Hand-to-Hand Combat: Can Competitive Markets Knock Out Central Planning?

Against the Dead Hand develops this idea in stunning detail, tracing the history of the planning mentality from the 1880s onward, and showing how that mentality has continued to operate in the economic decisions governments have made since the fall of communism. Lindsey s book is thus in many ways about the cognitive dissonance that dominates so much contemporary thinking about economics.

On the one hand, he notes, central planning has proven to be an abysmal failure, a reactionary and ultimately totalitarian approach to processes that are inherently dynamic, dispersed, and unpredictable. On the other hand, governments still cling to the ideal of economic planning, and relinquish their protectionist tariffs, centralized banks, nationalized industries, and pegged inflation rates only when their economies flounder so badly that they have no other choice.

A trade lawyer who founded and now directs the Center for Trade Policy Studies at the Cato Institute, Lindsey is in a position to know what s going on with the world economy and to judge it in the light of history, law, and policy. That s just what he does in Against the Dead Hand, whose strikingly cogent argument about globalization stands in stark contrast to those we have been accustomed to hear in recent years.

In such books as Benjamin Barber s Jihad vs. McWorld: How Globalism and Tribalism are Reshaping the World (1996), Thomas Friedman s The Lexus and the Olive Tree: Understanding Globalization (2000), John Gray s False Dawn: The Delusions of Global Capitalism (2000), Michael Hardt and convicted terrorist Antonio Negri s Empire (2001), and Nobel Prize-winner Joseph Stiglitz s Globalization and Its Discontents (2002), the debate rages about whether globalization is good or bad, about what it means for our sense of community, for our hold on tradition, for our future prosperity, and even for the possibility of revolution (Hardt and Negri s Empire has been hailed as “the Communist Manifesto for our time”). The race toward globalization has also, it seems, been a race to make the definitive statement about what globalization means.

But the punditry and the prophecy have centered more on outcomes than on causes, more on predictions than on historical processes, and for that reason the competing views within the debate finally seem to have more in common than not. Whether praising or deploring capitalism, these books all operate from the same basic premise: that global capitalism is a done deal. The notion that the world either has or will soon become one vast, borderless market is treated not as one possibility among many, but as an inevitability, an accomplished, uncontroversial fact. Combining detailed historical analysis with wide-ranging accounts of contemporary economic practice, Lindsey shows that the governing assumption of the globalization debate as it is currently shaped is utterly, unequivocally wrong.

Lindsey challenges the widely held view that markets have definitively triumphed over governments, arguing that while globalization has certainly made progress since the fall of Soviet communism, it is by no means complete, its future far from secure.

What liberalization we have seen, Lindsey argues, has arisen pragmatically  as a tactical alternative to failed planning that has the advantage of actually working. But pragmatics is not philosophy, and problem-solving in the absence of a clear historical and theoretical rationale will never be as clear-minded or effective as it ought to be.

Giving example after example of governments that have hobbled their own attempts at liberalization by clinging to an essentially collectivist mentality, Lindsey argues for the importance not just of policy but of philosophy. Stressing that government is not itself the problem, Lindsey argues that trouble arises when governments overstep their bounds by interfering with capital markets. According to Lindsey, such activities as over-taxing, imposing trade sanctions, fixing prices, and nationalizing industries distort and impair market activity in the name of regulating it. Using case studies from Japan, India, Argentina, Chile, Russia, China, and a host of other developed and developing countries, Lindsey explains in elaborate detail why markets work and how planning cannot. The overall effect is powerful indeed: In its broadest terms, Against the Dead Hand allows us to see the 20^th century in terms of recurring economic patterns and offers convincing reasons why those patterns have remained so constant, and so predictable, across time and space.

Lindsey s point is thus twofold: first, that economic liberalization has been limited and hampered by outmoded and unworkable governmental structures and economic policies; and second, that it will continue to be so hampered until we grasp the philosophical basis for liberalization. In essence, Lindsey is saying that because we have not understood our past, we are misinterpreting our present; that we won t achieve the level of prosperity and progress that we could have until we make the facts that central planning doesn t work and that competitive markets do the basis for global economic policy.

As such, Against the Dead Hand may be read as an extension  even a continuation  of the work of Nobel Prize-winning economist Friedrich Hayek. In 1944, Hayek wrote The Road to Serfdom to warn the world about the dangers of large-scale economic planning. Hayek argued that the totalitarianism then operating in Germany, Italy, and the Soviet Union was not a perversion of collectivist thought, but its natural and inevitable outcome. He explained the utopian attraction of

centralization as a reactionary nostalgia for a lost, pre-industrial world. He argued forcefully and  history has shown  correctly, for the free market s self-correcting extended order as the only viable basis for a harmonious and prosperous world.

A seer who foretold the devastation that would be caused by the collectivist experiment, Hayek might well be seen as Lindsey s guiding spirit or muse. Citing Hayek liberally, Lindsey develops arguments Hayek himself might have developed if he were alive today. A fusion of carefully researched history, forcefully articulated libertarian philosophy, expert policy analysis, and hardcore economic reporting, Against the Dead Hand could as easily be called The Road Away from Serfdom.

Books on globalization are immensely popular at present. At the moment of this writing, Stiglitz s Globalization and Its Discontents ranks 362 on Amazon.com s sales list, while Hardt and Negri s Empire ranks 1,975  a remarkable feat for an academic monograph written in highly theoretical, often impenetrable prose. By contrast, Lindsey s book languishes behind at 7,954. It has not received the critical attention or the media coverage that it deserves, despite ringing endorsements from former Secretary of State George Schulz, respected author and commentator Virginia Postrel, and bestselling Peruvian political advisor Hernando de Soto. Even so, Lindsey s book is arguably the most important of all the books that have recently been written about globalization. It s well worth a careful, thoughtful read.