"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

Thursday, January 27, 2011

Let's Forget, for a Moment, About Economics. How About Some English Literature? George Orwell, Perhaps?



I don't know if students today are aware of the English writer George Orwell.  But back in the early to mid 1980s, when the US-USSR Cold War still ongoing, George Orwell's novel Nineteen Eighty-Four, was often required reading.  You see, we in the West looked at this dystopian novel as an example of the evils of Communism, of Soviet Russia, and of what to avoid.

For those not aware of the novel, here is a brief summary by Wiki:
Nineteen Eighty-Four (sometimes written 1984) is a 1949 dystopian novel by George Orwell about an oligarchical, collectivist society. Life in the Oceanian province of Airstrip One is a world of perpetual war, pervasive government surveillance, and incessant public mind control. The individual is always subordinated to the state, and it is in part this philosophy which allows the Party to manipulate and control humanity. In the Ministry of Truth, protagonist Winston Smith is a civil servant responsible for perpetuating the Party's propaganda by revising historical records to render the Party omniscient and always correct, yet his meagre existence disillusions him to the point of seeking rebellion against Big Brother, eventually leading to his arrest, torture, and reconversion.

Why do I bring this up?  There was always one passage in the novel that struck me.  And occasionally, after watching the news, especially after reading statistics such as unemployment figures, GDP, or even watching the stock market, I can't help but recall a passage from the novel Nineteen Eighty-Four.

This is the passage:
But actually, he thought as he re-adjusted the Ministry of Plenty's figures, it was not even forgery. It was merely the substitution of one piece of nonsense for another. Most of the material that you were dealing with had no connexion with anything in the real world, not even the kind of connexion that is contained in a direct lie. Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head. For example, the Ministry of Plenty's forecast had estimated the output of boots for the quarter at one-hundred-and-forty-five million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been over-fulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than one-hundred-and-forty-five millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot. And so it was with every class of recorded fact, great or small. Everything faded away into a shadow-world in which, finally, even the date of the year had become uncertain.
I'm not saying that we live in such times.  We don't.  But sometimes I fear that we are trending toward such an era.

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