Orwell, a man of the “left,” could not remain silent in the face of the horrors of Stalinism. Twice — during the Spanish Civil War and again at the dawn of the Cold War — he refused to permit his comrades to blind themselves to where their collectivism had led and could lead again. For his favor he was called a conscious tool of fascism, a stinging accusation considering he had gone to Spain to fight fascism. (But for a few inches, the bullet that penetrated Orwell’s neck in Spain would have denied us the latter warnings, Animal Farm and Nineteen Eighty-Four. We would have never known what the fascists had cost us.)

Hayek, a man of the “right,” risked ostracism and worse in 1944 by publishing The Road to Serfdom, in which this Austrian-turned-Briton, writing in England at the height of World War II, warned that central economic planning would, if pursued seriously, end in a totalitarianism indistinguishable from the Nazi enemy. That couldn’t have been easy to write at that time and place — central planning was much in vogue among the intelligentsia. While a good deal of the reception was serious and respectful, a good deal of it was not. Herbert Finer, in Road to Reaction, called Hayek’s book “the most sinister offensive against democracy to emerge from a democratic country for many decades”; it expressed “the thoroughly Hitlerian contempt for the democratic man.”

Not surprisingly, it was The Road to Serfdom that brought Orwell and Hayek together in print. Orwell briefly reviewed the book along with Konni Zilliacus’s The Mirror of the Past in the April 9, 1944 issue of The Observer. The man who would publish Animal Farm a year later and Nineteen Eighty-Four five years later found much to agree with in Hayek’s work. He wrote:

Shortly, Professor Hayek’s thesis is that Socialism inevitably leads to despotism, and that in Germany the Nazis were able to succeed because the Socialists had already done most of their work for them, especially the intellectual work of weakening the desire for liberty. By bringing the whole of life under the control of the State, Socialism necessarily gives power to an inner ring of bureaucrats, who in almost every case will be men who want power for its own sake and will stick at nothing in order to retain it. Britain, he says, is now going the same road as Germany, with the left-wing intelligentsia in the van and the Tory Party a good second. The only salvation lies in returning to an unplanned economy, free competition, and emphasis on liberty rather than on security. In the negative part of Professor Hayek’s thesis there is a great deal of truth. It cannot be said too often — at any rate, it is not being said nearly often enough — that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamed of.

This is a significant endorsement, for no one understood totalitarianism as well as Orwell. Indeed, in Why Orwell Matters, Christopher Hitchens points out that Nineteen Eighty-Four impressed Communist Party members behind the Iron Curtain. He quotes Czeslaw Milosz, the Polish poet and Nobel laureate, who before defecting to the West was a cultural attaché for the Polish communist government: “Orwell fascinates them [members of the Inner Party] through his insight to the details they know well…. Even those who know Orwell only by hearsay are amazed that a writer who never lived in Russia should have so keen a perception into its life.” (An audio interview with Hitchens about Orwell is here.)

But true to his left state-socialism, Orwell could not endorse Hayek’s positive program:

Professor Hayek is also probably right in saying that in this country the intellectuals are more totalitarian-minded than the common people. But he does not see, or will not admit, that a return to “free” competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State. The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led, and since the vast majority of people would far rather have State regimentation than slumps and unemployment, the drift towards collectivism is bound to continue if popular opinion has any say in the matter.

…Capitalism leads to dole queues, the scramble for markets, and war. Collectivism leads to concentration camps, leader worship, and war. There is no way out of this unless a planned economy can somehow be combined with the freedom of the intellect, which can only happen if the concept of right and wrong is restored to politics.

Short Shrift

It’s disappointing to see Orwell give such short shrift to Hayek’s positive thesis. He is glib and dogmatic, which is unbecoming a serious intellectual such as Orwell. His ignorance of economics leaps from the page.

“[A] return to ‘free’ competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the State.” It’s hard to believe that someone so familiar with Stalinism could have written that. Even without knowing much economics, could he really have thought that what goes on in market-oriented societies, even during depressions, could be worse than the famine Stalin inflicted on the Ukrainians, the show trials and executions, or the labor camps in Siberia?

“The trouble with competitions is that somebody wins them.” In a market producers compete to better serve consumers. The losers in that competition are not exiled or executed. They find other ways to serve consumers, just as producers are trying to serve them.

“Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led….” Where has monopoly arisen without the aid of the State? We find no market-generated monopoly in England or the United States. There, major business interests actively promoted protectionism and other interventions precisely to tamp down competition and protect their market shares. Of course, for many people, Orwell presumably among them, that is capitalism, a topic I return to below. (I should note that Hayek forswore laissez faire in his book, but that is a topic for another day.)

“[T]he vast majority of people would far rather have State regimentation than slumps and unemployment….” But that’s a false choice. Slumps and unemployment, as Hayek and his mentor Ludwig von Mises taught, are products of central-bank manipulation of money and interest rates, that is, of government not of the free market. The Great Depression, which must have been on Orwell’s mind, was no exception. The real choice is between freedom and security (including mutual aid) on the one hand, and State “regimentation,” slumps, and unemployment on the other.

I must pause here to focus on Orwell’s disgraceful use of the word “regimentation.” I say “disgraceful” because he committed the sin he himself so eloquently condemned in his justly famous essay “Politics and the English Language”: the sin of euphemism. In that great essay he wrote:

In our time, political speech and writing are largely the defence of the indefensible. Things like the continuance of British rule in India, the Russian purges and deportations, the dropping of the atom bombs on Japan, can indeed be defended, but only by arguments which are too brutal for most people to face, and which do not square with the professed aims of the political parties. Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness. Defenceless villages are bombarded from the air, the inhabitants driven out into the countryside, the cattle machine-gunned, the huts set on fire with incendiary bullets: this is called pacification. Millions of peasants are robbed of their farms and sent trudging along the roads with no more than they can carry: this is called transfer of population or rectification of frontiers. People are imprisoned for years without trial, or shot in the back of the neck or sent to die of scurvy in Arctic lumber camps: this is called elimination of unreliable elements. Such phraseology is needed if one wants to name things without calling up mental pictures of them. Consider for instance some comfortable English professor defending Russian totalitarianism. He cannot say outright, “I believe in killing off your opponents when you can get good results by doing so”. Probably, therefore, he will say something like this:

“While freely conceding that the Soviet regime exhibits certain features which the humanitarian may be inclined to deplore, we must, I think, agree that a certain curtailment of the right to political opposition is an unavoidable concomitant of transitional periods, and that the rigors which the Russian people have been called upon to undergo have been amply justified in the sphere of concrete achievement.”

Regimentation is the least of what goes on under a totalitarian regime.

Capitalism versus the Free Market

“Capitalism leads to dole queues, the scramble for markets, and war.” I think that part of the problem for Orwell is that a truly free market is not among the possible options. For him and many others, the choice is between a system run for employers and one run for workers. (The preferable alternative is not obvious.) In this view, the former is capitalism, sometimes dressed up as “the free market,” and the latter is socialism. We shouldn’t be too hard on Orwell for thinking this way, for many defenders of the market are just as careless when they write about mixed economies such as the one in the United States. Despite pervasive government intervention, we often hear business conduct defended because “under capitalism” consumers have the power to punish firms that ill-serve them. Tell that to consumers who chose not to buy GM and Chrysler cars. Tell that to people who lost land through eminent domain so that a big-box chain might prosper. Generations of business-inspired intervention to some extent must have rigged the market against consumers and workers. If not, what are the economists complaining about?

As for his inclusion of war in his list, let it be said that the scramble for markets and other economic objectives cannot be a sufficient condition for war. War requires the State, that is, the socialization of costs through taxation and conscription.

One wonders how Orwell avoided despair. He couldn’t accept (state) capitalism, and he saw the totalitarian tendencies of socialism up close. Yet he could write, “There is no way out of this unless a planned economy can somehow be combined with the freedom of the intellect, which can only happen if the concept of right and wrong is restored to politics.” (Emphasis added.)

Hadn’t he just read Hayek’s Chapter 11, “The End of Truth,” in which Hayek described how a serious commitment to central planning must produce “contempt for intellectual liberty”?

The word “truth” itself ceases to have its old meaning. It describes no longer something to be found, with the individual conscience as the sole arbiter of whether in any particular instance the evidence (or the standing of those proclaiming it) warrants a belief; it becomes something to be laid down by authority, which has to be believed in the interest of unity of the organized effort and which may have to be altered as the exigencies of this organized effort require it.

The general intellectual climate which this produces, the spirit of complete cynicism as regards truth which it engenders, the loss of the sense of even the meaning of truth, the disappearance of the spirit of independent inquiry and of the belief in the power of rational conviction, the way in which differences of opinion in every branch of knowledge become political issues to be decided by authority, are all things which one must personally experience — no short description can convey their extent.

But of course Orwell had experienced those things in Spain and knew how it was in Russia. He certainly put a heavy burden on that word “somehow.” How restoring the concept of right and wrong to politics would make central planning either decent or practical is a mystery no one has solved. (Of course, Mises had long before shown that socialism could not be practical because without prices arising out of the exchange of privately owned means of production, the socialist planner could not make rational calculations with respect to what should be produced, in what manner, and in what quantities.)

To end on a partly optimistic note, though Orwell presumably would not agree, central economic planning is not on the modern agenda. The threat today is not state socialism. It’s bureaucratic corporatism dressed up as progressive democracy.

Leoni (1913-1967) was a professor of legal theory and a lawyer in Italy. He was also an eminent liberal scholar and champion of individual freedom, who served as president of the Mont Pelerin Society. Freedom and the Law has a provenance worth describing. In 1958 Leoni, F. A. Hayek, and Milton Friedman each gave a series of lectures at the Fifth Institute on Freedom and Competitive Enterprise at what is now Claremont McKenna College in California. To say this meeting was consequential would be a gross understatement. Hayek’s lecturers were incorporated into The Constitution of Liberty. Friedman’s grew into Capitalism and Freedom, and Leoni’s were collected as Freedom and the Law. (Readers of this column will know that I previously wrote about Leoni’s essay “Voting Versus the Market,” which appears in Freedom and the Law.)

Leoni’s work was critical in helping to launch the multidisciplinary movement known as Law and Economics, in which these two areas of knowledge are applied to each other in order to achieve an otherwise impossible depth of understanding of society.

His work is highly relevant to the Judiciary Committee’s hearing on Sotomayor. In speeches she has suggested that because of sex and ethnicity, judges either can’t or shouldn’t try to be impartial in their rulings. Moreover, President Obama said he wanted a Court nominee with empathy based on life experience, as well as knowledge of the law. However, under questioning by adversarial senators, Sotomayor seemed to back away from both approaches. At one point, she said, “They [judges] don’t determine the law. Congress makes the laws. The job of a judge is to apply the law. And so it’s not the heart that compels conclusions in cases. It’s the law. The judge applies the law to the facts before that judge…. I look at the law that’s being cited. I look at how precedent informs it. I try to determine what those principles are of precedent to apply to the facts in the case before me and then do that…. We apply law to facts. We don’t apply feelings to facts.”

This is clearly what the conservative senators wanted to hear, but observers of varying ideological stripes were disappointed that Sotomayor stooped to feeding the television audience such pablum. She more than implied that a judge’s job is mechanistic: The facts plus the law plus precedent equals a ruling.

Nothing in human affairs is that simple. Judgment and interpretation are required every step of the way. This is why, contrary to popular fable, the line between the rule of law and the rule of men and women is so fine as to be nonexistent. (See John Hasnas’s important papers The Myth of the Rule of Law and the Depoliticization of Law [pdf]). Laws, which are intended to be applied to an unlimited number of unforeseeable future circumstances, do not speak for themselves. Human beings must interpret them. This does not mean language is inherently impenetrable. (I could hardly write if I believed that.) However, there is a broad middle ground between impenetrability and perfect clarity. As libertarian legal scholar Randy Barnett noted,  “While I do not share [the] view of law as radically indeterminate, I sure think it is a whole lot more underdeterminate than Judge Sotomayor made it out to be in her testimony today.”

If the law is underdeterminate–if there is scope for interpretation and more than one competing interpretation can be reasonable–what is an advocate of liberty to do?

Enter Leoni

Leoni offers us hope. Let’s start at the beginning. Why do we care who is on the Supreme Court? We care because down the street from the Court is the legislation factory we call the U.S. Congress. It has virtually nothing to do but churn out bills. In fact, most “serious” pundits judge congresses by how many bills they churn out. All the incentives faced by members of Congress push in one direction: to legislate (that is, meddle in people’s affairs).

Furthermore, we know that much of this legislation, since it interferes with what people want to do, will spawn litigation. Eventually some of these cases will wind up before the Supreme Court, the rulings of which will become the law of the land. Hence the interest in Supreme Court nominees.

Thus it would matter far less who is on the Supreme Court if there were little or no legislation.

But we need legislation, don’t we?

Without legislation there would be no law, right?

Where did we get the idea that a group of mostly undistinguished men and women–absurdly claiming to be our representatives and sitting in what is surely the ultimate ivory tower–should make blanket rules for everyone (except perhaps for themselves), regardless of time, place, and circumstance? It certainly has not protected liberty. Why don’t more people realize how poorly this simpleminded procedure serves a complex society?

Law versus Legislation

Most of us are badly in need of reminding that what is admirable about the Western legal tradition–that which has made our progress and prosperity possible–is the product not of legislatures but of something rather different. This fact compels us to distinguish law from legislation. As Hayek wrote in the first volume of Law, Legislation, and Liberty,

Unlike law itself, which has never been “invented” in the same sense, the invention of legislation came relatively late in the history of mankind….  Law in the sense of enforced rules of conduct is undoubtedly coeval with society; only the observance of common rules makes the peaceful existence of individuals in society possible. Long before man had developed language to the point where it enabled him to issue general commands, an individual would be accepted as a member of a group only so long as he conformed to its rules…. To modern man … the belief that all law governing human action is the product of legislation appears so obvious that the contention that law is older than law-making has almost the character of a paradox. Yet there can be no doubt that law existed for ages before it occurred to man that he could  make or alter it.

Or as Leoni put it, “[F]ewer and fewer people now seem to realize that just as language and fashion are the products of the convergence of spontaneous actions and decisions on the part of a vast number of individuals, so the law too can, in theory, just as well be a product of a similar convergence in other fields.”

He goes on, “The paradoxical situation of our times is that we are governed by men, not, as the classical Aristotelian theory would contend, because we are not governed by laws [legislation], but because we are.”

The question for Leoni is not how can we get good legislation and avoid bad legislation. The matter is much deeper than that: “It is a question of deciding whether individual freedom is compatible in principle with the present system centered on and almost completely identified with legislation.”

He tells us that in order to imagine an alternative to governance by legislatures, we need not visit Utopia. Rather, we may study Roman and English history: “Both the Romans and the English shared the idea that the law is something to be discovered more than to be enacted and that nobody is so powerful in his society as to be in a position to identify his own will with the will of the land.” This was law that judges discerned when resolving specific disputes brought before them by specific individuals; it was law based on custom and the expectations it gave rise to. (See Hasnas’s “Toward a Theory of Empirical Natural Rights” [pdf].)

Leoni lists three differences between judges in the sense just described and legislators:

1. “[J]udges or lawyers or others in a similar position are to intervene only when they are asked to do so by the people concerned, and their decision is to be reached and become effective, at least in civil matters, only through a continuous collaboration of the parties themselves and within its limits.”

2. “[T]he decision of judges is to be effective mainly in regard to the parties to the dispute, only occasionally in regard to third persons, and practically never in regard to people who have no connection with the parties concerned.”

3. “[S]uch decisions on the part of judges and lawyers are very rarely to be reached without reference to the decisions of other judges and lawyers in similar cases and are therefore to be in indirect collaboration with all other parties concerned, both past and present.”

Thus, “the authors of these decisions have no real power over other citizens beyond what those citizens themselves are prepared to give them by virtue of requesting a decision in a particular case.”

Free Markets versus Central Planning

Leoni draws important parallels between judge-discovered law and the free market on the one hand and legislation and central planning on the other: “[A] legal system centered on legislation resembles … a centralized economy in which all the relevant decisions are made by a handful of directors, whose knowledge of the whole situation is fatally limited and whose respect, if any, for the people’s wishes is subject to that limitation.”

He exposes the posturing of self-styled “representatives” with a refreshing bluntness not often encountered today:

No solemn titles, no pompous ceremonies, no enthusiasm on the part of applauding masses can conceal the crude fact that both the legislators and the directors of a centralized economy are only particular individuals like you and me, ignorant of 99 percent of what is going on around them as far as the real transactions, agreements, attitudes, feelings, and convictions of people are concerned…. The mythology of our age is not religious, but political, and its chief myths seem to be “representation” of the people, on the one hand, and the charismatic pretension of political leaders to be in possession of the truth and to act accordingly, on the other.

Finally, to bring this back to Judge Sotomayor and the job she will assuredly be awarded, Leoni noted that judiciary law can become like legislation “whenever jurists or judges are entitled to decide ultimately a case.” But isn’t that what a Supreme Court is entitled to do when it makes law for everyone everywhere?

“In our time,” Leoni wrote, “the mechanism of the judiciary in certain countries where ‘supreme courts’ are established results in the imposition of the personal views of the members of these courts, or of a majority of them, on all the other people concerned whenever there is a great deal of disagreement between the opinion of the former and the convictions of the latter.”

Thus the assertion that the Supreme Court must not become a legislature is wishful thinking. It must and it will–no matter who sits on it.

So what’s an advocate of liberty to do? Leoni concluded that we must limit legislatures to as few matters as possible. That in itself is a tall order. But it is a start in the right direction.

The Federal Reserve has been pumping hundreds of billions of newly created dollars into “the economy.” Much of that money has been sent to Wall Street to bailout large, struggling firms. But that’s just the beginning. President-elect Obama says that since he needs to “stimulate the economy” we can look forward to trillion-dollar budget deficits for years to come. Even before the financial turmoil began, the deficit had approached $500 billion. (Not to worry, though–Obama says deficit spending will impose “fiscal discipline” in the future.)

Of course, when the federal government spends more than it taxes, it has to get the extra money somewhere. Therein lies the treachery. The government’s vendors and other beneficiaries demand to be paid on time. So it borrows from the credit markets by selling Treasury securities to investors. The Federal Reserve in turn monetizes the debt by buying Treasury securities in the marketplace. It pays for those securities by creating bank reserves–money–from nothing, or as John Maynard Keynes suggested, by performing the “miracle … of turning stone into bread.”

Since we, like the rest of the world, have long lived with a fiat-money system–that is, a system in which the paper money is not backed by anything–there is nothing remarkable about this for most people (if they are aware of the procedure at all). But before long, they will pay a steep price whether or not they know who the culprit is.

The central bank’s expansion of money and credit used to be called inflation. Today that word is used mostly for one of the consequences of monetary expansion: generally rising prices. That’s unfortunate because that definition papers over the most important effects of deficit spending and monetary inflation.

To think of inflation as generally rising prices is to miss the real point. If an increase in the money simply raised the “price level” uniformly, it would be little more than an inconvenience. Prices might outrun wages at first, reducing real incomes, but soon wages would catch up and, in real terms, we’d be back where we started. The dollar values would larger, but without real consequence.

That’s not how  it works, though. Ludwig von Mises explained the process in a lecture he gave in Paris in 1938 and again in New York in 1945. It was later published under the title “The Non-Neutrality of Money.” (It appears in Money, Method, and the Market Process: Essays by Ludwig von Mises, edited by Richard M. Ebeling.)

Barter Economy

In this lecture Mises was determined to disabuse his listeners of their belief in the neutrality of money–that is, the idea that changes in the money supply leave real factors undisturbed. He understood why economists have held this erroneous belief. They began thinking of exchange in the admittedly simplified terms of a barter economy in which goods exchange for other goods. When they added money to this unrealistic picture, they assumed nothing of importance changed. As Mises put it, they believed “The functioning of the market mechanism as demonstrated by the concept of pure barter was not affected by monetary factors.”

These economists acknowledged that money prices can vary, but “they believed–and this is exactly the essence of the fallacy of money’s neutrality–that these changes in purchasing power were brought about simultaneously in the whole market and that they affected all commodities to the same extent.” Thus according to this view, the price level changes, but relative prices do not.

Here’s the problem. There really is no price level, except for ones constructed by averaging the prices of an arbitrary basket of goods and services. What really exist–and therefore what really count–are millions of prices for goods and services that are constantly subject to change in relation to one another. These prices emerge from the decisions of potential buyers and sellers who pursue their ends according to their subjective priorities.

You’d hardly know this by reading mainstream economics, but economic phenomena happen on the ground–where human action and interaction take place–and not at the level of statistical aggregates and averages that no real person ever encounters..

“Monetary problems are economic problems and have to be dealt with in the same way as all other economic problems,” Mises continued. He meant that when analyzing inflation and other monetary issues, our focus should not be “the economy” holistically conceived. As he put it, “Changes in the quantity of money and in the demand for money for cash holding do not occur in the economic system as a whole if they do not occur in the households of individuals. These changes in the households of individuals never occur for all individuals at the same time and to the same degree and they therefore never affect their judgments of value to the same extent and at the same time.”

In the economists’ lingo, macroeconomics is, or should be, rooted in microeconomics.

Inflation and Its Consequences

Take inflation. When the government expands the supply of money, it does not do so by dropping Federal Reserve notes evenly across the land from the proverbial helicopter. In the old days government would print money or filch precious metals to make coins, then spend the money as it liked. A few select people received the money first, and they could then enter the market and buy what they liked at prices still unaffected by the inflation. the late receivers were the losers.

These days the process is more complicated. The Treasury borrows money from private lenders by selling securities. With that cash it pays contractors and welfare-state beneficiaries. Meanwhile, the Federal Reserve creates money in the form of bank reserves by buying government securities. It’s called monetizing the debt. Banks then pyramid loans on these new reserves, expanding the money supply and lowering interest rates. Among the consequences is the depreciation of the monetary unit (rising prices) and the boom-bust trade cycle described by Mises and F.A. Hayek. (Hayek won his Nobel Prize in 1974 partly for his work on the trade cycle.).

Whichever method is used, the point is that the newly created money enters the economy at specific points rather than blanketing society evenly. The result is a diversion of the economy from the path it would have taken in the absence of the disturbance. A new pattern emerges the details of which cannot be predicted. Why not? Because people are people not robots. If your cash balance doubled tomorrow you wouldn’t mechanically double the quantities of everything you buy now . Instead, you would change the proportions–buy more of this and less of that–and even buy things you don’t buy today. You yourself can’t predict exactly what you would do in these circumstances.

“The additional quantity of money does not find its way at first into the pockets of all individuals; not every individual of those benefited first gets the same amount and not every individual reacts to the same additional quantity in the same way…,” Mises summed up. “The additional amount of money offered by them on the market makes prices and wages go up. But not all the prices and wages rise, and those which do rise do not rise to the same degree.”

Income Distribution

Now things get interesting. We begin to see that inflation is a form of government distribution of income. (I don’t say “redistribution” because in a true market economy income is not distributed but rather acquired through exchange.)

“If [for instance] the additional money is spent for military purposes,” Mises wrote, “the prices of some commodities only and the wages of only some kinds of labor rise, others remain unchanged or may even temporarily fall. They may fall because there are now on the market some groups of men whose incomes have not risen but who nevertheless are obliged to pay more for some commodities, namely for those asked by the men first benefited by the inflation. Thus, price changes which are the result of the inflation start with some commodities and services only, and are diffused more or less slowly from one group to the others. It takes time till the additional quantity of money has exhausted all its price changing possibilities.”

Make no mistake about it. This is a government-engineered transfer of resources, that is, a violation of property rights. And by the way, the distribution is not from rich to poor. If anything, the distribution is upwards.

As Mises explained, “But even in the end the different commodities are not affected to the same extent. The process of progressive depreciation has changed the income and the wealth of the different social groups. As long as this depreciation is still going on, as long as the additional quantity of money has not yet exhausted all its possibilities of influencing prices, as long as there are still prices left unchanged at all or not yet changed to the extent that they will be, there are in the community some groups favored and some at a disadvantage…. As long as the inflation is in progress, there is a perpetual shift in income and wealth from some social group, to other social groups.”

We have seen that government expansion of the money supply rearranges resources in society and interferes with the market’s natural tendency to serve consumers according to their own priorities. Thus inflation would be objectionable even if it did not cause malinvestment and seed the ground for a subsequent depression, that is, even if it did not spawn the trade cycle.

It is incumbent on the inflationists–specifically, the incoming government officials–to explain why income distribution is a proper function of government.