In the seventeenth century, the capitalist bourgeois classes were becoming an increasingly important part of the European economy.
The rising middle class was becoming too wealthy, too independent, and too influential. So, governments devised a response to the capitalist class: governments would create monopoly corporations that did what the private sector did, but could be controlled by the regime. Companies like the British East India Company and the Dutch East India Company were born, and they existed to strengthen the state and help make regime allies rich. This was mercantilism, which Murray Rothbard describes as the economic philosophy of absolutism.
The rise of the free-market “classical” liberals in the eighteenth and nineteenth centuries came with explicit opposition to these government cartels and monopolies. The liberals wanted a true private sector with true private property. They didn’t want “public-private partnerships” or ersatz “private” corporations that were just extensions of the regime.
Mass movements like the American Revolution had some success in destroying these mercantilist arrangements. Anti-mercantilist sentiment was one reason the Boston Tea Party targeted tea owned by the East India Company. The Patriots understood how the mercantilist machine worked. Liberals throughout Europe in the nineteenth century fought to create a truly free economy that could compete against or displace the state monopolies.
The liberals won some key victories, but the mercantilist impulse never really went away. Today, we find countless ways that regimes join up with ostensibly private enterprises to help both groups perpetuate their own power and influence.
At the center of it all is the financial sector, and the financial sector has long been specially targeted by mercantilists of every age. It’s why the US’s central bank, the Federal Reserve, began as a cartel of bankers who came together to limit competition and draw closer to federal power.
In recent decades, however, a new type of mercantilist enterprise has grown and become key in many federal programs. These are the nonprofit foundations that help create government pilot programs, fund pro-regime media projects, and work closely with regimes to accomplish a variety of ideological projects hatched by the ruling class. These are organizations like The National Endowment for Democracy, the Ford Foundation, the Gates Foundation, and others.
These are not private or independent organizations in the true sense of these words. They are something very different, and it is not a coincidence that we so often find these organizations’ fingerprints all over regime plans to centrally plan the economy, force vaccines on ordinary people, or limit access to so-called fossil fuels.
For these reasons, the Mises Institute has never been blindly “pro-business” or in favor of “privatization” when the goal is mere mercantilist monopolization. Rather, we seek a private sector that is truly independent of the regime.
In this issue of The Austrian, to expose the dangers of these public-private alliances, Senior Fellow Guido Hülsmann examines how “private” organizations have been at the forefront of what he sees as a renaissance of socialism in recent years. It seems private foundations have helped create the modern state-dominated economy by funding education and policy efforts every step of the way. Hülsmann notes that what private foundations want today is what many regimes will want in the future.
We also include a Q and A with economist Thorsten Polleit, who discusses his new book The Global Currency Plot: How the Deep State Will Betray Your Freedom, and How to Prevent It. Polleit takes a look at the role of the world’s central banks—and how they want a global currency designed to end economic freedom. The answer lies in private money and a truly private banking sector.
In this issue, readers will also find new book reviews from David Gordon, news about our students and scholars, and information on upcoming events and past successes. There is much more to come in the fall of 2023.
