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Why America is NOT Going Totalitarian

Written by Gary North on October 6, 2014

We say that individuals are responsible for their actions. Libertarianism teaches this. Christianity teaches this. There is no plea bargaining on judgment day. There are no corporate defenses. “The devil made me do it” will not hold up in that court.

We should explain economics in terms of individuals’ decisions. We should also explain politics this way, too.


We distinguish between microeconomics and macroeconomics. Microeconomics has to do with individual decision-making in a private property system. Macroeconomics has to do with how an entire economy functions.

Austrian School economics teaches that we should begin to study macroeconomics by studying microeconomics. Macroeconomics can be explained only as the outcome of microeconomics. What an individual does in a private property legal order can be explained in terms of economic theory: profit and loss. What the entire economy does can also be explained in terms of individual profit and loss. Any system of macroeconomics whose defenders assert its autonomy from microeconomics is an illusion. Cause and effect in economic theory begin with individual decision-making.

The question is this: Who holds the hammer? Who has final authority: the customer with money or the business with products? The Austrian School is clear: the customer with money, which is the most marketable commodity. Money is the hammer.

In politics, the hammer is the vote. Votes are sanctions: positive and negative. They determine in the aggregate which politician wins and which politician loses. In this sense, micro and macro are unified.

But there is a fundamental difference between market sanctions and political sanctions. This difference is best understood in terms of selling your vote. You can exercise your vote for expected future returns from the government, but you are not legally allowed to sell your vote because a particular politician pays you money. That would be illegal. The idea of “one man, one vote” is very different from “one man, one dollar.” A man is allowed to collect as many dollars as he can persuade other people to give to him, by gift or exchange. This is not true of political voting. It is never the case of “one man, multiple votes” for the same candidate, except in Cook County, Illinois, where your vote counts and counts and counts (Dick Gregory).

The free market’s system of positive and negative sanctions, which we call profit and loss, governs microeconomics. It does not operate in the same way in the field of politics. Politics has to do with judicial sanctions, which are mandatory: legalized violence. Market profit and loss have to do with economic sanctions, which are not mandatory. A government official can legally tell you what to do. Company CEOs cannot tell you what to do. You can take it or leave it.

(For the rest of my article, click the link.)

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2 thoughts on “Why America is NOT Going Totalitarian

  1. Grumpy Old Man says:

    This works fine as long as voters respect the legal system. When that breaks down people behave based on more personal values.

  2. Johnp1960 says:

    Dr. North,
    The problem is the vast majority of Americans have a sort of bovine acceptance to intrusive government. All these politicians have to do is point to the latest,(Blow-back inspired), terror threat and most Americans nod assent and more liberties are lost. You may be correct in the percentage of GDP that goes to taxes, but, have you considered the burden of regulations and rules, how much this has cost each and everyone of us, since, say 1945, when the GDP percentage was highest? I wasn't alive then, but I've heard things were ALOT looser! If the house of cards of an economy doesn't collape from debt and regulation, I envision a future more along the lines of "The Minority Report" a Tom Cruise movie from a few years ago. I'm not wanting that, but I think it's where we are headed.