechanism.

The Mises-Hayek argument met its most formidable counterargument in two brilliant articles by
Oskar Lange, a young economist who would become the first Polish ambassador to the United
States after World War II. Lange set out to show that the planners would, in fact, have precisely
the same information as that which guided a market economy. The information would be revealed
as inventories of goods rose and fell, signaling either that supply was greater than demand or
demand greater than supply. Thus, as planners watched inventory levels, they were also learning
which of their administered (i.e., state-dictated) prices were too high and which too low. It only
remained, therefore, to adjust prices so that supply and demand balanced, exactly as in the
Lange's answer was so simple and clear that many believed the Mises-Hayek argument had been
demolished. In fact, we now know that their argument was all too prescient. Ironically, though,
Mises and Hayek were right for a reason that they did not foresee as clearly as Lange himself.
"The real danger of socialism," Lange wrote, in italics, "is that of a bureaucratization of economic
life." But he took away the force of the remark by adding, without italics, "Unfortunately, we do
not see how the same or even greater danger can be averted under monopolistic capitalism."

The effects of the "bureaucratization of economic life" are dramatically related in The Turning
Point, a scathing attack on the realities of socialist economic planning by two Soviet economists,
Nikolai Smelev and Vladimir Popov, that gives examples of the planning process in actual
operation. In 1982, to stimulate the production of gloves from moleskins, the Soviet government
raised the price it was willing to pay for moleskins from twenty to fifty kopecks per pelt.

Smelev and Popov noted:

State purchases increased, and now all the distribution centers are filled with these pelts. Industry
is unable to use them all, and they often rot in warehouses before they can be processed. The
Ministry of Light Industry has already requested Goskomtsen [the State Committee on Prices]
twice to lower prices, but "the question has not been decided" yet. This is not surprising. Its
members are too busy to decide. They have no time: besides setting prices on these pelts, they
have to keep track of another 24 million prices. And how can they possibly know how much to
lower the price today, so they won't have to raise it tomorrow?

This story speaks volumes about the problem of a centrally planned system. The crucial missing
element is not so much "information," as Mises and Hayek argued, as it is the motivation to act on
information. After all, the inventories of moleskins did tell the planners that their production was
at first too low and then too high. What was missing was the willingness better yet, the necessity
to respond to the signals of changing inventories. A capitalist firm responds to changing prices
because failure to do so will cause it to lose money. A socialist ministry ignores changing
inventories because bureaucrats learn that doing something is more likely to get them in trouble
than doing nothing, unless doing nothing results in absolute disaster.

Absolute economic disaster has now been reached in the Soviet Union and its Eastern former
satellites, and we are watching efforts to construct some form of economic structure that will no
longer display the deadly symptoms of inertia and indifference that have come to be the hallmarks
of socialism. It is too early to predict whether these efforts will succeed. The main obstacle to real
perestroika is the impossibility of creating a working market system without a firm basis of private
ownership, and it is clear that the creation of such a basis encounters the opposition of the
former state bureaucracy and the hostility of ordinary people who have long been trained to be
suspicious of the pursuit of wealth. In the face of such uncertainties, all predictions are foolhardy
save one: no quick or easy transition from socialism to some form of nonsocialism is possible.
Transformations of such magnitude are historic convulsions, not mere changes in policy. Their
completion must be measured in decades or generations, not years.
At April 14, 2008 7:47 AM, Kelly_41m said


Excerpt: William L. Shirer


On April 30, 1934, Bernhard Rust, an Obergruppenfuehrer in the S.A., onetime Gauleiter of
Hanover, a Nazi Party member and friend of Hitler since the early Twenties, was named Reich
Minister of Science, Education of Popular Culture. In the bizarre, topsy-turvy world of National
Socialism, Rust was eminently fitted for his task. Since 1930 he had been an unemployed
provincial schoolmaster, having been dismissed in that year by the local republican authorities at
Hanover for certain manifestations of instability of mind, though his fanatical Nazism may have
been partly responsible for his ouster. For Dr. Rust preached the Nazi gospel with the zeal of a
Goebbels and the fuzziness of a Rosenberg. Named Prussian Minister of Science, Art and
Education in February 1933, he boasted that he had succeeded overnight in "liquidating the school
as an institution of intellectual acrobatics."

To such a mindless man was now entrusted dictatorial control over German science, the public
schools, the institutions of higher learning and the youth organizations. For education in the Third
Reich, as Hitler envisaged it, was not to be confined to stuffy classrooms but to be furthered by a
Spartan, political and martial training in the successive youth groups and to reach its climax not
so much in the universities and engineering colleges, which absorbed but a small minority, but
first, at the age of eighteen, in compulsory labor service and then in service, as conscripts, in
the armed forces.

Hitler's contempt for "professors" and the intellectual academic life had peppered the pages of
Mein Kampf, in which he had set down some of his ideas on education. "The whole education by
a national state," he had written, "must aim primarily not at the stuffing with mere knowledge but
at building bodies which are physically healthy to the core." But, even more important, he had
stressed in his book the importance of winning over and then training the youth in the service "of
a new national state" a subject he returned to often after he became the German dictator.

"When an opponent declares, 'I will not come over to your side,' "he said in a speech on
November 6, 1933, "I calmly say, 'Your child belongs to us already . . . What are you? You will
pass on. Your descendants, however, now stand in the new camp. In a short time they will know
nothing else but this new community.'" And on May 1, 1937, he declared, "This new Reich will
give its youth to no one, but will itself take youth and give to youth its own education and its own
upbringing." It was not an idle boast; that was precisely what was happening.

The German schools, from first grade through the universities, were quickly Nazified. Textbooks
were hastily rewritten, curricula were changed, Mein Kampf was made in the words of Der
Deutsche Erzieher, official organ of the educators "our infallible pedagogical guiding star" and
teachers who failed to see the new light were cast out. Most instructors had been more or less
Nazi in sentiment when not outright party members. To strengthen their ideology they were
dispatched to special schools for intensive training in National Socialist principles, emphasis being
put on Hitler's racial doctrines.
Every person in the teaching profession, from kindergarten through the universities, was
compelled to join the National Socialist Teachers' League which, by law, was held "responsible
for execution of the ideological and political co-ordination of all teachers in accordance with the
National Socialist doctrine." The Civil Service Act of 1937 required teachers to be "the executors
of the will of the party-supported State" and to be ready "at any time to defend without
reservation the National Socialist State." An earlier decree had classified them as civil servants
and thus subject to the racial laws. Jews, of course, were forbidden to teach. All teachers took an
oath to "be loyal and obedient to Adolf Hitler." Later, no man could teach who had not first
served in the S.A., the Labor Service or the Hitler Youth. Candidates for instructorships in the
universities had to attend for six weeks an observation camp where their views and character were
studied by Nazi experts and reported to the Ministry of Education, which issued licenses to teach
based on the candidates' political "reliability."

Prior to 1933, the German public schools had been under the jurisdiction of the local authorities
and the universities under that of the individual states. Now all were brought under the iron
rule of the Reich Minister of Education. It was he who also appointed the rectors and the deans of
the universities, who formerly had been elected by the full professors of the faculty. He also
appointed the leaders of the university students' union, to which all students had to belong, and of
the lecturers union, comprising all instructors. The N.S. Association of University Lecturers,
under the tight leadership of old Nazi hands, was given a decisive role in electing who was to
teach and to see that what they taught was in accordance with Nazi theories.

The result of so much Nazification was catastrophic for German education and for German
learning. History was so falsified in the new textbooks and by the teachers in their lectures that it
became ludicrous. The teaching of the "racial sciences," exalting the Germans as the master race
and the Jews as breeders of almost all the evil there was in the world, was even more so. In the
University of Berlin alone, where so many great scholars had taught in the past, the new rector, a
storm trooper and by profession a veterinarian, instituted twenty-five new courses in Rassenkunde
racial science and by the time he had really taken the university apart he had eighty-six courses
connected with his own profession.

The teaching of the natural sciences, in which Germany had been so pre-eminent for generations,
deteriorated rapidly. Great teachers such as Einstein and Franck in physics, Haber, Willstaetter
and Warburg in chemistry, were fired or retired. Those who remained, many of them, were bitten
by the Nazi aberrations and attempted to apply them to pure science. They began to teach what
they called German physics, German chemistry, German mathematics. Indeed, in 1937 there
appeared a journal called Deutsche Mathematik, and its first editorial solemnly proclaimed that
any idea that mathematics could be judged nonracially carried "within itself the germs of
destruction of German science."
At April 18, 2008 3:07 PM, Kelly_41m said

Another Posting as is somewhat Relevant

Economics Under the National Socialst German Workers Party.


One of the most commonly held misconceptions by modern socialists in relation to Hitler and his
National Socialist German Workers Party is that they defined themselves as such in name only to
gain electorial victory. Once established, set upon a path which has been argued did not reflect
true socialism in that they did not nationalize or centralize economic production. This may appear
to be true on the outset, however, and this reflects true brilliance on the part of Hitler and his
Nazis, they put in place so many legal controls, bureaucratic constraints and legislation that,
although maybe a private business/capitalist enterprise, it existed as such in name only. Everything
external to the enterprise, availability of materials and manpower, delivery of materials both raw
and finished, and access to markets were all state controlled, thus, so was the enterprise. From the
perspective of the state, control of economic production was gained without all the fuss and muss
of a forced take over or revolution. IE: Centralized Control of economic production through
political means via legislation, State boards, bureaus and commissions. (Sound familiar ?)

The following refutes the long held misconception that Hitler and his Nazi party were Not True
Socialists and shows, as the ole saying goes, there's more then one way to skin a cat.

Economic planning Under the National Socialist German Workers Party Excerpt from:

James Burnham, a former Trotskyite who served with the Office of Strategic Services (OSS)
during the World War II and later contributed to the National Review, described the Nazi
regime's economic planning. Burnham pointed out how the original "workers revolution" of
Marxism had in fact become a managerial revolution in all societies were Socialism had been
embraced. Writing in 1940, Burnham noted,

Outright state ownership and operation, advancing in all fields, are particularly ascendant in the
extensive areas of new enterprise opened up during the Nazi rule....virtually all economic
enterprise is subject to rigid state control; and it is control which we have seen to be decisive in
relation to the instruments of production. Legal forms, even income privileges, are in the end
subordinate to de facto control.

Even where private owners still exist in Germany, the decisions about "their" property are not in
their hands. They do not decide what to make or not to make. They do not establish prices or
bargain about wages. They are not at liberty to buy the raw materials they might choose nor to
seek the most profitable markets. They cannot, as a rule, decide how to invest or not invest
their surplus funds. In short, they are no longer owners, no longer effective capitalists...
The regulation of production in Germany is no longer left to the market. What is to be produced,
and how much, is decided, deliberately, by groups of men, by the state boards and bureaus and
commissions. It is they that decide whether a new plant shall be built or an old plant retired, how
raw materials shall be allotted and orders distributed, what quotas must be fulfilled by various
branches of industry, what goods shall be put aside for export, how prices shall be fixed and credit
and exchange extended. There is no requirement that these decisions of the bureaus must be based
on any profit aim in the capitalist sense. If it is thought expedient, for whatever reason, to
produce, for example, an ersatz rubber or wool or food, this will be done even if the production
entails, from a capitalist point of view, a heavy loss. Similarly, in order to accumulate foreign
exchange or to stimulate some political effect in a foreign nation, goods will be exported
regardless of loss. A factory may be compelled to shut down, even though it could operate at a
high profit. Banks and individuals are forced to invest their funds with no reference to the private
and voluntary opinions about "risks" from a profit standpoint. It is literally true to say that the
Nazi economy, already, is not a "profit economy."

The workers, on their side, are no longer the "free proletarians" of capitalism. Under Nazism the
workers are indeed, free from unemployment. At the same time they cannot, as individuals or
through their own independent organizations, bargain for wages or change jobs at will. They are
assigned to their tasks, and their labor conditions are fixed, by the decisions of the state bureaus
and commissions. Millions of them are allotted to the vast state enterprises. ...With the reduction
in the area of private enterprise and the increase of state enterprise, goes also a corresponding
reduction in the social position of the private capitalists. So far as control over the instruments of
production goes, the capitalists are already near the bottom. As to income privilege: a recent
estimate by a New York statistician gives as a mere 5% the share of the German national income
going to profits and interest. This is a substantial reduction from the 1933 figures, in spite of a
huge increase in the total national income, which, under capitalism, would normally be
accompanied by a percentage increase in profits. ...f the German capitalists' 5%, the greater part is
appropriated by the state as taxes and "contributions." ...
At November 23, 2008 11:51 AM, Kelly_41m said…



Came across this the other day. Thought I would post the following
excerpt going back beyond a thousand years. Its amazing how we
still haven't learned a damn thing.

Bruce Bartlett

Beginning with the third century B.C. Roman economic policy started to contrast more and more
sharply with that in the Hellenistic world, especially Egypt. In Greece and Egypt economic policy
had gradually become highly regimented, depriving individuals of the freedom to pursue personal
profit in production or trade, crushing them under a heavy burden of oppressive taxation, and
forcing workers into vast collectives where they were little better than bees in a great hive. The
later Hellenistic period was also one of almost constant warfare, which, together with rampant
piracy, closed the seas to trade. The result, predictably, was stagnation.

Stagnation bred weakness in the states of the Mediterranean, which partially explains the ease
with which Rome was able to steadily expand its reach beginning in the 3rd century B.C. By the
first century B.C., Rome was the undisputed master of the Mediterranean. However, peace did
not follow Rome's victory, for civil wars sapped its strength.

Free-Market Policies under Augustus

Following the murder of Caesar in 44 B.C., his adopted son Octavian finally brought an end to
internal strife with his defeat of Mark Antony in the battle of Actium in 31 B.C. Octavian's victory
was due in no small part to his championing of Roman economic freedom against the Oriental
despotism of Egypt represented by Antony, who had fled to Egypt and married Cleopatra in 36
B.C. As Oertel (1934: 386) put it, "The victory of Augustus and of the West meant . . a repulse of
the tendencies towards State capitalism and State socialism which might have come to fruition . . .
had Antony and Cleopatra been victorious."

The long years of war, however, had taken a heavy toll on the Roman economy. Steep taxes and
requisitions of supplies by the army, as well as rampant inflation and the closing of trade routes,
severely depressed economic growth. Above all, businessmen and traders craved peace and
stability in order to rebuild their wealth. Increasingly, they came to believe that peace and stability
could only be maintained if political power were centralized in one man. This man was Octavian,
who took the name Augustus and became the first emperor of Rome in 27 B.C., serving until
14 A.D.
Volume 14 Number 2, Fall 1994

Free-Market Policies under Augustus Cont’d

Although the establishment of the Roman principate represented a diminution of political freedom,
it led to an expansion of economic freedom. [1] Augustus clearly favored private enterprise,
private property, and free trade (Oertel 1934: 386; Walbank 1969: 23). The burden of taxation
was significantly lifted by the abolition of tax farming and the regularization of taxation
(Rostovtzeff 1957: 48). Peace brought a revival of trade and commerce, further encouraged by
Roman investments in good roads and harbors. Except for modest customs duties (estimated at 5
percent), free trade ruled throughout the Empire. It was, in Michael Rostovtzeff's words, a period
of "almost complete freedom for trade and of splendid opportunities for private initiative"
(Rostovtzeff 1957: 54).

Tiberius, Rome's second emperor (14-37 A.D.), extended the policies of Augustus well into the
first century A.D. It was his strong desire to encourage growth and establish a solid middle class
(bourgeoisie), which he saw as the backbone of the Empire. Oertel (1939: 232) describes the

The first century of our era witnessed a definitely high level of economic prosperity, made
possible by exceptionally favorable conditions. Within the framework of the Empire, embracing
vast territories in which peace was established and communications were secure, it was possible
for a bourgeoisie to come into being whose chief interests were economic, which maintained a
form of economy resting on the old city culture and characterized by individualism and private
enterprise, and which reaped all the benefits inherent in such a system. The State deliberately
encouraged this activity of the bourgeoisie, both directly through government protection and its
liberal economic policy, which guaranteed freedom of action and an organic growth on the lines
of "laissez faire, laissez aller," and directly through measures encouraging economic activity.

Of course, economic freedom was not universal. Egypt, which was the personal property of the
Roman emperor, largely retained its socialist economic system (Rostovtzeff 1929, Milne 1927).
However, even here some liberalization did occur. Banking was deregulated, leading to the
creation of many private banks (Westermann 1930: 52). Some land was privatized and the state
monopolies were weakened, thus giving encouragement to private enterprise even though the
economy remained largely nationalized. [2]
Volume 14 Number 2, Fall 1994

Food Subsidies
The reason why Egypt retained its special economic system and was not allowed to share in the
general economic freedom of the Roman Empire is that it was the main source of Rome's grain
supply. Maintenance of this supply was critical to Rome's survival, especially due to the policy of
distributing free grain (later bread) to all Rome's citizens which began in 58 B.C. By the time of
Augustus, this dole was providing free food for some 200,000 Romans. The emperor paid the
cost of this dole out of his own pocket, as well as the cost of games for entertainment, principally
from his personal holdings in Egypt. The preservation of uninterrupted grain flows from Egypt to
Rome was, therefore, a major task for all Roman emperors and an important base of their
power (Rostovtzeff 1957: 145).

The free grain policy evolved gradually over a long period of time and went through periodic
adjustment. [3] The genesis of this practice dates from Gaius Gracchus, who in 123 B.C.
established the policy that all citizens of Rome were entitled to buy a monthly ration of corn at a
fixed price. The purpose was not so much to provide a subsidy as to smooth out the seasonal
fluctuations in the price of corn by allowing people to pay the same price throughout the year.

Under the dictatorship of Sulla, the grain distributions were ended in approximately 90 B.C. By
73 B.C., however, the state was once again providing corn to the citizens of Rome at the same
price. In 58 B.C., Clodius abolished the charge and began distributing the grain for free. The
result was a sharp increase in the influx of rural poor into Rome, as well as the freeing of many
slaves so that they too would qualify for the dole. By the time of Julius Caesar, some 320,000
people were receiving free grain, a number Caesar cut down to about 150,000, probably by being
more careful about checking proof of citizenship rather than by restricting traditional eligibility.

Under Augustus, the number of people eligible for free grain increased again to 320,000. In 5
B.C., however, Augustus began restricting the distribution. Eventually the number of people
receiving grain stabilized at about 200,000. Apparently, this was an absolute limit and corn
distribution was henceforth limited to those with a ticket entitling them to grain. Although
subsequent emperors would occasionally extend eligibility for grain to particular groups, such as
Nero's inclusion of the Praetorian guard in 65 A.D., the overall number of people receiving grain
remained basically fixed.

The distribution of free grain in Rome remained in effect until the end of the Empire, although
baked bread replaced corn in the 3rd century. Under Septimius Severus (193-211 A.D.) free oil
was also distributed. Subsequent emperors added, on occasion, free pork and wine. Eventually,
other cities of the Empire also began providing similar benefits, including Constantinople,
Alexandria, and Antioch (Jones 1986: 696-97).
Volume 14 Number 2, Fall 1994

Food Subsidies Cont’d

Nevertheless, despite the free grain policy, the vast bulk of Rome's grain supply was distributed
through the free market. There are two main reasons for this. First, the allotment of free grain was
insufficient to live on. Second, grain was available only to adult male Roman citizens, thus
excluding the large number of women, children, slaves, foreigners, and other non-citizens living in
Rome. Government officials were also excluded from the dole for the most part. Consequently,
there remained a large private market for grain which was supplied by independent traders
(Casson 1980).

Taxation in the Republic and Early Empire

The expansion of the dole is an important reason for the rise of Roman taxes. In the earliest days
of the Republic Rome's taxes were quite modest, consisting mainly of a wealth tax on all forms of
property, including land, houses, slaves, animals, money and personal effects. The basic rate was
just .01 percent, although occasionally rising to .03 percent. It was assessed principally to pay
the army during war. In fact, afterwards the tax was often rebated (Jones 1974: 161). It was
levied directly on individuals, who were counted at periodic censuses.

As Rome expanded after the unification of Italy in 272 B.C., so did Roman taxes. In the
provinces, however, the main form of tax was a tithe levied on communities, rather than directly
on individuals. [5] This was partly because censuses were seldom conducted, thus making direct
taxation impossible, and also because it was easier to administer. Local communities would decide
for themselves how to divide up the tax burden among their citizens (Goffart 1974: 11).

Tax farmers were often utilized to collect provincial taxes. They would pay in advance for the
right to collect taxes in particular areas. Every few years these rights were put out to bid, thus
capturing for the Roman treasury any increase in taxable capacity. In effect, tax farmers were
loaning money to the state in advance of tax collections. They also had the responsibility of
converting provincial taxes, which were often collected in-kind, into hard cash. [6] Thus the
collections by tax farmers had to provide sufficient revenues to repay their advance to the state
plus enough to cover the opportunity cost of the funds (i.e., interest), the transactions
cost of converting collections into cash, and a profit as well. In fact, tax farming was quite
profitable and was a major investment vehicle for wealthy citizens of Rome (Levi 1988: 71-94).
Volume 14 Number 2, Fall 1994

Taxation in the Republic and Early Empire Cont’d

Augustus ended tax farming, however, due to complaints from the provinces. Interestingly, their
protests not only had to do with excessive assessments by the tax farmers, as one would expect,
but were also due to the fact that the provinces were becoming deeply indebted. A.H.M. Jones
(1968: 11) describes the problems with tax farmers:

Oppression and extortion began very early in the provinces and reached fantastic proportions in
the later republic. Most governors were primarily interested in acquiring military glory and in
making money during their year in office, and the companies which farmed the taxes expected to
make ample profits. There was usually collusion between the governor and the tax contractors
and the senate was too far away to exercise any effective control over either. The other great
abuse of the provinces was extensive money lending at exorbitant rates of interest to the
provincial communities, which could not raise enough ready cash to satisfy both the exorbitant
demands of the tax contractors and the blackmail levied by the governors.

As a result of such abuses, tax farming was replaced by direct taxation early in the Empire
(Hammond 1946: 85). The provinces now paid a wealth tax of about 1 percent and a flat poll or
head tax on each adult. This obviously required regular censuses in order to count the taxable
population and assess taxable property. It also led to a major shift in the basis of taxation
(Jones 1974: 164-66). Under the tax farmers, taxation was largely based on current income.
Consequently, the yield varied according to economic and climactic conditions. Since tax farmers
had only a limited time to collect the revenue to which they were entitled, they obviously had
to concentrate on collecting such revenue where it was most easily available. Because assets such
as land were difficult to convert into cash, this meant that income necessarily was the basic base
of taxation. And since tax farmers were essentially bidding against a community's income
potential, this meant that a large portion of any increase in income accrued to the tax farmers.

By contrast, the Augustinian system was far less progressive. The shift to flat assessments based
on wealth and population both regularized the yield of the tax system and greatly reduced its
"progressivity." This is because any growth in taxable capacity led to higher taxes under the tax
farming system, while under the Augustinian system communities were only liable for a fixed
payment. Thus any increase in income accrued entirely to the people and did not have to be
shared with Rome. Individuals knew in advance the exact amount of their tax bill and that any
income over and above that amount was entirely theirs. This was obviously a great incentive to
produce, since the marginal tax rate above the tax assessment was zero. In economic terms, one
can say that there was virtually no excess burden (Musgrave 1959: 140-59). Of course, to the
extent that higher incomes increased wealth, some of this gain would be captured through
reassessments. But in the short run, the tax system was very pro-growth.
Volume 14 Number 2, Fall 1994

The Rise and Fall of Economic Growth

Rome's pro-growth policies, including the creation of a large common market encompassing the
entire Mediterranean, a stable currency, and moderate taxes, had a positive impact on trade. Keith
Hopkins finds empirical support for this proposition by noting the sharp increase in the number of
known shipwrecks dating from the late Republic and early Empire as compared to earlier periods
(Hopkins 1980: 105-06). The increase in trade led to an increase in shipping, thus increasing the
likelihood that any surviving wrecks would date from this period. Rostovtzeff (1957: 172)
indicates that "commerce, and especially foreign and inter-provincial maritime commerce,
provided the main sources of wealth in the Roman Empire."

Hopkins (1980: 106-12) also notes that there was a sharp increase in the Roman money supply
which accompanied the expansion of trade. He further notes that this expansion of the money
supply did not lead to higher prices. Interest rates also fell to the lowest levels in Roman history in
the early part of Augustus's reign (Homer 1977: 53). This strongly suggests that the supply of
goods and services grew roughly in line with the increase in the money supply. There was
probably also an increase in the demand for cash balances to pay taxes and rents, which would
further explain why the increased money supply was non-inflationary.

During the early Empire revenues were so abundant that the state was able to undertake a massive
public works program. Augustus repaired all the roads of Italy and Rome, restored the temples
and built many new ones, and built many aqueducts, baths and other public buildings. Tiberius,
however, cut back on the building program and hoarded large sums of cash. This led to a financial
crisis in 33 A.D. in which there was a severe shortage of money. This shortage may have been
triggered by a usury law which had not been applied for some years but was again enforced by the
courts at this time (Frank 1935). The shortage of money and the curtailment of state expenditures
led to a sharp downturn in economic activity which was only relieved when the state made large
loans at zero interest in order to provide liquidity (Thornton and Thornton 1990). [7]

Under Claudius (41-54 A.D.) the Roman Empire added its last major territory with the conquest
of Britain. Not long thereafter, under Trajan (98-117 A.D.), the Empire achieved its greatest
geographic expansion. Consequently, the state would no longer receive additional revenue from
provincial tribute and any increase in revenues would now have to come from within the Empire
itself. Although Rostovtzeff (1957: 91) credits the Julio-Claudian emperors with maintaining the
Augustinian policy of laissez faire, the demand for revenue was already beginning to undermine
the strength of the Roman economy. An example of this from the time of Caligula (37-41 A.D.) is
recorded by Philo (20 B.C-50 A.D.):
Volume 14 Number 2, Fall 1994

The Rise and Fall of Economic Growth Cont’d

Not long ago a certain man who had been appointed a collector of taxes in our country, when
some of those who appeared to owe such tribute fled out of poverty, from a fear of intolerable
punishment if they remained without paying, carried off their wives, and their children, and their
parents, and their whole families by force, beating and insulting them, and heaping every kind of
contumely and ill treatment upon them, to make them either give information as to where the
fugitives had concealed themselves, or pay the money instead of them, though they could not do
either the one thing or the other; in the first place, because they did not know where they were,
and secondly, because they were in still greater poverty than the men who had fled
[Yonge 1993: 610].

Inflation and Taxation

As early as the rule of Nero (54-68 A.D.) there is evidence that the demand for revenue led to
debasement of the coinage. Revenue was needed to pay the increasing costs of defense and a
growing bureaucracy. However, rather than raise taxes, Nero and subsequent emperors preferred
to debase the currency by reducing the precious metal content of coins. This was, of course, a
form of taxation; in this case, a tax on cash balances (Bailey 1956).

Throughout most of the Empire, the basic units of Roman coinage were the gold aureus, the silver
denarius, and the copper or bronze sesterce. [8] The aureus was minted at 40-42 to the pound,
the denarius at 84 to the pound, and a sesterce was equivalent to one-quarter of a denarius.
Twenty-five denarii equaled one aureus and the denarius was considered the basic coin and unit of

The aureus did not circulate widely. Consequently, debasement was mainly limited to the
denarius. Nero reduced the silver content of the denarius to 90 percent and slightly reduced the
size of the aureus in order to maintain the 25 to 1 ratio. Trajan (98-117 A.D.) reduced the silver
content to 85 percent, but was able to maintain the ratio because of a large influx of gold. In fact,
some historians suggest that he deliberately devalued the denarius precisely in order to maintain
the historic ratio. Debasement continued under the reign of Marcus Aurelius (161-180 A.D.), who
reduced the silver content of the denarius to 75 percent, further reduced by Septimius Severus to
50 percent. By the middle of the third century A.D., the denarius had a silver content of just 5

Interestingly, the continual debasements did not improve the Empire's fiscal position. This is
because of Gresham's Law ("bad money drives out good"). People would hoard older, high silver
content coins and pay their taxes in those with the least silver. Thus the government's "real"
revenues may have actually fallen. As Aurelio Bernardi explains:
Volume 14 Number 2, Fall 1994

Inflation and Taxation Cont’d

At the beginning the debasement proved undoubtedly profitable for the state. Nevertheless, in the
course of years, this expedient was abused and the [fn2]century of inflation which had been thus
brought about was greatly to the disadvantage of the State's finances. Prices were rising too
rapidly and it became impossible to count on an immediate proportional increase in the fiscal
revenue, because of the rigidity of the apparatus of tax collection. [9]

At first, the government could raise additional revenue from the sale of state property. Later,
more unscrupulous emperors like Domitian (81-96 A.D.) would use trumped-up charges to
confiscate the assets of the wealthy. They would also invent excuses to demand tribute from the
provinces and the wealthy. Such tribute, called the aurum corinarium, was nominally voluntary
and paid in gold to commemorate special occasions, such as the accession of a new emperor or a
great military victory. Caracalla (198-217 A.D.) often reported such dubious "victories" as a way
of raising revenue. Rostovtzeff (1957: 417) calls these levies "pure robbery."

Although taxes on ordinary Romans were not raised, citizenship was greatly expanded in order to
bring more people into the tax net. Taxes on the wealthy, however, were sharply increased,
especially those on inheritances and manumissions (freeing of slaves).

Occasionally, the tax burden would be moderated by a cancellation of back taxes or other
measures. One such occasion occurred under the brief reign of Pertinax (193 A.D.), who replaced
the rapacious Commodus (A.D. 176-192). As Edward Gibbon (1932: 88) tells us:

Though every measure of injustice and extortion had been adopted, which could collect the
property of the subject into the coffers of the prince; the rapaciousness of Commodus had been so
very inadequate to his extravagance, that, upon his death, no more than eight thousand pounds
were found in the exhausted treasury, to defray the current expenses of government, and to
discharge the pressing demand of a liberal donative, which the new emperor had been obliged to
promise to the Praetorian guards. Yet under these distressed circumstances, Pertinax had the
generous firmness to remit all the oppressive taxes invented by Commodus, and to cancel
all the unjust claims of the treasury; declaring in a decree to the senate, "that he was better
satisfied to administer a poor republic with innocence, than to acquire riches by the ways of
tyranny and dishonor."
Volume 14 Number 2, Fall 1994

State Socialism
Unfortunately, Pertinax was an exception. Most emperors continued the policies of debasement
and increasingly heavy taxes, levied mainly on the wealthy. The war against wealth was not simply
due to purely fiscal requirements, but was also part of a conscious policy of exterminating the
Senatorial class, which had ruled Rome since ancient times, in order to eliminate any potential
rivals to the emperor. Increasingly, emperors came to believe that the army was the sole source of
power and they concentrated their efforts on sustaining the army at all cost.

As the private wealth of the Empire was gradually confiscated or taxed away, driven away or
hidden, economic growth slowed to a virtual standstill. Moreover, once the wealthy were no
longer able to pay the state's bills, the burden inexorably fell onto the lower classes, so that
average people suffered as well from the deteriorating economic conditions. In Rostovtzeff's
words, "The heavier the pressure of the state on the upper classes, the more intolerable became
the condition of the lower" (Rostovtzeff 1957: 430).

At this point, in the third century A.D., the money economy completely broke down. Yet the
military demands of the state remained high. Rome's borders were under continual pressure from
Germanic tribes in the North and from the Persians in the East. Moreover, it was now explicitly
understood by everyone that the emperor's power and position depended entirely on the support
of the army. Thus, the army's needs required satisfaction above all else, regardless of the
consequences to the private economy.

With the collapse of the money economy, the normal system of taxation also broke down. This
forced the state to directly appropriate whatever resources it needed wherever they could be
found. Food and cattle, for example, were requisitioned directly from farmers. Other producers
were similarly liable for whatever the army might need. The result, of course, was chaos, dubbed
"permanent terrorism" by Rostovtzeff (1957: 449). Eventually, the state was forced to compel
individuals to continue working and producing.
Volume 14 Number 2, Fall 1994

State Socialism Cont’d

The result was a system in which individuals were forced to work at their given place of
employment and remain in the same occupation, with little freedom to move or change jobs.
Farmers were tied to the land, as were their children, and similar demands were made on all other
workers, producers, and artisans as well. Even soldiers were required to remain soldiers for life,
and their sons compelled to follow them. The remaining members of the upper classes were
pressed into providing municipal services, such as tax collection, without pay. And should tax
collections fall short of the state's demands, they were required to make up the difference
themselves. This led to further efforts to hide whatever wealth remained in the Empire, especially
among those who still found ways of becoming rich. Ordinarily, they would have celebrated their
new-found wealth; now they made every effort to appear as poor as everyone else, lest they
become responsible for providing municipal services out of their own pocket.

The steady encroachment of the state into the intimate workings of the economy also eroded
growth. The result was increasing feudalization of the economy and a total breakdown of the
division of labor. People fled to the countryside and took up subsistence farming or attached
themselves to the estates of the wealthy, which operated as much as possible as closed systems,
providing for all their own needs and not engaging in trade at all. Meanwhile, much land was
abandoned and remained fallow or fell into the hands of the state, whose mismanagement
generally led to a decline in production.

Emperor Diocletian's Reforms

By the end of the third century, Rome had clearly reached a crisis. The state could no longer
obtain sufficient resources even through compulsion and was forced to rely ever more heavily on
debasement of the currency to raise revenue. By the reign of Claudius II Gothicus (268-270 A.D.)
the silver content of the denarius was down to just .02 percent (Michell 1947: 2). As a
consequence, prices skyrocketed. A measure of Egyptian wheat, for example, which sold for
seven to eight drachmaes in the second century now cost 120,000 drachmaes. This suggests an
inflation of 15,000 percent during the third century (Rostovtzeff 1957: 471).

Finally, the very survival of the state was at stake. At this point, the Emperor Diocletian
(284-305 A.D.) took action. He attempted to stop the inflation with a far-reaching system of price
controls on all services and commodities. [10] These controls were justified by Diocletian's belief
that the inflation was due mainly to speculation and hoarding, rather than debasement of the
currency. As he stated in the preamble to his edict of 301 A.D.:
Volume 14 Number 2, Fall 1994

Emperor Diocletian's Reforms Cont’d

For who is so hard and so devoid of human feeling that he cannot, or rather has not perceived,
that in the commerce carried on in the markets or involved in the daily life of cities immoderate
prices are so widespread that the unbridled passion for gain is lessened neither by abundant
supplies nor by fruitful years; so that without a doubt men who are busied in these affairs
constantly plan to control the very winds and weather from the movements of the stars, and, evil
that they are, they cannot endure the watering of the fertile fields by the rains from above which
bring the hope of future harvests, since they reckon it their own loss if abundance comes through
the moderation of the weather [Jones 1970: 310].

Despite the fact that the death penalty applied to violations of the price controls, they were a total
failure. Lactantius (1984: 11), a contemporary of Diocletian's, tells us that much blood was shed
over "small and cheap items" and that goods disappeared from sale. Yet, "the rise in price got
much worse." Finally, "after many had met their deaths, sheer necessity led to the repeal of the

Diocletian's other reforms, however, were more successful. The cornerstone of Diocletian's
economic policy was to turn the existing ad hoc policy of requisitions to obtain resources for the
state into a regular system. [11] Since money was worthless, the new system was based on
collecting taxes in the form of actual goods and services, but regularized into a budget so that the
state knew exactly what it needed and taxpayers knew exactly how much they had to pay.

Careful calculations were made of precisely how much grain, cloth, oil, weapons or other goods
were necessary to sustain a single Roman soldier. Thus, working backwards from the state's
military requirements, a calculation was made for the total amount of goods and services the state
would need in a given year. On the other side of the coin, it was also necessary to calculate what
the taxpayers were able to provide in terms of the necessary goods and services. This required a
massive census, not only of people but of resources, especially cultivated land. Land was graded
according to its productivity. As Lactantius (1984: 37) put it, "Fields were measured out clod by
clod, vines and trees were counted, every kind of animal was registered, and note taken of every
member of the population."

Taxable capacity was measured in terms of the caput, which stood for a single man, his family, his
land and what they could produce. [12] The state's needs were measured in terms of the annona,
which represented the cost of maintaining a single soldier for a year. With these two measures
calculated in precision, it was now possible to have a real budget and tax system based entirely on
actual goods and services. Assessments were made and resources collected, transported and
stored for state use.
Volume 14 Number 2, Fall 1994

Emperor Diocletian's Reforms Cont’d

Although an army on the move might still requisition goods or services when needed, the overall
result of Diocletian's reform was generally positive. Taxpayers at least knew in advance what they
were required to pay, rather than suffer from ad hoc confiscations. Also, the tax burden was
spread more widely, instead of simply falling on the unlucky, thus lowering the burden for many
Romans. At the same time, with the improved availability of resources, the state could now better
plan and conduct its military operations.

In order to maintain this system where people were tied to their land, home, jobs, and places of
employment, Diocletian transformed the previous ad hoc practice. Workers were organized into
guilds and businesses into corporations called collegia. Both became de facto organs of the state,
controlling and directing their members to work and produce for the state.

The Fall of Rome

Constantine (308-37 A.D.) continued Diocletian's policies of regimenting the economy, by tying
workers and their descendants even more tightly to the land or their place of employment (Jones
1958). For example, in 332 he issued the following order:

Any person in whose possession a tenant that belongs to another is found not only shall restore
the aforesaid tenant to his place of origin but also shall assume the capitation tax for this man for
the time that he was with him. Tenants also who meditate flight may be bound with chains and
reduced to a servile condition, so that by virtue of a servile condemnation they shall be compelled
to fulfill the duties that befit free men [Jones 1970: 312].

Despite such efforts, land continued to be abandoned and trade, for the most part, ceased
(Rostovtzeff 1926). Industry moved to the provinces, basically leaving Rome as an economic
empty shell; still in receipt of taxes, grain and other goods produced in the provinces, but
producing nothing itself. The mob of Rome and the palace favorites produced nothing, yet
continually demanded more, leading to an intolerable tax burden on the productive classes. [13]

In the fifty years after Diocletian the Roman tax burden roughly doubled, making it impossible for
small farmers to live on their production (Bernardi 1970: 55). [14] This is what led to the final
breakdown of the economy (Jones 1959). As Lactantius (1984: 13) put it:

The number of recipients began to exceed the number of contributors by so much that, with
farmers' resources exhausted by the enormous size of the requisitions, fields became deserted and
cultivated land was turned into forest.
Volume 14 Number 2, Fall 1994

The Fall of Rome Cont’d

Although Constantine made an effort to restore the currency, subsequent emperors resumed the
debasement, resulting in renewed price inflation (West 1951). Apparently, Emperor Julian
(360-63 A.D.) also refused to believe that the inflation was due to debasement, but rather was
caused by merchants hoarding their stores. To prove his point, he sent his own grain reserves into
the market at Antioch. According to Gibbon (1932: 801),

The consequences might have been foreseen, and were soon felt. The Imperial wheat was
purchased by the rich merchants; the proprietors of land or of corn withheld from the city the
accustomed supply; and the small quantities that appeared in the market were secretly sold at an
advanced and illegal price.

Although he had been warned that his policies would not lower prices, but rather would
exacerbate the shortage, Julian nevertheless continued to believe that his policy worked, and
blamed complaints of its failure on the ingratitude of the people (Downey 1951).

In other respects, however, Julian was more enlightened. In the area of tax policy, he showed
sensitivity and perception. He understood that the main reason for the state's fiscal problem was
the excessive burden of taxation, which fell unequally on the population. The wealthy effectively
were able to evade taxation through legal and illegal measures, such as bribery. By contrast, the
ordinary citizen was helpless against the demands of the increasingly brutal tax collectors.

Previous measures to ease the tax burden, however, were ineffective because they only relieved
the wealthy. Constantine, for example, had sought to ease the burden by reducing the number of
tax units--caputs--for which a given district was responsible. In practice, this meant that only the
wealthy had any reduction in their taxes. Julian, however, by cutting the tax rate, ensured that his
tax reduction was realized by all the people. He also sought to broaden the tax base by abolishing
some of the tax exemptions which many groups, especially the wealthy, had been granted by
previous emperors (Bernardi 1970: 59, 66).
Volume 14 Number 2, Fall 1994

The Fall of Rome Cont’d

Nevertheless, the revenues of the state remained inadequate to maintain the national defense. This
led to further tax increases, such as the increase in the sales tax from 1 percent to 4.5 percent in
444 A.D. (Bernardi 1970: 75). However, state revenues continued to shrink, as taxpayers
invested increasing amounts of time, effort and money in tax evasion schemes. Thus even as tax
rates rose, tax revenues fell, hastening the decline of the Roman state (Bernardi 1970: 81-3). In
short, taxpayers evaded taxation by withdrawing from society altogether. Large, powerful
landowners, able to avoid taxation through legal or illegal means, began to organize small
communities around them. Small landowners, crushed into bankruptcy by the heavy burden of
taxation, threw themselves at the mercy of the large landowners, signing on as tenants or even as
slaves. (Slaves, of course, paid no taxes.) The latter phenomenon was so widespread and so
injurious to the state's revenues, in fact, that in 368 A.D. Emperor Valens declared it illegal to
renounce one's liberty in order to place oneself under the protection of a great landlord
(Bernardi 1970: 49).

In the end, there was no money left to pay the army, build forts or ships, or protect the frontier.
The barbarian invasions, which were the final blow to the Roman state in the fifth century, were
simply the culmination of three centuries of deterioration in the fiscal capacity of the state to
defend itself. Indeed, many Romans welcomed the barbarians as saviors from the onerous tax
burden. [15]

Although the fall of Rome appears as a cataclysmic event in history, for the bulk of Roman
citizens it had little impact on their way of life. As Henri Pirenne (1939: 33-62) has pointed out,
once the invaders effectively had displaced the Roman government they settled into governing
themselves. At this point, they no longer had any incentive to pillage, but rather sought to provide
peace and stability in the areas they controlled. After all, the wealthier their subjects the greater
their taxpaying capacity.

In conclusion, the fall of Rome was fundamentally due to economic deterioration resulting from
excessive taxation, inflation, and over-regulation. Higher and higher taxes failed to raise additional
revenues because wealthier taxpayers could evade such taxes while the middle class--and its
taxpaying capacity--were exterminated. Although the final demise of the Roman Empire in the
West (its Eastern half continued on as the Byzantine Empire) was an event of great historical
importance, for most Romans it was a relief.

The author is a Senior Fellow with the National Center for Policy Analysis.
References : (Link)
At February 12, 2009 8:34 AM, Kelly_41m said…

Current World Economics and Economic Troubles.



Historical consequences. Capitalism vs Socialism

economic thought.

For individuals who've have taken the time to read through all the material posted here and the
reviews of the books listed, is just words right ?, economic theory and history. To really
(or further) gain insight into the long term consequences of socialism and socialist economic
order, search the internet for the video set "Commanding Heights" from PBS.

Based on Pulitzer Prize-winner Daniel Yergin's Book

"The Commanding Heights"

Episode 1 : The Battle of Ideas

Episode 2 : Agony of Reform
Episode 3 : The New Rules of the Game

For those who know how, "Bit torrent" anyone ?.

Many who have reviewed the episodes, including myself, express should be watched by everyone,
in that they gain at least some insight into current global economic troubles. Many
schools/universities around the world incorporate these as teaching aids in various courses where
economics is touched on.

As seems there is so much misinformation these days, theory's and counter theory's, one thing
stands, history is not a theory. The question becomes, what have we learned and what can we do,
going into the future to hopefully avoid repeating what has transpired in the past.

As George Santayana expressed in one of his works:

Progress, far from consisting in change, depends on retentiveness. When change is absolute there
remains no being to improve and no direction is set for possible improvement: and when
experience is not retained,.... Those who cannot remember the past are condemned to repeat it.
Notes Regarding This, and Previous Postings:
I expressed earlier in one of my postings here, some time back, "This is my final Post" however,
have since posted additional material I've come across regarding historical aspects of socialist
order/economic order, as well as historical consequences of such. This I did (further postings) to
back up and provide intellectual depth to the first half dozen posts or so.

In regards to "Commanding Heights" Video Series.

For me, watching the videos brought about a bit of sadness and despair for the "average everyday
people" who endured the long term consequences of socialism and its effects. For what we see on
the computer screen here, or in the books that we read, is distant or far away. Just words on
paper or interesting conflicting theories. The video's backup what's been posted here thus far, but
go further then just words on a computer screen, or in a book. The true human costs of ineffective
economic thought/order are revealed here, and is not pretty. As one of the current governing
officials in Chile expressed, when socialism literally collapsed our economy, the human cost of
reform was Very, Very high. Although Chile now is one of the leading economies in South
America and are enjoying one of the highest standards of living there, if not the highest on that
continent, the cost was very high. Same for Russia, but even worse.

Of an interesting note. When the Solidarity Union brought about the collapse of socialist order in
Poland, which then brought about a domino effect in that region, the damndest thing, and of
all things, a Union bringing about real change. The reforms initiated and carried through (many of
which are still in the works) by the Solidarity Union have thus far been so successful that Poland
is looked upon as a model for a peaceful way/means of moving away from socialism and into
prosperity by many other countries. (You need to watch the video's).

What I've expressed (two paragraphs above), is a just a tiny bit of the material covered. It is
hopefully enough to whet the curiosity appetite for knowledge of some that they will actually
download and/or purchase ( Available from PBS ) the above videos and enlighten themselves

For those who have actually went through much of this material, and have grasped some of it, or
most of it, watching the video's will clarify much of what the previous postings and books are
about, and what it all really means. And finally, as the title of this blog purports, "Has B.C. got it
yet" will have actually, ****"Got it"****.
Food for thought
A couple of additional thoughts/materials regarding previous postings and Daniel Yergin's and
Joseph Stanislaw's book and video series "Commanding Heights", Battle for World Economy.

Additional Part 1 ( Regarding book: Requiem For Marx )

Yergin's and Stanislaw's "Commanding Heights" series covers only the malaise that socialism
and socialist economic/societal order in the long run creates and the steps taken by many
different countries/societies to abandon/reform their economic structures away from socialism. It
doesn't go into technical details or historical aspects of Leninist, Marxist and/or Ebertian
economic evolution and/or theory.

In consideration of Rummel's "Death by Government" and Stéphane Courtois “Black Book of

Communism”, where conservatively well over 100 million murdered (acknowledged by the
united nations) as a result of this corrosive/destructive ideology through the last century, I did
further digging for a resource/book to gain further insight (beyond Mises) into that not addressed
in "Commanding Heights" series. IE: What are the technical details from a modern perspective of
Marxian, Ebertian, and Leninist theory that brought so much destruction and misery to
humankind ??.

This search led me to the book/compilation, "Requiem for Marx". Edited with an introduction by
Dr.Yuri Maltsev. It's a kinda posthumous analysis of Marxian theory from the perspective of
modern Russian academia as well as others who have taken time to have another look at Marxian

Similar to an FAA technical investigation to discern the cause and/or effect of an airliner crash
via post analysis of available/collectable information/material, the compilation (Requiem for
Marx) in a sense attempts the same thing "economic failure analysis". Contributing authors Yuri
Maltsev, David Gordon, Hans-Hermann Hoppe, Gary North, David Osterfeld, Ralph Raico and
Murray Rothbard offer some good insight from more of a modern perspective of the built in
errors, misconceptions and false assumptions in much of what Marx, Ebert and Lenin theorized
as a means to a utopian society. It also touches on and acknowledges the well over 100 million
murdered as a result of the implementation of Marx/Ebertian economic/ideological theory. I
strongly recommend its reading if interested in the technical details regarding the failure of
Marxian/socialist theory via differing perspectives.
Additional Part 2 ( Regarding Book: Der Fuehrer )
This is a bit off the subject, however the following two books:

Alan Bullock: Hitler, A Study in Tyranny

William Shirer: Rise and fall of the Third Reich

are both very much complemented by

Konrad Heiden's: Der Fuehrer (which I just finished reading)

Heiden touched on, which is not really covered in Shirer's and Bullock's work, economics during
the time of Hitler and National Socialism in the last several chapters. Makes for some very
interesting reading.

Also, through Heiden's work I was made aware of another work called "Protocols of the Wise
Men Of Zion" of which Heiden expressed, was required/mandatory reading by the early members
of what eventually became the National Socialist German Workers Party.

Following Links:

Heiden also mentions works by Niccolò Machiavelli mentioned also by Bolivia's Minister of
Planning in the Commanding Heights series. Some of his thoughts (though near 500 years old)
are interesting as well. From a modern perspective, many say Machiavelli, through his writings,
can be classified as one of the very first pioneering analytical political scientists.

Following Link for Info:

More Food for thought From Konrad Heiden's -- Der Fuehrer
Found these paragraphs of interest. As so many other Authors have mention, figured Mr. Heiden
deserved a bit of space also: From Pages 183 & 184.

HITLER HAD HESITATED UNTIL HIS HESITATION nearly broke the movement. (1)

But then he pulled himself together. From one moment to the next he took an extraordinary
decision. The task was to drive the government to revolution. But how? This time it looked as
though the orders had come directly from the Wise Men of Zion.

Two refugees from Russia devised the plan, Alfred Rosenberg and his friend, Max Richter.
Richter was a German from East Prussia, but he had spent a large part of his life in Russia, in the
German Baltic provinces, from which Rosenberg originated. During the Russian revolution of
1905, he had belonged to one of the little private armies set up by landowners and industrialists
for defense against the revolution – something on the style of the Black Hundreds. He had
married the daughter of a manufacturer whose factory he had guarded. Later he had served in
Turkey as a German ‘diplomat,' or rather agent, and after the war, still as a German agent, he had
been involved in the Russian counter-revolution. Fleeing from Russia, he had found his way to
the German counter--revolution. Lossow knew him from the old days and characterized him as a
man of dubious honor; Ludendorff esteemed him and vouched for his good character. Of
bourgeois origin, he ennobled himself with his wife's family name, calling himself Max Erwin
von Scheubner-Richter.

This political schemer of the Russian school, a craftier, more worldly man than his young friend
Rosenberg, knew exactly how the Wise Men of Zion make a revolution. The revolution must be
‘imperceptible,' say the Protocols; ‘under an outward appearance of legality, the last traces of
legal, constitutional life must gradually be destroyed.' At the end of September, Scheubner-
Richter had provided Hitler with a lengthy plan for revolution. ‘The national revolution,' he
wrote, ‘must not precede the seizure of political power; the seizure of the state's police power
constitutes the premise for the national revolution'; one must, therefore, strive ‘to lay hands on
the state police power in a way that is at least outwardly legal.'

This was the type of revolution that the captains and majors had been working on for five
years – revolution ‘by permission of the Herr Prasident,' it was called in a secret document
(one of a number that has come down to us).

(1)..National Socialism