Freedom of competition does not mean that you can succeed simply by imitating or copying precisely what someone else has done. Freedom of the press does not mean that you have the right to copy what another man has written and thus to acquire the success which this other man has duly merited on account of his achievements. It means that you have the right to write something different. Greetings and salutations my fellow plebs. My name is Walker and this is The Bitcoin Podcast.
The Bitcoin Time Chain is 840239 and the value of one bitcoin is still one bitcoin. Today's episode is the first of a six part series where I will cover the six lessons of Ludwig von Mises. You may have heard of these lessons recently thanks to Renato Moicano in his post fight interview. What Renato was referencing is a series of six lectures Mises delivered in Argentina which his wife later combined into a book called Economic Policy. Thoughts for today and tomorrow.
You can download the PDF of this book in the show notes. Now that the having is past us I thought this would be the perfect time to create six episodes for these six lessons to serve as a primer to the Austrian School of Economics. I'll call it Austrian Audible. The six lessons are as follows. One, Capitalism. Two, Socialism. Three, Interventionism. Four, Inflation. Five, Foreign Investment. Six, Policies. And ideas.
Today's lesson is Capitalism. And I'll also read you the introduction and forward to the book to set the stage for today's lesson and for the rest of them. Please share these lessons with your friends, family, and strangers on the internet who can benefit from the knowledge of real economics as taught by Mises and the Austrian School. You can find the links to watch or listen to the show on all platforms by going to bitcoinpodcast.net.
And if you are a bitcoin-only company looking to sponsor another fucking bitcoin podcast, hit me up on social media or by going to bitcoinpodcast.net slash sponsor. Without further ado, let's get into lesson one from Mises Six Lessons. Capitalism. Economic Policy. Thoughts for Today and Tomorrow. By Ludwig von Mises. Introduction. The ideal economic policy, both for today and tomorrow, is very simple.
Government should protect and defend against domestic and foreign aggression the lives and property of the persons under its jurisdiction, settle disputes that arise, and leave people otherwise free to pursue their various goals and ends in life. This is a radical idea in our interventionist age.
Governments today are often asked to regulate and control production, to raise the prices of some goods and services, and to lower the prices of others, to fix wages, to help some businesses get started, and to keep others from failing, to encourage or hamper imports and exports, to care for the sick and elderly, to support the profligate, and so on and on and on.
Ideally, government should be a sort of caretaker, not of the people themselves, but of the conditions which will allow individuals, producers, traders, workers, entrepreneurs, savers, and consumers to pursue their own goals in peace. If the government does that, and no more, the people will be able to provide for themselves much better than the government possibly could. This in essence is the message of Professor Ludwig von Mises in this small volume.
Professor Mises, 1881-1973, was one of the 20th century's foremost economists. He was the author of profound theoretical books, such as Human Action, Socialism, Theory and History, and a dozen other works. However, in these lectures delivered in Argentina in 1959, he spoke in non-technical terms suitable for his audience of business professionals, professors, teachers, and students. He illustrates theory with home-spun examples.
He explains simple truths of history in terms of economic principles. He describes how capitalism destroyed the hierarchical order of European feudalism and discusses the political consequences of various kinds of government. He analyzes the failures of socialism and the welfare state, and shows what consumers and workers can accomplish when they are free under capitalism to determine their own destinies.
When government protects the rights of individuals to do as they wish, so long as they do not infringe on the equal freedom of others to do the same, they will do what comes naturally, work, cooperate, and trade with one another. They will then have the incentive to save, accumulate capital, innovate, experiment, take advantage of opportunities, and produce. Under these conditions, capitalism will develop.
The remarkable economic improvements of the 18th and 19th centuries and Germany's post-World War II economic miracle were due, as Professor Mises explains, to capitalism. In economic policies, there are no miracles. You have read in many newspapers and speeches about the so-called German economic miracle, the recovery of Germany after its defeat and destruction in the Second World War. But this was no miracle.
It was the application of the principles of the free market economy, of the methods of capitalism, even though they were not applied completely in all respects. Every country can experience the same miracle of economic recovery, although I must insist that economic recovery does not come from a miracle. It comes from the adoption of, and is the result of, sound economic policies.
So we see that the best economic policy is to limit government to creating the conditions which permit individuals to pursue their own goals and live at peace with their neighbors. Government's obligation is simply to protect life and property, and to allow people to enjoy the freedom and opportunity to cooperate and trade with one another. In this way, government creates the economic environment that permits capitalism to flourish.
The development of capitalism consists in everyone's having the right to serve the customer better and or more cheaply, and this method, this principle, has, within a comparatively short time, transformed the whole world. It has made possible an unprecedented increase in world population.
When government assumes authority and power to do more than this, and abuses that authority and power, as it has many times throughout history, notably in Germany under Hitler, in the USSR under Stalin, and in Argentina under Perón, it hampers the capitalistic system and becomes destructive of human freedom. Senator Juan Perón, elected president in 1946, was in exile when Mises visited Argentina in 1959, having been forced out of the country in 1955.
His wife, the popular Eva, had died earlier in 1952. Although Perón was out of the country, he had many supporters and was still a force to be reckoned with. He returned to Argentina in 1973, was again elected president, and with his new wife, Isabelita, as vice president, ruled until he died ten months later. His widow, Isabelita, took over until her administration, charged with corruption, was finally ousted in 1976.
Argentina has had a series of presidents since then, and has made some strides toward improving her economic situation. Life and property have been accorded greater respect, some nationalized industries have been sold to private buyers, and the inflation has been slowed. The present work is a felicitous introduction to Mises' ideas. They are, of course, elaborated more fully in human action and his other scholarly works.
Newcomers to his ideas would do well, however, to start with some of his simple books, such as Bureaucracy or The Anti-Capitalist Mentality. With this background, readers will find it easier to grasp the principles of the free market and the economic theories of the Austrian school that Mises presents in his major works. Bettina Björn Grieves, February 1995. Forward.
The present book fully reflects the author's fundamental position for which he was and still is admired by followers and reviled by opponents. While each of the six lectures can stand alone as an independent essay, the harmony of the series gives an aesthetic pleasure similar to that derived from looking at the architecture of a well-designed edifice.
Fritz Matchlup, Princeton, 1979. Late in 1958, when my husband was invited by Dr. Alberto Benegas Lynch to come to Argentina and deliver a series of lectures, I was asked to write a book. I was asked to accompany him. This book contains, in written word, what my husband said to hundreds of Argentinian students in those lectures. We arrived in Argentina several years after Perón had been forced to leave the country.
He had governed destructively and completely destroyed Argentina's economic foundations. His successors were not much better. The nation was ready for new ideas, and my husband was equally ready to provide them. These lectures were delivered in English in the enormous lecture hall of the University of Buenos Aires. In two neighboring rooms, his words were simultaneously translated into Spanish for students who listened with earphones.
Ludwig von Mises spoke without any restraint about capitalism, socialism, interventionism, communism, fascism, economic policy, and the dangers of dictatorship. These young people who listened to my husband did not know much about freedom of the market or individual freedom.
As I wrote about this occasion in My Years with Ludwig von Mises, if anyone in those times would have dared to attack communism and fascism as my husband did, the police would have come in and taken hold of him immediately, and the assembly would have been broken up. The audience reacted as if a window had been opened, and fresh air allowed to breeze through the rooms. He spoke without any notes. As always, his thoughts were guided by just a few words written on a scrap of paper.
He knew exactly what he wanted to say, and by using comparatively simple terms, he succeeded in communicating his ideas to an audience not familiar with his work, so that they could understand exactly what he was saying. The lectures were taped, and the tapes were later transcribed by a Spanish-speaking secretary whose typed manuscript I found among my husband's posthumous papers.
On reading the transcript, I remembered vividly the singular enthusiasm with which those Argentinians had responded to my husband's words, and it seemed to me, as a non-economist, that these lectures delivered to a lay audience in South America were much easier to understand than many of Ludwig von Mises' more theoretical writings. I felt they contained so much valuable material, so many thoughts important for today and the future, that they should be made available to the public.
And since my husband had never revised the transcripts of his lectures for book publication, that task remained for me. I have been very careful to keep intact the meaning of every sentence, to change nothing of the content, and to preserve all the expressions my husband often used, which are so familiar to his readers. My only contribution has been to pull the sentences together and take out some of the little words one uses when talking informally.
If my attempt to convert these lectures into a book has succeeded, it is only due to the fact that, with every sentence, I heard my husband's voice. I heard him talk. He was alive to me, alive in how clearly he demonstrated the evil and danger of too much government, how comprehensively and lucidly he described the differences between dictators leadership and interventionism. With how much wit he talked about the important historic personalities.
Without few remarks, he succeeded in making bygone times come alive. I want to use this opportunity to thank my good friend George Cotter for assisting me with this task. His editorial experience and his understanding of my husband's theories were a great help to this book.
I hope these lectures will be read not only by scholars, but also by my husband's many admirers among non-economists, and I earnestly hope that this book will be made available to younger audiences, especially high school and college students around the world. Margaret von Mises, New York, June 1979. First Lecture. Capitalism. These descriptive terms which people use are often quite misleading.
In talking about modern captains of industry and leaders of big business, for instance, they call a man a chocolate king, or a cotton king, or an automobile king. Their use of such terminology implies that they see practically no difference between the modern heads of industry and those feudal kings, dukes, or lords of earlier days. But the difference is in fact very great, for a chocolate king does not rule at all. He serves.
He does not reign over conquered territory, independent of the market, independent of his customers. The chocolate king, or the steel king, or the automobile king, or any other king of modern industry, depends on the industry he operates and on the customers he serves. This king must stay in the good graces of his subjects, the consumers.
He loses his kingdom as soon as he is no longer in a position to give his customers better service and provide it at a lower cost than others with whom he must compete. Two hundred years ago, before the advent of capitalism, a man's social status was fixed from the beginning to the end of his life. He inherited it from his ancestors, and it never changed.
If he was born poor, he always remained poor, and if he was born rich, a lord or a duke, he kept his dukedom and the property that went with it for the rest of his life. As for manufacturing, the primitive processing industries of those days existed almost exclusively for the benefit of the wealthy. Most of the people, ninety percent or more of the European population, worked the land and did not come in contact with the city-oriented processing industries.
This rigid system of feudal society prevailed in the most developed areas of Europe for many hundreds of years. However, as the rural population expanded, there developed a surplus of people on the land. For this surplus of population without inherited land or estates, there was not enough to do, nor was it possible for them to work in the processing industries. The kings of the cities denied them access.
The numbers of these outcasts continued to grow, and still no one knew what to do with them. They were, in the full sense of the word, proletarians, outcasts whom the government could only put into the workhouse or the poor house. In some sections of Europe, especially in the Netherlands and in England, they became so numerous that, by the 18th century, they were a real menace to the preservation of the prevailing social system.
Today, in discussing similar conditions in places like India or other developing countries, we must not forget that in 18th century England, conditions were much worse. At that time, England had a population of 6 or 7 million people, but of those 6 or 7 million people, more than 1 million, probably 2 million, were simply poor outcasts, for whom the existing social system made no provision. What to do with these outcasts was one of the great problems of 18th century England.
Another great problem was the lack of raw materials. The British, very seriously, had to ask themselves this question. What are we going to do in the future when our forests will no longer give us wood we need for our industries and for heating our houses? For the ruling classes, it was a desperate situation, the statesman did not know what to do, and the ruling gentry were absolutely without any ideas on how to improve conditions.
Out of this serious social situation emerged the beginnings of modern capitalism. There were some persons among those outcasts, among those poor people, who tried to organize others to set up small shops which could produce something. This was an innovation. These innovators did not produce expensive goods suitable only for the upper classes, they produced cheaper products for everyone's needs. And this was the origin of capitalism as it operates today.
It was the beginning of mass production, the fundamental principle of capitalistic industry. Whereas the old processing industries serving the rich people in the cities had existed almost exclusively for the demands of the upper classes, the new capitalistic industries began to produce things that could be purchased by the general population. It was mass production to satisfy the needs of the masses.
This is the fundamental principle of capitalism as it exists today in all of those countries in which there is a highly developed system of mass production. Big business, the target of the most fanatic attacks by the so-called leftists, produces almost exclusively to satisfy the wants of the masses. Businesses producing luxury goods solely for the well-to-do can never attain the magnitude of big businesses.
And today, it is the people who work in large factories who are the main consumers of the products made in those factories. This is the fundamental difference between the capitalistic principles of production and the feudalistic principles of the preceding ages. When people assume, or claim, that there is a difference between the producers and the consumers of the products of big businesses, they are badly mistaken.
In American department stores, you hear the slogan, the customer is always right. And this customer is the same man who produces in the factory those things which are sold in the department stores. The people who think that the power of big business is enormous are mistaken also, since big business depends entirely on the patronage of those who buy its products. The biggest enterprise loses its power and its influence when it loses its customers.
50 or 60 years ago, it was said in almost all capitalist countries that the railroad companies were too big and too powerful. They had a monopoly, it was impossible to compete with them. It was alleged that, in the field of transportation, capitalism had already reached a stage at which it had destroyed itself, for it had eliminated competition.
What people overlooked was the fact that the power of the railroads depended on their ability to serve people better than any other method of transportation. Of course, it would have been ridiculous to compete with one of those big railroad companies by building another railroad parallel to the old line, since the old line was sufficient to serve existing needs. But very soon there came other competitors.
Freedom of competition does not mean that you can succeed simply by imitating or copying precisely what someone else has done. Freedom of the press does not mean that you have the right to copy what another man has written and thus to acquire the success which this other man has duly merited on account of his achievements. It means that you have the right to write something different.
Freedom of competition concerning railroads, for example, means that you are free to invent something, to do something, which will challenge the railroads and place them in a very precarious competitive situation. In the United States, the competition to the railroads in the form of buses, automobiles, trucks, and airplanes has caused the railroads to suffer and to be almost completely defeated as far as passenger transportation is concerned.
The development of capitalism consists in everyone's having the right to serve the customer better and or more cheaply, and this method, this principle, has within a comparatively short time transformed the whole world. It has made possible an unprecedented increase in world population. In 18th century England, the land could support only 6 million people at a very low standard of living.
Today, more than 50 million people enjoy a much higher standard of living than even the rich enjoyed during the 18th century, and today's standard of living in England would probably be higher still had not a great deal of the energy of the British been wasted in what were, from various points of view, avoidable political and military adventures. These are the facts about capitalism.
Thus, if an Englishman, or for that matter, any other man in any country of the world, says today to his friends that he is opposed to capitalism, there is a wonderful way to answer him. You know that the population of this planet is now 10 times greater than it was in the ages preceding capitalism. You know that all men today enjoy a higher standard of living than your ancestors did before the age of capitalism.
But how do you know that you are the one out of ten who would have lived in the absence of capitalism? The mere fact that you are living today is proof that capitalism has succeeded, whether or not you consider your own life very valuable. In spite of all its benefits, capitalism has been furiously attacked and criticized. It is necessary that we understand the origin of this antipathy.
It is a fact that the hatred of capitalism originated not with the masses, not among the workers themselves, but among the landed aristocracy, the gentry, the nobility of England and the European continent. They blamed capitalism for something that was not very pleasant for them. At the beginning of the 19th century, the higher wages paid by industry to its workers forced the landed gentry to pay equally higher wages to their agricultural workers.
The aristocracy attacked the industries by criticizing the standard of living of the masses of the workers. Of course, from our viewpoint, the workers' standard of living was extremely low. Conditions under early capitalism were absolutely shocking, but not because the newly developed capitalistic industries had harmed the workers. The people hired to work in factories had already been existing at a virtually subhuman level.
The famous old story repeated hundreds of times that the factories employed women and children and that these women and children before they were working in factories had lived under satisfactory conditions is one of the greatest falsehoods of history. The mothers who worked in the factories had nothing to cook with. They did not leave their homes and their kitchens to go into the factories.
They went into the factories because they had no kitchens, and if they had a kitchen, they had no food to cook in those kitchens. And the children did not come from comfortable nurseries. They were starving and dying. And all the talk about the so-called unspeakable horror of early capitalism can be refuted by a single statistic.
Precisely in these years in which the British capitalism developed, precisely in the age called the Industrial Revolution in England, in the years from 1760 to 1830, precisely in those years the population of England doubled, which means that hundreds or thousands of children who would have died in preceding times survived and grew to become men and women. If you want your Bitcoin stack to survive long enough to pass it down to your children, you need to keep it safe.
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Plus when you go to bitbox.swiss-walker and use promo code Walker, not only do you get 5% off, but you also help support this fucking podcast. So thank you. There is no doubt that the conditions of the preceding times were very unsatisfactory. It was capitalist business that improved them. It was precisely those early factories that provided for the needs of their workers, either directly or indirectly, by exporting products and importing food and raw materials from other countries.
Again and again the early historians of capitalism have, one can hardly use a milder word, falsified history. One anecdote they used to tell quite possibly invented involved Benjamin Franklin. According to the story, Ben Franklin visited a cotton mill in England and the owner of the mill told him full of pride, look here are cotton goods for Hungary. Benjamin Franklin, looking around, seeing that the workers were shabbily dressed, said, why don't you produce also for your own workers?
But those exports of which the owner of the mill spoke really meant that he did produce for his own workers, because England had to import all of its raw materials. There was no cotton either in England or in continental Europe. There was a shortage of food in England and food had to be imported from Poland, from Russia, from Hungary. These exports were the payment for the imports of the food which made the survival of the British population possible.
Many examples from the history of those ages will show the attitude of the gentry and aristocracy toward the workers. I want to cite only two examples. One is the famous British Spienhamland system. By this system the British government paid all workers who did not get the minimum wage determined by the government, the difference between the wages they received and this minimum wage. This saved the landed aristocracy the trouble of paying higher wages.
The gentry would pay the traditionally low agricultural wage, and the government would supplement it, thus keeping workers from leaving rural occupations to seek urban factory employment. Eighty years later, after capitalism's expansion from England to continental Europe, the landed aristocracy again reacted against the new production system.
In Germany, the Prussian junkers, having lost many workers to the higher paying capitalistic industries, invented a special term for the problem, flight from the countryside, land flute. And in the German parliament, they discussed what might be done against this evil as it was seen from the point of view of the landed aristocracy.
Prince Bismarck, the famous chancellor of the German Reich, in a speech one day said, I met a man in Berlin who had once worked on my estate, and I asked this man, why did you leave the estate? Why did you go away from the country? Why are you now living in Berlin? And according to Bismarck, this man answered, you don't have such a nice birgarten in the village as we have here in Berlin, where you can sit, drink beer, and listen to music.
This of course, a story told from the point of view of Prince Bismarck, the employer. It was not the point of view of all his employees. They went into industry because the industry paid them higher wages and raised their standard of living to an unprecedented degree. Today, in capitalist countries, there is relatively little difference between the basic life of the so-called higher and lower classes. Both have food, clothing, and shelter.
But in the 18th century and earlier, the difference between the man of the middle class and the man of the lower class was that the man of the middle class had shoes, and the man of the lower class did not have shoes. In the United States today, the difference between a rich man and a poor man means very often only the difference between a Cadillac and a Chevrolet. The Chevrolet may be bought secondhand, but basically it renders the same services to its owner.
He too can drive it from one point to another. More than 50% of the people in the United States are living in houses and apartments they own themselves. The attacks against capitalism, especially with respect to the higher wage rates, start from the false assumption that wages are ultimately paid by people who are different from those who are employed in the factories.
Now, it is all right for economists and for students of economic theories to distinguish between the worker and the consumer and to make a distinction between them. But the fact is that every consumer must, in some way or the other, earn the money he spends, and the immense majority of the consumers are precisely the same people who work as employees in the enterprises that produce the things which they consume.
Wage rates under capitalism are not set by a class of people different from the class of people who earn the wages. They are the same people. It is not the Hollywood Film Corporation that pays the wages of a movie star. It is the people who pay admission to the movies. But it is not the entrepreneur of a boxing match who pays the enormous demands of the prize fighters. It is the people who pay admission to the fight.
Through the distinction between the employer and the employee, a distinction is drawn in economic theory, but it is not a distinction in real life. Here, the employer and the employee ultimately are one and the same person. There are people in many countries who consider it very unjust that a man who has to support a family with several children will receive the same salary as a man who has only himself to take care of.
But the question is not whether the employer should bear greater responsibility for the size of a worker's family. The question we must ask in this case is, are you, as an individual, prepared to pay more for something? Let us say a loaf of bread.
If you are told that the man who produced this loaf of bread has six children, the honest man will certainly answer in the negative and say, in principle I would, but in fact, if it costs less, I would rather buy the bread produced by a man without any children. The fact is that, if the buyers do not pay the employer enough to enable him to pay his workers, it becomes impossible for the employer to remain in business.
The capitalist system was termed capitalism, not by a friend of the system, but by an individual who considered it to be the worst of all historical systems, the greatest evil that had ever befallen mankind. That man was Karl Marx. Nevertheless, there is no reason to reject Marx's term, because it describes clearly the source of the great social improvements brought about by capitalism. Those improvements are the result of capital accumulation.
They are based on the fact that people, as a rule, do not consume everything they have produced, that they save and invest a part of it. There is a great deal of misunderstanding about this problem, and, in the course of these lectures, I will have the opportunity to deal with the most fundamental misapprehensions, which people have concerned the accumulation of capital, the use of capital, and the universal advantages to be gained from such use.
I will deal with capitalism particularly in my lectures about foreign investment and about the most critical problem of present-day politics, inflation. You know, of course, that inflation exists not only in this country. It is a problem all over the world today. An often unrealized fact about capitalism is this. Savings mean benefits for all those who are anxious to produce or to earn wages.
When a man has accrued a certain amount of money, let us say $1,000, and instead of spending it, entrusts these dollars to a savings bank or an insurance company, the money goes into the hands of an entrepreneur, a businessman, enabling him to go out and embark on a project which could not have been embarked on yesterday because the required capital was unavailable. What will the businessman do now with the additional capital?
The first thing he must do, the first use he will make of this additional capital, is to go out and hire workers and buy raw materials, in turn causing a further demand for workers and raw materials to develop, as well as a tendency toward higher wages and higher prices for raw materials.
Long before the saver or the entrepreneur obtains any profits from all this, the unemployed worker, the producer of the raw materials, the farmer, and the wage earner are all sharing in the benefits of the additional savings. When the entrepreneur will get something out of the project, depends on the future state of the market and on his ability to anticipate correctly the future state of the market. But the workers, as well as the producers of raw materials, get the benefits immediately.
Much was said 30 or 40 years ago about the wage policy, as they called it, of Henry Ford. One of Mr. Ford's great accomplishments was that he paid higher wages than did other industrialists or factories. His wage policy was described as an invention, yet it is not enough to say that this new invented policy was the results of the liberality of Mr. Ford.
A new branch of business or a new factory in an already existing branch of businesses has to attract workers from other employments, from other parts of the country, even from other countries. And the only way to do this is to offer the workers higher wages for their work. This is what took place in the early days of capitalism, and it is still taking place today.
When the manufacturers in Great Britain first began to produce cotton goods, they paid their workers more than they had earned before. Of course, a great percentage of these new workers had earned nothing at all before that and were prepared to take anything they were offered.
But after a short time, when more and more capital was accumulated and more and more new enterprises were developed, wage rates went up, and the result was the unprecedented increase in British population, which I spoke of earlier. The scornful depiction of capitalism by some people as a system designed to make the rich become richer and the poor become poorer is wrong from beginning to end.
Marx's thesis regarding the coming of socialism was based on the assumption that workers were getting poorer, that the masses were becoming more destitute, and that finally all the wealth of a country would be concentrated in a few hands or in the hands of one man only, and then the masses of impoverished workers would finally rebel and expropriate the riches of the wealthy proprietors.
According to this doctrine of Karl Marx, there can be no opportunity, no possibility within the capitalistic system, for any improvement of the conditions of the workers. In 1864, speaking before the International Working Men's Association in England, Marx said that the belief that labor unions could improve conditions for the working population was absolutely in error.
The union policy of asking for higher wage rates and shorter work hours he called conservative, conservative being of course, the most condemnatory term which Marx could use. He suggested that the unions set themselves a new, revolutionary goal, that they do away with the wage system altogether, that they substitute socialism, government ownership of the means of production, for the system of private ownership.
If we look upon the history of the world, especially upon the history of England since 1865, we realize that Marx was wrong in every respect. There is no Western, capitalistic country in which the conditions of the masses have not improved in an unprecedented way. All these improvements of the last 80 or 90 years were made in spite of the prognostications of Karl Marx. For the Marxian socialists believed that the conditions of the workers could never be ameliorated.
They followed a false theory, the famous iron law of wages. The law which stated that a worker's wages, under capitalism, would not exceed the amount he needed to sustain his life or service to the enterprise. The Marxians formulated their theory in this way. If the workers' wage rates go up, rising wages above the substance level, they will have more children.
And these children, when they enter the labor force, will increase the number of workers to the point where the wage rates will drop, bringing the workers once more down to the subsistence level, to that minimal sustenance level, which will just barely prevent the working population from dying out. But this idea of Marx, and of many other socialists, is a concept of the working man precisely like that which biologists use, and rightly so, in studying the life of animals, of mice, for instance.
If you increase the quantity of food available for animal organisms or for microbes, then more of them will survive, and if you restrict their food, then you will restrict their numbers. But man is different, even the worker, in spite of the fact that Marxists do not acknowledge it, has human wants other than food and reproduction of his species.
An increase in real wages results not only in an increase in population, it results also, and first of all, in an improvement in the average standard of living. This is why today we have a higher standard of living in Western Europe and in the United States than in the developing nations of, say, Africa. We must realize, however, that this higher standard of living depends on the supply of capital. This explains the difference between conditions in the United States and conditions in India.
Modern methods of fighting contagious disease have been introduced in India, at least to some extent. And the effect has been an unprecedented increase in population, but since this increase in population has not been accompanied by a corresponding increase in the amount of capital invested, the result has been an increase in poverty. A country becomes more prosperous in proportion to the rise in the invested capital per unit of its population.
I hope that in my other lectures, I will have the opportunity to deal in greater detail with these problems and will be able to clarify them, because some terms, such as the capital invested per capita, require a rather detailed explanation. But you have to remember that, in economic policies, there are no miracles. You have read in many newspapers and speeches about the so-called German economic miracle, the recovery of Germany after its defeat and destruction in the Second World War.
But this was no miracle. It was the application of the principles of free market economy, of the methods of capitalism, even though they were not applied completely in all respects. Every country can experience the same miracle of economic recovery, although I must insist that economic recovery does not come from a miracle. It comes from the adoption of, and is the result of, sound economic policies. And that's a wrap on this Austrian Audible episode of The Bitcoin Podcast.
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