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A Critique of “The Grapes of Wrath:” Causes of Poverty Then and Now

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The “Grapes of Wrath” is a fictional account inspired by terrible plight of Oklahoma Sharecroppers during the “dust bowl” period that also coincided with America’s “Great Depression.” The actual causes of the circumstances, outside of the natural (drought, wind, crop failure), are barely hinted at in the film which instead presents the bewildered outlook of the tenant farmers who have no idea why the events of the movie are occurring, while implying the culprits are the rich and “well to do”, and also simultaneously presenting government as both co-conspirator and savior. The one-sided nature of the film and its contradictions regarding government are merely symptoms of it being fiction and presenting the image its author, or director, desired and while it is excellent in helping us understand the personal trials of the sharecroppers and highlighted an obvious failure in the system it did not provide clear understanding of what the failure was or why it happened. The best way to understand the hardships of the “Okies” and apply those lessons today, then, is to look at the actual history of that time period. After a brief study of the history it becomes apparent that the events depicted in “The Grapes of Wrath” are the result of ill-conceived government enforced property rights, government distortion of the markets, and corporatism, which can all be applied to current poverty issues. In addition to the causes of poverty that effected the “Okies” today we also have inflationary monetary policy, heavy regulatory burdens for entrepreneurship, and the drastic expansion of the size of the federal government that has led to its ever growing consumption of otherwise productive resources.

Terry Anderson and Peter Hill in “The Not So Wild, Wild West: Property Rights on the Frontier” describe how in the late 1800s, the federal government pursued an aggressive homesteading policy in the west. Advertising “free land” was politically popular and it was a way to quickly secure the nations expanding territory. However, in doing this the federal government ignored privately established property rights negotiated between Indians and ranchers or amongst early settlers of the lands and redistributed arbitrary plot sizes with residency and improvement requirements that were not market based. The result of this was a “race for property rights” that led to both land owners with insufficient capital to successfully use the land, they could only afford the “free land” and not the equipment, seed, etc. to profit from it, and to the landowner-tenant farmer system. Landowners from other regions and around the state of Oklahoma claimed stakes during homesteading land races and then rented the land to tenant farmers. Since the land was “free” and did not constitute the landowner’s primary residence or income he had less incentive in the maintenance or improvement of the land and the tenants often could not afford to make improvements or did not think of the land as their own and thus could not justify extra expenses to improve the landowner’s property.

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Filed under Economics, Politics
Oct 16, 2011

Keynesian v Austrian View of the Business Cycle

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Following World War I and during the Great Depression, John Maynard Keynes, often referred to as the “father of Modern Macroeconomics,” put forward a monetarist theory that claimed that government should take action, by controlling interest rates, to stabilize price levels. For example, the government’s central bank should “lower interest rates when prices tend to rise and raise them [interest rates] when prices tend to fall.”1 This is still the practice of the Federal Reserve to this day. As unemployment continued in the west up until World War II, Keynes expanded his theory to include government intervention to stimulate aggregate demand, a combination of “consumption, investment, and government spending,”2 by providing incentives for spending, investing, and higher wages while trying to create disincentives for saving or lowering wage rates. The theory also encouraged deficit spending in times of crisis since it would be the most direct way for government to quickly boost aggregate demand and revive the economy. These ideas were adopted by most Western governments from the 30s until the 60s when stagflation, high inflation and high unemployment, appeared to disprove the core of Keynes interventionary tactics. During this time the Austrian School of Economics, primarily Ludwig von Mises and F. A. Hayek repudiated the theories of Keynes, as well as Chicago School economist Milton Friedman. They ideas of the Austrians to some degree and the Chicago School influence the American government from the 80s all the way until our latest recession when both President George W. Bush, President Barack Obama and the Federal Reserve have re-instituted Keynesian ideas of deficit spending, intentional inflation by lowering interest rates and printing money, and trying to absorb unemployment in the public sector. However, similar to the 70s, we seem to again be facing stagflation as the dollar is continuously weakened and unemployment remains high. This has led to increased support for austerity measures in the United States, a more free market approach.

Macroeconomic theory could be considered a self-fulfilling prophecy. As policy shaped and applied to “aggregates” the repercussions will also be felt by the “aggregate.” However, in reality the aggregate, or any other amorphous entity, does not act, only individuals act. In “America’s Great Depression” by Murray Rothbard he explains that “this view holds that business cycles and depressions stem from disturbances generated in the market by monetary intervention. The monetary theory holds that money and credit-expansion, launched by the banking system, causes booms and busts.”3 Rothbard further explains that is absurd to assume that all entrepreneurs simultaneously make the same decisions leading to booms and busts that extend to all industries and areas of the economy, he says, “in the purely free and unhampered market, there will be no cluster of errors, since trained entrepreneurs will not all make errors at the same time…In considering general movements in business, then, it is immediately evident that such movements must be transmitted through the general medium of exchange—money. Money forges the connecting link between all economic activities. If one price goes up and another down, we may conclude that demand has shifted from one industry to another; but if all prices move up or down together, some change must have occurred in the monetary sphere.”4

Further, Keynes in the introduction to “The General Theory of Employment, Interest, and Money,” makes the strong claim that “classical” or free market economic theory only applies in special cases while his own theory, which he boldly labels “general,” applies generally in all cases.5 However, throughout history the ideas of Keynes and his advocacy for strong government intervention only gain real support during times of crisis. It is during times of recession, depression, or natural disasters, such as the dust bowl that affected the “Okies,” famously portrayed in “The Grapes of Wrath.” The plight of those most affected by such disasters always tug at the heart strings of their fellow countrymen, and rightly so. However, our emotional response and desire to help those in need should not be used to justify a “general” theory. Those who suffered the most in “The Grapes of Wrath” were not suffering due to capitalism or greed, though the case can be made when the circumstances are created in a work of fiction, but were due to an “act of God” that made previous resources and land quickly lose their value and created a shift in labor that was difficult to absorb by the market due to abrupt and unpredictable nature of the disaster.


1. The Concise Encyclopedia of Economics. John Maynard Keynes. http://www.econlib.org/library/Enc/bios/Keynes.html. Accessed on 15 October 2011.
2. Ibid.
3. Rothbard, Murray. (2005). America’s Great Depression Fifth Edition. Auburn, Alabama: Ludwig von Mises Institute. pp. xxxvii
4. Ibid. pp. 6-9
5. Keynes, John M. (1997). The General Theory of Employment, Interest, and Money. Amherst, New York: Promethius Books. pp. 3

Filed under Economics
Oct 15, 2011

On Bureaucracy: Mises Versus Weber

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When people think of government, specifically democratic government, they think of politicians or elected officials. They imagine representatives whose power is temporary and can be influenced by possibility of losing popular support and elections. However, “bureaucracy is the largest part of any government if measured by the number of people engaged or by fund expended” and is defined as “the totality of government offices or bureaus that constitute the permanent government of a state.” (Oszlak, 2005, 488-489) Elected officials and policy makers, for the most part, legislate or dictate goals, that ideally reflect the goals of the people they represent, but bureaucracy is the means through which those goals are pursued. The regulations, actions, and compulsion necessary to achieve the tasks and goals of policy makers emanate from bureaucracy. In other words, policy makers create an outline of action and bureaucracy is the source of the content and substance that is the state. Since bureaucracy is, by nature, “more permanent…than politician” it “makes the politician…more subject to bureaucracy” instead of the more common assumption of the bureaucracy being subject to the politician. (Anderson, 2004, 8-9) While the literature and theory on bureaucracy is disproportionately less, relative to its size and influence, compared to other components of the state, two major theorists have provided needed insight into this monumental, but intellectually neglected, institution: Max Weber, in “Economy and Society”, and Ludwig von Mises, in “Bureaucracy.”

Weber and Mises each approach bureaucracy from very different angles which, not coincidentally, leads them to starkly different observations and conclusions regarding the nature of bureaucracy and its impact on society. For Weber, his theories on bureaucracies are part of a “purely formal and typological discussion.” (Weber, 991) He describes the traits of the “ideal type” of bureaucracy as “arranged in a clearly defined hierarchy of offices;…compelled by the impersonal duties of their office; units and positions are arranged in a chain of command; …functions are clearly specified in writing, so there is specialization of task and a specified sphere of competence; and the bureaucrats behavior is subject to systematic control.” (Oszlak, 2005, 489) However, Weber focused much less on the cause of bureaucracies or the reasons they deviated from his ideal type, nor did he explain the axiomatic principles from which his ideal type was derived from. Instead he relies on historical relativism and a general institutional perspective that is biased towards “collective phenomena” as opposed to individual action in determining causal factors to describe bureaucracy, which he already accepts as both “inevitable” and “indestructible”, in abstractions of reality, whose generic nature and basis in flawed perception make the discovery of core “truths” impossible (Anderson, 2004, 6-9). Instead the observations are simply used as a means for predicting outcomes and do not attempt to answer “Why?”

Mises, on the other hand, relies on axiomatic principles to explain his theory of bureaucracy. The first principle is the “axiom of human action,” which can be described “simply as purposeful behavior” and is inherent to human beings “by virtue of their existence and their nature;” further human action “can be undertaken only by individual actors.” (Rothbard, 2004, 1-2) The second principle applicable here is the “Law of Marginal Utility,” which states that “things are valued as means in accordance with their ability to attain ends valued as more or less urgent.” (Rothbard, 2004, 21) For Mises, both bureaucratic action and non-bureaucratic action are undertaken by individuals with purpose toward some end, the difference, then, is that bureaucracy seeks ends without consideration for profit and non-bureaucratic institutions actions are profit driven. This concrete definition would apply to many if not all of the same institutions described by Weber and others as being a bureaucracy, but it also has the added advantage specificity and clearly separated categories to prevent overlap or contradictions in the conclusions that can be drawn from it. This definition applies to government, business, charity or any institution that takes actions without consideration for profit or to the degree in which their decisions are not made based on profit. In other words, the less an institution considers profit the more bureaucratic it becomes and vice versa.

In modern society not seeking “profit” is often viewed as altruistic or positive but this usually stems from a misunderstanding of “value” and the only way to translate “values” to “actors” providing goods or services to the public. As stated in the “Law of Marginal Utility” earlier, goods and services do not have inherent value but are only worth as much as the ends they to be used in attaining for according to the urgency of each individual. The only way for individuals, who all value things differently, to communicate these values to the producers of goods and services, so that capital resources are used efficiently to produce the most aggregate value, is monetarily or terms of exchange. This causes a problem for bureaucracies, as they do not consider profits, since they are not able to form computations of the value of the goods and services they provide and therefore, have to rely on the “guesses” of bureaucrats in the use of their resources, which will inevitably lead misallocation.

Both Weber and Mises viewed bureaucracy as destructive to society, Mises more definitively so. They both also foresaw the continued expansion of bureaucracy. Mises believed this expansion was due to the “interventionist”nature of State bureaucracy that forces institutions that were once profit seeking to adapt in order to “guard itself from destruction” by “incur[ring] all sorts of expenditures for matters not related to business” and act according to regulations imposed by government bureaucracy that force “production and consumption to develop along lines different from those prescribed by an unhampered market.” (Anderson, 2004, 12-14) The continued expansion of bureaucracy and regulations will reduce innovation and creativity, they will be replaced with compliance and obedience, and destroy the lines of communication between consumer and producer; as well as lead to massive waste through misallocation of resources.

Anderson, William P. (2004) Mises Versus Weber on Bureaucracy and Sociological Method. Journal of Libertarian Studies 18 (1) 1-29

Oszlak, Oscar. (2005). Regimes and Contention. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (482-505). Cambridge, UK: Cambridge University Press.

Rothbard, Murray N. (2004) Man, Economy, and State with Power and Market. (Scholar’s ed.) Auburn, Alabama: Ludwig von Mises Institute

Filed under Philosophy, Politics
Apr 13, 2011