Exceptionalism In Economic Terms

|
Posted: Mar 22, 2021 10:56 AM
Exceptionalism In Economic Terms

Source: AP Photo/Mark Lennihan

A valid question is, “What does American Exceptionalism look like in economic terms?” Or better yet, let us define exactly what American Exceptionalism is in economic terms. There is no better reference than the great Austrian Economist, Ludwig von Mises. Von Mises clearly imposed this superior economic system in exact opposition to the collectivist, statist system. In fact, von Mises explained in his 1920 manuscript, Economic Calculation in the Socialist Commonwealth, that a “socialist economy itself is ‘impossible’ [...] really and truly and literally impossible,”[1] as Dr. Salerno paraphrases von Mises in his Postscript in the 1990 edition of the book.

Salenro summaries von Mises’ explanation by describing first the three essential provisions:

[T]he necessary and sufficient conditions of existence and evolution of human society is liberty, property, and sounds money: the liberty of each individual to produce and exchange according to independently formed value judgments and price appraisements; unrestricted private ownership of all types and orders of producers’ goods as well as of consumers’ good; and the existence of a universal medium of exchange whose value is not subject to large or unforeseeable variations.

Abolish all, or even one, of these institutions and human society disintegrates amid a congeries of isolated household economies and predatory tribes.[2]

What von Mises calls the “intellectual division of labor” goes on to describe the process in which this superior economy, the intended economy of the United States, exercises its means of exchange in the free-marketplace which:[3]

[...] emerges when private property owners are at liberty to exchange goods and services against money according to their individual value judgments and price appraisements.  Thus in a market society every individual mind is accorded a dual role in determining the quantities of monetary calculation.  In their consumer roles, all people make monetary bids for the existing stocks of final goods according to their subjective valuations, leading to the emergence of objective monetary exchange ratios which relate the value of all consumer goods to one another.[4]

Essentially, free individuals are at liberty to openly exchange with each other to their own satisfaction and desired value. There is no more level of a playing field than this. This is the economy of the Great American Experiment; free individuals making free and independent decisions that suit and satisfy their own needs. This is American Exceptionalism at work in an economic system. The collective system smashes, shatters, and oppresses all of this. It is important to realize that “administrations prior to the 1930s, and most likely beyond, were working within a long established tradition of balanced budgets and low levels of government expenditures relative to the private sector (always with exceptions imposed by wartime finance).”[5]

[1] Ludwig von Mises, 1990 (originally published 1920), Economic Calculation in the Socialist Commonwealth, Postscript: Why a Socialist Economy is “Impossible” by Joseph T. Salerno, (Auburn, AL: Ludwig von Mises Institute), [http://mises.org/econcalc.asp], p. 49.

[2] Ludwig von Mises, 1990 (originally published 1920), Economic Calculation in the Socialist Commonwealth, Postscript: Why a Socialist Economy is “Impossible” by Joseph T. Salerno, (Auburn, AL: Ludwig von Mises Institute), [http://mises.org/econcalc.asp], p. 49.

[3] Ludwig von Mises, 1990 (originally published 1920), Economic Calculation in the Socialist Commonwealth, (Auburn, AL: Ludwig von Mises Institute), [http://mises.org/econcalc.asp], p. 52.

[4] Ludwig von Mises, 1990 (originally published 1920), Economic Calculation in the Socialist Commonwealth, Postscript: Why a Socialist Economy is “Impossible” by Joseph T. Salerno, (Auburn, AL: Ludwig von Mises Institute), [http://mises.org/econcalc.asp], p. 52.

[5] Robert B. Ekelund Jr. and Mark Thornton, December 1986, “Schumpeterian Analysis, Supply-Side Economics, and Macroeconomic Policy in the 1920s," Review of Social Economy, Vol. 44 No.3, p. 234.