British Influence on U.S. Foreign Policy Before and After World War 2

This was a research paper that I wrote for my British history class this past semester. There was much more that could have been written, but I was limited by a page amount of 10-12 pages and time. 

The First World War was sold as a war “to end all wars” and to “make the world safe for democracy”. President Woodrow Wilson, who would run a reelection campaign with the slogan “He kept us out of war” would none the less plunge an unwilling American people into the First World War on the side of the Allied power of Russia, France, and most importantly Great Britain. But the aftermath of the war left much to be desired for Americans. Seeing the failure of Woodrow Wilson to get his idealistic “Fourteen Points” implemented in a post-war world, a post-war settlement at Versailles that severely punished Germany while enriching the French and British empires, the British propaganda used to bring America into the war on their side, and a new international organization that threatened the sovereignty of the United States, the American people came to despise the war and the effects it brought upon the world. With a sense of feeling that they had been duped into the European bloodbath to play the game of power politics, a majority of Americans wished to see their country return to a policy of nonintervention.

                And nonintervention is what the American people got. The U.S. Senate refused to ratify the Treaty of Versailles and thus rejected American membership in the League of Nations. A Naval Conference was held in the United States with the purpose of downsizing the naval strength of the great powers. And America wished to never entangle itself with the power politics of Europe. Fast forward to the mid-1930s, and this noninterventionist sentiment still permeated the minds of most Americans. But as the threat of another great war loomed on the horizon during this time, Great Britain wished to bring the United States into the emerging conflict on the side of the empire. While this was a difficult task, the British influence on U.S. foreign policy and their efforts to bring America into World War Two was implemented in a few ways. The first was a propaganda effort aimed at influencing American public opinion towards supporting American intervention on the side of the British. The second was the official policies of both the United States and British governments such as the Lend-Lease Act, the Destroyer Deal, and so on. The last way was a covert campaign within the United States by the British government.

                All of these efforts did eventually help to bring the United States into World War Two, but only after the attack at Pearl Harbor. But it is important to examine this topic because of the grave implications it has for American foreign policy since the end of World War 2. George Washington warned Americans against allowing foreign influence on government policy, especially foreign policy.

The British Propaganda Campaign

                Prior to Pearl Harbor, public opinion towards what would become World War Two was unfavorable. With the horrors of World War One still fresh in their minds, many Americans wished to avoid another European war. The revisionist works of historians such as Henry Elmer Barnes, Charles A. Beard, and Charles C. Tansil were in high demand after World War 1 as Americans wished to inform themselves of how they were misled by the British into war.[1] Even Roosevelt would at times appease his noninterventionist critics by appealing to the idea of America remaining aloof of another European war and passing neutrality legislation such as The Neutrality Act of 1935. While this position of nonintervention and neutrality seemed to dominate American public opinion, the British government had plans to undermine this position and to convince the United States to abandon neutrality.

                The British propaganda effort did not officially start until the mid to late 1930s, but such a propaganda effort had to overcome some obstacles to their goals. Americans loved all things British that were related to culture and society. But what love of England existed was equally if not overmatched by Anglophobia. [2] The American struggle to shake off the British rule of redcoats and the king during the American War for Independence plays a large part in American Anglophobia at this time. Americans in many cases also abhorred British imperialism and the rigid class structure of their society. But these feelings of Anglophila and Anglophobia varied from community to community, with even Southerners remembering the British honoring their shipbuilding contracts during the American Civil War.[3] Most Americans loathed British politicians but loved their actors.

                Nonetheless, Great Britain still had admirers in America. A Gallup Poll found that 55 percent of American voters considered Britain to be the European country that they “liked best” in April of 1937.[4] And even after World War 1, many Atlanticist organizations worked with the elites in both Britain and the United States to strengthen business and cultural links. Some examples include Pilgrims Trust and the English Speaking Union, both of which sought to spread Anglo-Americanism. [5] The American Council of Foreign Relations also sought such an Anglo-American Alliance.[6]

                But the British still had to confront the American fear of propaganda that came as a result of World War One. Prior to the 1930s, the British government’s press bureau in New York pursued a policy of no propaganda. [7] As the years passed by into the 1930s, the Foreign Office News Department in London had increasingly emphasized that propaganda was an appropriate tool of foreign policy. In 1932, the British Broadcasting Corporation began broadcasting its “Empire Services”, which sought to portray Great Britain and life in the British Empire in a positive light.[8] The British began a process of re-armament in 1935, which included plans for propaganda, but internal conflict arose in the British Ministry of Information over the usage of domestic propaganda, which prevented any overseas propaganda efforts until 1938, when the Foreign Office established a committee to investigate overseas publicity. [9] There was some hope for the British, found in American arousal due to Japanese aggression in China and a growing anti-Nazi sentiment.

                When President Roosevelt proclaimed the New York World’s Fair open in 1939, the British set up the British Pavilion in the World’s Fair.[10] It attracted as many as 14 million visitors. The most important piece of the British Pavilion was the “Hall of Democracy”, which showcased the Magna Carta, the much celebrated document of Anglo-American liberty along with the pedigree of George Washington, which showed his direct decent from King John and some of the barons who signed the Magna Carta.[11] The potential for propagating the “democratic” ideal through the Magna Carta (and I used “democratic” in the loosest sense) was so great that the British mailed a translation and history of the document to every school in America. Even the New York Times was persuaded to write a cover story on the Magna Carta by British Library of Information. The Magna Carta was successful indeed.[12]

                Sir William McLean went on a propaganda campaign throughout the United States with the objective of painting the British Empire in a positive light to Americans with speeches and lectures. [13] On the eve of war in 1939, King George VI and the Queen made a visit to America in June. This visit helped swell pro-British sentiments to new heights and helped to secure American sympathy before the outbreak of war.[14]

                The British were in many cases clear about the objectives of the propaganda campaign, which was to win American sympathy and cause the United States to abandon neutrality in the event of war in Europe. A British officer, Captain Sidney Rogerson, believed that if the United States was to be brought into a European war on the side of the British, the Americans would

                need a definite threat to America, a threat, moreover, which will have to be brought home by propaganda to every citizen, before the republic will again take arms in an external quarrel. The position will naturally be considerably eased if Japan were involved and this might and probably would bring America in without further ado. At any rate, it would be a natural and obvious object of our propagandists to achieve this, just as during the Great War they succeeded in embroiling the United States with Germany. [15]

                Though even by 1938, American fear of propaganda was still extremely high. Soon, under the direction of Congressman Martin Dies of Texas, the House Committee for the Investigation of Un­American Activities convened and began a war against foreign propaganda.[16] This was not the first time such a committee had been formed, but Dies did include the British in his investigation. But due to the fact that London still “officially” operated on a “no propaganda” policy, Dies found no evidence of any foul play by the British. Senator Gerald Nye would attempt to expose the efforts of the British by inserting a chapter of Sidney Rogerson’s book Propaganda in the Next War into the Congressional Record. This insertion received publicity, but it did little to stop the British in their efforts. [17]

                On September 1, 1939, Germany invades Poland. Shortly thereafter, Britain and France declared war on Germany. It was during this time that the British used a propaganda tactic that they used in World War 1: the report of atrocities committed by the enemy. But unlike World War 1, in which the atrocity stories were exaggerated or fabricated, such atrocity stories were real.[18] Such atrocity stories were met with skepticism by most Americans who might object to the idea of intervention. The British responded to this objection by claiming that the United States should enter the war because Germany and its Axis allies posed a grave and direct threat to vital American interests. [19]

                The sympathy of American intellectuals for the British cause may have been a reason why British propaganda succeeded. The political commentator Walter Lippmann is one such intellectual. Walter Lippmann advocated strongly for intervention against Germany, saying that German expansionism constituted a direct threat to American security.[20] Lippmann also had contact with British propaganda agencies, more specifically, the British Press Service, whose works were often seen in Lippmann’s column.[21] But Lippmann’s work with the British Press Service was more subtle. Lippmann often equated the interests of the United States with Britain, seeing both countries as part of an “Atlantic Community”.[22] But American intellectuals were not the only ones to aid the British in their efforts to bring the United States to war on the side of the British. Rather, British efforts to get the Americans into the war had much support from the U.S. government.

U.S. Foreign Policy and Great Britain

                As has already been stated, a majority of Americans became disillusioned with their intervention into World War 1 and vowed not to make the same mistake again. While not taking on a complete noninterventionist policy, the U.S. government demobilized much of its armed forces, participated in small interventions in South America, and generally traded with Europe. When stirrings of war began around the mid-1930s, the U.S. Congress, understanding the noninterventionist sentiments of the people at large, moved quickly to prevent America from entering another European war.

                As a result, the Neutrality Act of 1935 was passed by Congress and signed by President Roosevelt.[23] This Act curtailed how American businessmen and individuals interacted with nations at war. Upon the outbreak of a war, the President would be compelled to proclaim that such a war existed. Then, upon such proclamation, it would become illegal for Americans to export arms, ammo, or any other implements of war to any place within the belligerent states.[24] The President was also empowered to prohibit Americans from traveling on the ships of the belligerent countries except at their own risks if he deemed it necessary for the security and peace of the United States.

                The British openly sought the aid of the United States even before war began. It should also be pointed out that despite the Rooseveltian rhetoric of keeping American boys out of foreign wars, Roosevelt would soon begin seeking a way for America to enter World War Two.[25] During the king and queen’s visit to the United States in June of 1939, they met with the Roosevelts at Hyde Park. On account of King George’s biographer, in a private conversation with the King, Roosevelt pledged to the King full American support for Great Britain.[26] Roosevelt also pledged that the U.S. Navy would patrol the Atlantic and destroy German U-boats. [27]

                Tyler Kent, a code clerk at the U.S. Embassy in London, had discovered coded-messages between Roosevelt and Winston Churchill when he was merely First Lord of the Admiralty. What is striking about this, which alarmed Kent, was that the code that was being used in these messages were only used by the Embassy when communication was going back and forth between the President, diplomats in Washington, and the Embassy itself. Basically, Roosevelt was in secret negotiations with another officer of the British government, who happened to be Churchill before he became Prime Minister-a violation of standard protocol.[28] Kent soon got in contact with Captain Archibald Ramsay, a Member of Parliament who was not sympathetic to Churchill. Scotland Yard got word of such conversations, and shortly after Churchill became Prime Minister in 1940, he ordered the arrest of Kent and Ramsay. Instead of pleading diplomatic immunity, Roosevelt conspired with the British government and waived diplomatic immunity for Kent. [29] Tyler Kent was tried in a secret British court and found guilty of violating the British Official Secrets Act of 1911 and imprisoned in Britain until after World War Two. [30] Captain Ramsay was also imprisoned, but was released in September of 1944.

                 Roosevelt soon embarked on numerous acts with the intent of provoking and incident with Germany which would allow America to enter the war on the side of the British. During September of 1940, the United States and Great Britain made an exchange, which is now known as the “destroyer deal”. In exchange for giving the British moth-balled U.S. destroyers, the United States was granted the right to land in British possessions that would be used as American bases. A few months later on December 17, Roosevelt held a press conference to describe the next measure of American assistance to Britain: the Lend-Lease Act.[31] To articulate the policy of lending war materials to Britain, Roosevelt talked about a man whose house was on fire, finding assistance in the form of his neighbor who happened to have a garden hose. The neighbor with the garden hose granted the neighbor whose house was on fire to use it. The neighbor does not charge the first guy for the use of the hose, but he expected the hose to remain in one piece. So Roosevelt’s premise for the policy of Lend-Lease was this: we [the U.S. government] will lend you war materials; if you are lent war materials and they remain intact, then  you may return them after usage and you will be fine; but if such war materials are damaged, then you must replace them.[32]

                Unknown at the time, Roosevelt assisted the British in hunting the German warship known as the Bismark by sending a plan with an American commander at the service of the British Admiralty.[33] As noted earlier, Roosevelt had committed the U.S. Navy to the task of aiding the British Navy in the war against German U-boats. On September 4, 1941, off the coast of Iceland, the USS Greer was attacked by a German U-boat.[34] Roosevelt was quick to claim that the Greer was attacked in international waters without provocation. But the truth is that the Greer had provoked the attack by chasing the German submarine, which fired upon the Greer with two torpedoes, after which the Greer responded by releasing depth charges. [35] In another similar incident involving the USS Kearny, a German submarine fired upon this U.S. vessel only after being fired upon by the Kearny. On October 30, 1941, the USS Reuben James was sunken by a German submarine.[36]

                On December 29, 1940, Roosevelt delivered an address which has now become known as the “Arsenal of Democracy” speech.[37] In this speech, Roosevelt defended the British Empire and its’ efforts to resist the Germans and describes them as the “spearhead of resistance to world conquest.”[38] Roosevelt went further:

We have furnished the British great material support and we will furnish far more in the future. There will be no "bottlenecks" in our determination to aid Great Britain. No dictator, no combination of dictators, will weaken that determination by threats of how they will construe that determination.[39]

                Perhaps a more egregious moment of the U.S. and British governments’ attempts to bring America into the war came in the form of the Atlantic Charter. Reveal on August 14, 1941, Roosevelt and Churchill set forth principles for the national policies of their respective countries that they agreed to follow. Those principles are as follows: 1) neither country sought territorial aggrandizement; 2) A desire to see no territorial changes that go against the wishes of the people; 3)A restoration of self- government to those who have lost it; 4) Equal access to trade a raw materials to victors and vanquished for economic prosperity; 5) Full collaboration in the economic field to improve labor standards, economic progress and social security; 6) the final destruction of the Nazis and the establishment of peace; 7) freedom of travel; 8) all nations must abandon the use of force. [40]

                The Atlantic Charter is interesting in the fact that the document basically calls for the destruction of Nazi Germany. But the problem arises in this way: how can the United States claim to be a neutral power when it is consulting war objectives with a belligerent government? Roosevelt was in a sense violating the spirit of the Neutrality laws and policies set forth by the U.S. Congress. But most of the actions by both the U.S. and British governments violated the spirit of neutrality in America.

The Covert Campaign

Another aspect of the British campaign to bring America into the war is the covert operations of the British government. In about 1940, the British government established the British Security Coordination in New York, which was to be the center of British covert operations in the United States.[41] This operation headquartered in the Rockefeller Center. Perhaps the most well-known individual of this topic is William Stevenson, a Canadian citizen with the code name “Intrepid”.  Stevenson would later write an account of the activities of himself and his agents during this time in the book A Man Called Intrepid. Ian Fleming, an agent of Intrepid, popularized the activities of this secret agency in the James Bond novels and movies. [42] It should be noted that this secret operation was known to Roosevelt and had his support, but Congress knew nothing of this. The book Desperate Deception: British Covert Operations in the United States, 1939-1944 by Thomas E. Mahl gives an extensive account of the covert activities of the British government during this time period before the war.

                In April of 1940, Stevenson and President Roosevelt met and discussed plans to coordinate operations between the FBI and the British secret intelligence.[43] British Security Coordination also created false documents to aid Churchill and Roosevelt in bringing America into war against Germany. Stevenson was responsible for forging two documents with the purpose of bringing America and Germany into war against one another. The first document provided by Stevenson was a map of an allegedly secret plan by Hitler to invade South America, which was used by Roosevelt in a radio address delivered on October 27, 1941. [44] Stevenson also provided a false document into the hands of Hitler on December 3, 1941, which purported to be a secret plan by Roosevelt to make a preemptive strike against Germany. [45] The BSC even had an American citizen murdered because he established a legal business relationship with Germany in the oil business. [46] Intrepid also oversaw a concerted effort to destroy the political career of Congressmen Hamilton Fish, who opposed Roosevelt’s foreign policy.

Conclusion: America Inherits the British Empire

                Prior to the aftermath of World War Two, Great Britain was viewed as the “indispensable nation” that was charged with policing the world. [47]Allied victory in World War Two cost Britain dearly. Over 400,000 casualties, a mountain of debt that brought bankruptcy, and the liquidation of the British Empire were some of the results of British victory. Soviet Russia was made the dominant power in Europe while Britain faced socialism at home and almost complete dependence on the United States.[48]

                Now the West was again placed at risk of being dominated by Soviet Russia, but America had risen from the ashes of war as the undisputed champion of freedom in the Western world. America had overtaken the British as the “indispensable nation”.  It was during this time that America pursued a foreign policy of interventionism and empire via military and political dominance to the present day. America has taken on the role of world policeman and empire that the British Empire once held. The U.S. basically inherited the British Empire. Was this a good thing for America or has this sown the seed of destruction just like it did the British?

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[1] David Gordon, “A Common Design: Propaganda and World War,” In The Costs of War: America’s Pyrrhic Victories, ed. John V. Denson (New Brunswick: Transaction Publishers, 1998), 308.

[2] N.J. Cull, Selling war: The British propaganda campaign against American "neutrality" in World War II (New York: Oxford University Press, 1995), 5

[3] Ibid, 6

[4] Ibid, 7

[5] Ibid, 7

[6] Ibid, 8

[7] Ibid, 10

[8] Ibid, 11

[9] Ibid, 13

[10] Ibid, 26

[11] Ibid, 27

[12] Ibid, 27

[13] Ibid, 27

[14] Ibid, 28

[15]David Gordon, “A Common Design: Propaganda and World War,” In The Costs of War: America’s Pyrrhic Victories, ed. John V. Denson (New Brunswick: Transaction Publishers, 1998), 308

[16]N.J. Cull, Selling war: The British propaganda campaign against American "neutrality" in World War II (New York: Oxford University Press, 1995), 19

[17]  David Gordon, “A Common Design: Propaganda and World War,” In The Costs of War: America’s Pyrrhic Victories, ed. John V. Denson (New Brunswick: Transaction Publishers, 1998), 308

[18] Ibid, 310

[19] Ibid, 310

[20] Ibid, 315

[21] Ibid, 316

[22] Ibid, 318

[23]U.S. Statues at Large 49 (1935-1936): 1081-85 in Schmitz, D. F. (2007). The triumph of internationalism: Franklin D. Roosevelt and a world in crisis, 1933-1941. Washington, D.C: Potomac Books. Pg. 113

[24] Ibid, 113

[25] For more on this topic, see Charles Callan Tansill’s Back Door to War: The Roosevelt Foreign Policy 1933-1941, “Roosevelt and the First Shot: A Study of Deceit and Deception” in Reassessing the Presidency: The Rise of the Executive State and the Decline in Freedom, edited by John V. Denson. See also Pearl Harbor: The Seeds and Fruits of Infamy by Percy L. Greaves, Jr.

[26] John V. Denson, “Roosevelt and the First Shot: A Study of Deceit and Deception”, In Reassessing the Presidency: The Rise of the Executive State and the Decline in Freedom, ed. John V. Denson (Auburn, AL: Ludwig von Mises Institute,2001), 485.

[27] Ibid, 485

[28] Ibid, 485

[29] Ibid, 486

[30] Ibid, 486

[31] Rosenman, Public Papers and Addresses of Franklin D. Roosevelt, vol. 9, 604-60; in Schmitz, D. F. (2007). The triumph of internationalism: Franklin D. Roosevelt and a world in crisis, 1933-1941. Washington, D.C: Potomac Books. Pg. 114

[32] Ibid, 114

[33]  John V. Denson, “Roosevelt and the First Shot: A Study of Deceit and Deception”, In Reassessing the Presidency: The Rise of the Executive State and the Decline in Freedom, ed. John V. Denson (Auburn, AL: Ludwig von Mises Institute,2001), 497

[34] Ibid, 497

[35] Ibid, 497

[36] Ibid, 498

[37] Franklin D. Roosevelt, “The Great Arsenal of Democracy”, American Rhetoric, http://www.americanrhetoric.com/speeches/fdrarsenalofdemocracy.html (accessed November 19, 2012)

[38] ibid

[39] ibid

[40] “Atlantic Charter” (1941), retrieved from http://avalon.law.yale.edu/wwii/atlantic.asp

[41] William Stevenson, A Man Called Intrepid: The Secret War, (New York and London: Harcourt Brace Jovanovich, 1976), xvii

[42]John V. Denson, “Roosevelt and the First Shot: A Study of Deceit and Deception”, In Reassessing the Presidency: The Rise of the Executive State and the Decline in Freedom, ed. John V. Denson (Auburn, AL: Ludwig von Mises Institute,2001), 486

[43]William Stevenson, A Man Called Intrepid: The Secret War, (New York and London: Harcourt Brace Jovanovich, 1976),  xxiii

[44]John V. Denson, “Roosevelt and the First Shot: A Study of Deceit and Deception”, In Reassessing the Presidency: The Rise of the Executive State and the Decline in Freedom, ed. John V. Denson (Auburn, AL: Ludwig von Mises Institute,2001), 487

[45] Ibid, 487                                                                                                                                                                                            

[46] Ibid, 487

[47] Patrick Buchanan, Churchill, Hitler and the Unnecessary War: How Britain Lost its’ Empire and the West Lost the World, (New York, NY: Three Rivers Press, 2008), 414

[48] Ibid, 415

Machiavelli and State Power

By Lew Rockwell

This talk was delivered on September 15, 2012, at a seminar sponsored by the Columbia University Department of Italian in association with the Ludwig von Mises Institute.

As libertarianism has acquired a higher profile in American life over the past several years, the attacks on and caricatures of libertarians have grown almost as rapidly. Libertarians, we read, are antisocial, and prefer isolation over interaction with others. They are greedy, and are unmoved if the poor should starve. They are naive about our dangerous enemies, and refuse their patriotic duty to support the government’s wars.

These caricatures and misconceptions can be put to rest by simply defining what libertarianism is. The libertarian idea is based on a fundamental moral principle: nonaggression. No one may initiate physical force against anyone else.

There is nothing antisocial about that. To the contrary, it is the denial of this principle that is antisocial, for it is peaceful interaction that lies at the heart of civilized society.

At first glance, hardly anyone can object to the nonaggression principle. Few people openly support acts of aggression against peaceful parties. But libertarians apply this principle across the board, to all actors, public and private. Our view goes well beyond merely suggesting that the State may not engage in gross violations of the moral law. We contend that the State may not perform any action that would be forbidden to an individual. Moral norms either exist or they do not.

Thus we cannot abide State kidnapping, just because they call it the draft. We cannot abide the incarceration of people who ingest the wrong substances, just because they call it the war on drugs. We cannot abide theft just because they call it taxation. And we cannot abide mass murder just because they call it foreign policy.

Murray Rothbard, who earned his Ph.D. from this very institution in 1956 and went on to become known as Mr. Libertarian, said that you could discover the libertarian position on any issue by imagining a criminal gang carrying out the action in question.

In other words, libertarianism takes certain moral and political insights shared by a great many people, and simply applies them consistently.

For example, people oppose monopoly because they fear the increase in prices, the decrease in product quality, and the centralization of power that accompany it.
The libertarian applies this concern for monopoly to the State itself. After all, private firms, which we are supposed to fear, can’t simply charge whatever they want for their goods or services. Consumers can simply switch from one supplier to another, or from a particular product to a close substitute. Firms cannot engage in quality deterioration without likewise losing customers, who can find competitors offering better products.
But the State may, by definition, charge the public whatever it likes for the so-called services it supplies. Its subjects must accept whatever level of quality the State should deign to provide. And there can never, by definition, be any competitor to the State, since the State is defined as the territorial monopolist of compulsion and coercion.

With its wars, its genocides, and its totalitarian atrocities, the State has proven itself by far the most lethal institution in history. Its lesser crimes include the debt crises it has caused, the self-perpetuating bureaucracies that feed off the productive population, and the squandering of resources – which might otherwise have improved the general standard of living through capital formation – on arbitrary and politically motivated projects.

Yet the State, despite its failures, is consistently given a benefit of the doubt that no one would extend to actors and firms in the private sector. For instance, educational outcomes remain dismal despite vastly increased expenditures and far lower class sizes than in the past. Had the private sector presided over such a disaster, we would never hear the end of all the denunciations of the malefactors of great wealth who are keeping our children ignorant. When the government sector performs so poorly, there is silence. Silence, that is, interrupted by demands that the State be given still more resources.

Years ago, when John Chubb of the Brookings Institution tried to uncover how many bureaucrats were employed in New York City’s public school system, it took six telephone calls to reach someone who knew the answer – and that person was not allowed to disclose the information. It took another half dozen calls to find someone who both knew the answer and could reveal it. The answer? Six thousand.

Chubb then called the Archdiocese of New York to find out how many bureaucrats were employed in the administration of the city’s Catholic schools, which educated one-sixth as many students. When the first person he called didn’t know the answer, he figured he was in for it again. But that person went on to say, "Wait, let me count." It was twenty-six.


Imagine if the situation were reversed, and the top-heavy school system had been the private one. There would be no end to the investigations, the media reports, the public outrage. But when the State is the guilty party, there is no interest in the story at all, and no one even hears about it.
Likewise, when the government courts force innocent parties to endure interminable delays and endless expense, there are no investigations or cries for justice. When the rich and famous are obviously favored by the system, people glumly accept it as a fact of life. Meanwhile, private arbitration companies are flourishing, quietly filling the gap left by the government’s awful system – and hardly anyone notices or cares, much less appreciates these improvements in our welfare.

The US government has carried out atrocities of an unspeakable kind, just in the past ten years, and justified them with propaganda claims that nobody around the world, apart from a gullible sector of the American population, took seriously. If K-Mart had somehow managed to do such a thing, everyone involved would have been roundly condemned, and the perpetrators would have been imprisoned, if not executed.
The government, on the other hand, persuades the people that they and the government are the same thing, that the government’s wars are their wars, that these conflicts involve us against them. People’s moral compasses become blurred as they begin to identify themselves and their own personal goodness, as they see it, with the wars in which "their" government is engaged.
In fact, for the libertarian, the government’s wars are not us versus them. The wars are a case of them versus them.

The other side of the Austro-libertarian coin is, of course, the Austrian School of economics.
The Austrian School has enjoyed a renaissance of sorts since the Panic of 2008, since so many economists who belong to this venerable tradition of thought predicted the crisis – in the face of official assurances to the contrary, in the media, among the political class, and from the Federal Reserve itself. Thanks to the Internet, it was impossible for official opinion to black out these dissident voices.

The Austrian School, which was born officially with Carl Menger’s 1871 book Principles of Economics, is sometimes conflated with other schools of thought loosely associated with the free market. But in its method, its price theory, its monopoly theory, its capital theory, its business-cycle theory, and in so much else, it is distinct from those other schools of thought, and often in direct opposition to them.
It is solidly realistic, and grounded in the individual actor and his decisions and preferences. It seeks to understand real-world prices, not the prices of a long-run equilibrium that can never exist except in the minds of economists.

It was the Austrians who solved problems that had vexed the classical economists, whose price theory could not account for why water, so necessary to life, commanded virtually a zero price on the market, while diamonds, a mere luxury, were so dear.


And it is the Austrians who predicted the Great Depression at a time when fashionable opinion claimed the business cycle had been tamed forever, who predicted the dot-com crash when Fed chairman Alan Greenspan was saying that perhaps booms didn’t necessarily have to be followed by busts any longer, and who, as I mentioned, predicted the most recent crisis when the regulators whom we are supposed to trust to keep the economy stable said there was no housing bubble and the fundamentals of that market were sound.
A common caricature holds that supporters of the free market believe the market yields a perfect social outcome, whatever that is supposed to mean. In a world of uncertainty and constant change, no system can yield a perfect result. No system can ensure that the whole structure of production instantaneously adjusts to precisely that allocation of capital goods that will yield the exact array of types and quantities of consumer goods that the public desires, while imposing the least cost in terms of opportunities foregone.

Our point is that no competing system can do a better job than the market. Only actors on the market can allocate resources in a non-arbitrary way, because only on the market can someone evaluate a course of action according to the economizing principle of profit and loss. This is what the Austrians call economic calculation.

This was the reason, economist Ludwig von Mises explained in 1920, that socialism could not work. Under socialism as traditionally understood, the State owned the means of production. Now if the State already owns all those things, then no buying and selling of them takes place. Without buying and selling, in turn, there is no process by which prices can arise. And without prices for capital goods, central planners cannot allocate resources rationally. They cannot know whether a particular production process should use ten units of plastic and nine units of lumber, or ten units of lumber and nine units of plastic (if we are indifferent between the two combinations from a technological point of view). Without market prices by which to compare incommensurable goods like lumber and plastic, they cannot know how urgently demanded each input is in alternative lines of production. Multiply this problem by the nearly infinite set of possible combinations of productive factors, and you see the impossible situation the central planning board faces.


Even the non-socialist State has a calculation problem. Since it operates without a profit-and-loss feedback mechanism, it has no way of knowing whether it has allocated resources in accordance with consumer preferences and in a least-cost manner. To the contrary, its decisions regarding what to produce and where, in what quantities and using which methods are completely blind from the point of view of social economizing. (By "social economizing" I mean the process by which we attain higher-valued ends with lower-valued means.)

Hence if we want to ensure that resources are not squandered or spent arbitrarily, we must keep them out of the hands of the State.

Strictly speaking, the Austrian School of economics has nothing to do with libertarianism. Economics, insisted economist Ludwig von Mises, is value-free. It describes rather than prescribes. It does not tell us what we ought to do. It merely explains the various phenomena we observe, from prices to interest rates, and supplies the cause-and-effect analysis that permits us to understand the consequences of coercive interference in the voluntary buying and selling decisions of individuals.

All the same, the knowledge the Austrian School imparts to us strongly implies that certain courses of action are more desirable from the standpoint of human welfare than others. Among other things, we learn from Austrian economics that the State’s allocation decisions cannot be socially economizing. We learn that the desires of consumers are best served by the free price system, which directs production decisions up and down the capital structure in accordance with society’s demands. And we learn that the State’s interference with money, the commodity that forms one-half of every non-barter exchange, gives rise to the devastation of the boom-bust business cycle.

Austro-libertarianism, then, in the spirit of Rothbard, takes the libertarian nonaggression principle and supplements it with the Austrian School’s descriptions of the free and unhampered market economy. The result is an elegant and compelling way of understanding the world, which in turn conveys the moral and material urgency of establishing a free society.

Now the seminar today asks us to consider questions of power and the State from an Austro-libertarian perspective, but also in light of Nicolo Machiavelli, the late fifteenth- and early sixteenth-century historian, political theorist, and counselor to princes. Most people know of Machiavelli for the views expressed in his short manual The Prince, and not for his longer and perhaps more substantial works, including his Discourses on Livy and his history of Florence. I have drawn largely but not exclusively from The Prince for my brief remarks today.


The Roman moralists of antiquity, and the Renaissance humanists who followed them, had urged that rulers had to possess a particular set of moral virtues. These were, first, the four cardinal virtues – cardinal from the Latin meaning "hinge"; hence all other virtues hinge on these – of courage, justice, temperance, and wisdom. Now all men were called to cultivate these virtues, but princes in particular were called to still others beyond these, such as princely magnanimity and liberality. These themes are developed in Cicero’s De Officiis, or On Duties, and in Seneca’s On Clemency and On Benefits.

The humanists anticipated the thesis Machiavelli would one day bring forth, namely that there ought to be a division between morality on the one hand and whatever happens to be expedient for the prince on the other. They answered it by cautioning that even if princely wickedness is not punished in this life, divine retribution in the next life would be fearsome and certain.

What made Machiavelli stand out so starkly was his radical departure from this traditional view of the prince’s moral obligations. As the great Machiavelli scholar Quentin Skinner points out, "When we turn to The Prince we find this aspect of humanist morality suddenly and violently overturned."

The prince, says Machiavelli, must always "be prepared to act immorally when this becomes necessary." And "in order to maintain his power," he will – not just sometimes but often – be forced "to act treacherously, ruthlessly, and inhumanely."

Most people will never interact with the prince themselves, hence Machiavelli’s note to the prince that "everyone can see what you appear to be" but "few have direct experience of what you really are." "A skillful deceiver," he continued, "always finds plenty of people who will let themselves be deceived." We can surmise from this what kind of person the prince would have to be.


It is customary to object at this point that Machiavelli counseled that the prince pursue virtue when possible, and that he should not pursue evil for its own sake. Machiavelli does indeed make such an argument in chapter 15 of The Prince. But on the other hand, Machiavelli says that conduct considered virtuous by traditional morality and the general run of mankind merely "seems virtuous," and that apparently wicked behavior that maintains one’s power only seems vicious.
Skinner poses, and answers, the historian’s natural question when faced with these moral claims:

But what of the Christian objection that this is a foolish as well as a wicked position to adopt, since it forgets the day of judgment on which all injustices will finally be punished? About this Machiavelli says nothing at all. His silence is eloquent, indeed epoch-making; it echoed around Christian Europe, at first eliciting a stunned silence in return, and then a howl of execration that has never finally died away.

Machiavelli’s view has sometimes been summarized as "the ends justify the means." Such a distillation does not capture all aspects of Machiavelli’s thought, and no doubt this pithy summary irritates professors of political theory. But if the end in mind is the preservation of the prince’s power, then "the ends justify the means" is not an unfair description of Machiavelli’s counsel.

This principle, in turn, is what the collectivist State now appeals to in order to justify its own deviations from what people would otherwise consider moral and good. F.A. Hayek wrote, "The principle that the end justifies the means is in individualist ethics regarded as the denial of all morals. In collectivist ethics it becomes necessarily the supreme rule; there is literally nothing which the consistent collectivist must not be prepared to do if it serves ‘the good of the whole,’ because the 'good of the whole' is to him the only criterion of what ought to be done." Collectivist ethics, he added, "knows no other limit than that set by expediency – the suitability of the particular act for the end in view."

Almost everyone now accepts, at least implicitly, the claim that a different set of moral rules applies to the State, or that to one degree or another the State is above morality as traditionally understood. Even if they would not use some of the verbal formulations of Machiavelli, at some level they believe it is unreasonable to expect the State or its functionaries to behave the way the rest of us do. The State may preserve itself by methods that no private business, or household, or organization, or individual would be allowed to employ for their own preservation. We accept this as normal.


This is merely a more general statement of the phenomenon I described earlier, whereby few people even bat an eye when the State engages in behavior that would be considered a moral enormity if carried out by any other person or entity.

Now it will be objected that the coercive apparatus of the State is so important to the right ordering of society that we cannot insist too strongly on libertarian purity when evaluating its behavior. Sometimes the State just has to do what it has to do.

Every so-called service the State provides has in the past been provided non-coercively. We are simply not encouraged to learn this history, and the framework we unknowingly adopt from our earliest days in school makes our imaginations too narrow to conceive of it.

Machiavelli launched one revolution, on behalf of the State. Ours is the revolution against it, and in favor of peace, freedom, and prosperity.