Star Wars and the Austrian School: A Brief Overview

By Zach Foster

Originally published by Young Americans For Liberty

Star Wars is unquestionably a brilliant saga that touches the hearts of many through its incorporation of timeless literary archetypes and humanist themes.  Adventure, love, loss, spirituality, good vs. evil, and the triumph of the human (and humanoid) spirit...

 

Yet there are other characteristics standing out that demand attention and respect, such as the saga’s inclusion of patterns of history (great wars and economic or political disasters) and of the interactions and exchanges of societies and individuals.  One could practically point to passages from Mises’ Human Action or Theory and History while watching any given Star Wars episode!

 

Everyone knows the basic storyline that spans six episodes and numerous television and novel tie-ins.  A once prosperous and peaceful republic decays over time from corruption and then war.  Victory over secessionists in a great galactic war only serves to undermine the Republic’s ideals of liberty and hastens its demise and overt reorganization into the Galactic Empire.  Following two decades of imperial rule and repression, a guerrilla army dedicated to reestablishing the Republic and maintaining its founding principles of liberty fights a lengthy campaign, pursuing only the help of willing parties, eventually destroying the Empire and restoring republican democracy to the galaxy.

 

While the whole republican democracy vs. imperial rule theme is incredibly broad and universal, there are a number of factors that tug on the heart strings of any Austrian economists.  The saga begins with the Trade Federation, involved in a dispute over taxing trade routes, launching a blockade of the planet Naboo.  This is unquestionably an aggressive action inflicted on a sovereign people for the purpose of maintaining protectionist taxes and other economic interventionism—a crime not only against a sovereign people but also a violation of the free market.

 

Throughout the Clone Wars, part of the C.I.S. (Separatist) war effort is paid for by Trade Federation revenues, as well as profits generated by the Intergalactic Banking Clan (secretly controlled by the emperor-to-be Palpatine).  Can anyone say Intergalactic Federal Reserve?  At the same time, the Republic’s war effort is paid for by inflation by its own central bank, and probably also by raising taxes on Republic member worlds.

 

The end of the Clone Wars is met the rise of the Empire and Darth Vader—warnings of what happens when great leaders and great societies sacrifice their principles under an end-justifies-the-means mentality and invariably become what they originally set out to fight against.  In order to carry out the Wilsonian fantasy of “making the world [err, galaxy] safe for democracy” the Republic had to become an Empire, a threshold from which there was no return.

 

Then comes the Rebel Alliance, a coalition resembling that of thirteen autonomous states during the American Revolutionary War, fighting the Empire so that the Republic and its Constitution could be restored.  This Republic would be one that respects individual rights and the self-determination of worlds.  What did the Rebels give to the galaxy? “A republic, if you can keep it” (Benjamin Franklin).

 

Across the journey the audience is introduced to fascinating commercial centers.  Two such places, radically different from each other, are Coruscant and Tatooine.  Corsuscant and its booming skyscrapers represent the hustle and bustle of Wall Street, while the desert spaceports of Tatooine are a haven for the black market—some would call the black market the free market.  Whatever drugs, technology, equipment, and other goods are off the market where the Republic  rigidly enforces its prohibitionist and protectionist laws can easily be obtained in the unregulated bazaars of Tatooine—for the right price of course.  There’s a whole galaxy thriving with exchanges and movement and all sorts of human and humanoid action to explore!

 

Let this serve as an introduction to a series of glimpses into the Star Wars universe through the eyes of an Austrian economist.  Feel free to come along for the ride, and may the Force be with you.

[Check out the original publication!]

 

Image edited by Zach Foster. Background taken from a U.S. government photo and in the public domain.

The Government and the Currency

By Ludwig von Mises

 

Media of exchange and money are market phenomena. What makes a thing a medium of exchange or money is the conduct of parties to market transactions. An occasion for dealing with monetary problems appears to the authorities in the same way in which they concern themselves with all other objects exchanged, namely, when they are called upon to decide whether or not the failure of one of the parties to an act of exchange to comply with his contractual obligations justifies compulsion on the part of the government apparatus of violent oppression. If both parties discharge their mutual obligations instantly and synchronously, as a rule no conflicts arise which would induce one of the parties to apply to the judiciary. But if one or both parties' obligations are temporally deferred, it may happen that the courts are called to decide how the terms of the contract are to be complied with. If payment of a sum of money is involved, this implies the task of determining what meaning is to be attached to the monetary terms used in the contract.

 

Thus it devolves upon the laws of the country and upon the courts to define what the parties to the contract had in mind when speaking of a sum of money and to establish how the obligation to pay such a sum is to be settled in accordance with the terms agreed upon. They have to determine what is and what is not legal tender. In attending to this task the laws and the courts do not create money. A thing becomes money only by virtue of the fact that those exchanging commodities and services commonly use it as a medium of exchange. In the unhampered market economy the laws and the judges in attributing legal tender quality to a certain thing merely establish what, according to the usages of trade, was intended by the parties when they referred in their deal to a definite kind of money. They interpret the customs of the trade in the same way in which they proceed when called to determine what is the meaning of any other terms used in contracts.

 

Mintage has long been a prerogative of the rulers of the country. However, this government activity had originally no objective other than… (Read more)

 

Source: Mises.org

Inflation Targeting Hits the Wall

By Anthony P. Mueller

 

The financial-market crisis is not over but has grown into a vicious sovereign-debt crisis. Nevertheless, monetary policy makers of the major economies go on to practice the same sort of policy that has led to the crisis. Following the model of inflation targeting, they continue to disregard the quantity of money and the amount and kind of credit creation. As they did before, central bankers cut interest rates as low as they can. Few seem to remember that the monetary-policy concept of inflation targeting was adopted with the promise that low and stable inflation rates would produce financial and economic stability. Reality has not confirmed this assurance. On the contrary, inflation targeting was instrumental in bringing about the current financial crisis.

 

What Is Inflation Targeting?

A central bank that pursues an inflation-targeting monetary policy model would raise the policy interest rate (which in the case of the United States is the federal-funds rate) when the current price-inflation rate tends to move beyond the target and to reduce the policy interest rate when the rate tends to fall below the range. Operationally, the inflation rate is the target variable of this approach while the policy interest rate serves as the instrument variable. Different from monetarism, the monetary aggregates play only a secondary or no role at all in the inflation-targeting model.

 

The monetary policy model of inflation targeting can be… (Read on)

 

Source: Mises.org