RNH Academic Director Hannes H. Gissurarson gave a keynote paper at the Austrian Economics Conference in Vienna 4–5 November 2021 on ‘Menger’s Political Significance’. He pointed out that Carl Menger’s contribution to economic analysis was in many ways as seminal as that of Adam Smith. What Menger did was to break economic goods up into units, and then to find how many units of each good could equally satisfy human wants: this was the crucial concept of marginal utility. He treated all goods according to their potentiality for satisfying human wants, not according to their history, for example cost of production. This meant that two political ideas, or rather dogmas, of the late nineteenth century became irrelevant, Georgism and Marxism. Georgism ascribed special significance to land because its supply was more or less fixed, but for Menger it was just another good, to be valued and priced according to its marginal utility. Marxism ascribed special significance to labour because it was supposed to have created all value, whereas Menger regarded it as a good to be priced according to its marginal utility. It was not labour that created value: it was the potentiality of labour inputs or units to satisfy human wants which created the value of those inputs. But Menger’s insight not only disqualified Marxism, but also government redistribution of income such as John Rawls and Thomas Piketty demanded. Such redistribution distorted the information provided in an effective labour market on how different units of labour—individual skills, talents, and abilities—could best be employed to satisfy human wants.

Gissurarson pointed out that nevertheless the spectres of Georgism and Marxism still haunted Europe. For example in Iceland, there was widespread agitation for a special tax on fish stocks, a resource rent tax, which was based solely on the false premises of Georgism. More generally, both radical feminism and ecofundamentalism had much in common with Marxism. Radical feminists believed that women were exploited by the ‘Patriarchy’, paid wages below their real value (marginal price). But if true, in a competitive economy this would provide profit opportunities for those who wanted to run companies solely staffed by women. Why was this not done? Ecofundamentalists believed that nature was exploited far beyond what was reasonable. But over-exploitation of natural resources could only occur if they were not correctly priced, at the margin, and this was usually because private property rights to them had not been developed. For example, elephants and rhinos were endangered and lakes and rivers were polluted if and when nobody owned those goods. In most cases it was quite feasible to define private property rights to such goods, take them into stewardship, appoint their protectors.

Gissurarson Slides Vienna 5 November 2021

Tatała, Gissurarson, and Stodolak.

RNH Academic Director Hannes H. Gissurarson presented his new book, Twenty-Four Conservative-Liberal Thinkers, in two volumes, in Warsaw 2 November 2021, at a meeting sponsored jointly by the Civil Development Forum (FOR), the Warsaw Enterprise Institute and the Economic Freedom Foundation. The meeting took place in the Freedom Lounge appropriately located in the former headquarters of the Polish Communist Party. Sharing a panel on the book with Gissurarson were Marek Tatała from the Economic Freedom Foundation and Sebastian Stodolak from the Warsaw Enterprise Institute. Stodolak also interviewed Gissurarson for the Polish newspaper Dziennik Gazeta Prawna and recorded a podcast with him. In his introductory talk, Gissurarson pointed out that in the chapter on Milton Friedman in the second volume there was a brief account of the process in which the Poles and other Central and Eastern European nations, inspired not least by Friedrich von Hayek and Friedman, returned to normalcy in the 1990s, after having had socialism forcibly imposed on them for more than forty years. Gissurarson said that the conservative liberalism he identified in his book could be encapsulated in four terms: limited government, free trade, private property, and respect for traditions.

In the lively discussion following the introductory talk Gissurarson emphasised that environmental problems usually were caused not by capitalism but by the absence of private property rights. Elephants in Africa were endangered because there were no owners to care for them, whereas privately-owned sheep in Iceland were plentiful. In just one stroke poachers in Africa could be turned into gamekeepers if their communities would be given property rights to the elephant stocks. The same applied to polluted lakes and overfished rivers: Environmental protection required protectors who had a private and personal interest in the maximum long-term profitability of natural resources, be they land, fish stocks, oil wells or forests. In the case of the environment, as elsewhere, the best remedy for freedom was more freedom.

Asked about the bank collapse in Iceland, Gissurarson pointed out that in 2008 the assets of the Icelandic banks were probably as good on average as the assets of banks in neighbouring countries, although the Icelandic bankers should definitely have been more cautious in expanding their activities. The difference was that Iceland was denied the liquidity assistance from the United States Federal Reserve Board which the Scandinavian countries and Switzerland received, enabling those countries to rescue banks which otherwise would have gone under, such as Danske Bank in Denmark and UBS in Switzerland. Moreover, the British government, led by Prime Minister Gordon Brown and Chancellor Alistair Darling, closed down Icelandic-owned British banks at the same time as they rescued all other banks in the United Kingdom, invoking moreover an anti-terrorism law against Iceland, a longtime friend and ally that did not even have a military of her own. Their unprecedented action was, Gissurarson suggested, motivated by their desire to demonstrate to their Scottish voters the perils of independence. Iceland’s rapid recovery after the collapse bore however witness to the soundness and success of the comprehensive liberalisation of the economy in 1991–2004.

Some of the participants at the closing dinner on 30 October.

The venerable American institution Liberty Fund, based in Indianapolis, publishes books in the conservative-liberal tradition and holds colloquia on problems of freedom. One such colloquium was directed by RNH Academic Director Hannes H. Gissurarson in Paris, at the Hilton Opera, on 28–31 October 2021. The topic was Honoré de Balzac’s celebrated novel, Père Goriot, which takes place in Paris during a few months in 1819–1820. In his Capital in the Twenty-First Century, French economist Thomas Piketty repeatedly quotes from Balzac’s novel, claiming that it illustrates what kind of society is now being developed, with the rich becoming ever richer and wealth clinging obstinately to families. According to Piketty, the French nineteenth-century novelist ‘depicted the effects of inequality with a verisimilitude and evocative power that no statistical or theoretical analysis can match’. Piketty asserts that ‘inherited wealth comes close to being as decisive at the beginning of the twenty-first century as it was in the age of Balzac’s Père Goriot’ and that this novel reveals ‘the cynicism of a society entirely corrupted by money’.

Balzac

Gissurarson and other participants at the colloquium pointed out that this was far from being the case. The chief protagonists of Balzac’s novel were all in thrall to their passions, not to money except as a means. Old Goriot has transferred almost all his wealth to his two ungrateful daughters and lives modestly in a boarding house. One of his daughters desperately needs money to pay the gambling debts of her lover. The other daughter has seen her husband use her dowry on speculation, with no certainty that its value will be maintained or increased. Another resident in the boarding house, Vautrin, turns out to be a runaway prisoner who had taken responsibility for a crime he had not committed, because he had passionately loved the real perpetrator. Thus, the novel is really about the fragility of capital and the frailty of human beings. They are not corrupted by money but rather by their passions which they cannot completely control. Participants in the colloquium included Professors David Womersley from Oxford University and Pierre Garello from Aix Marseille University and Luis Ball and Leonidas Zelmanovitz from Liberty Fund.

At a conference on policing and crime at Akureyri 6 October 2021, Professor Hannes H. Gissurarson, RNH Academic Director, argued that some vices should not be crimes. In his support he quoted St. Thomas Aquinas (Summa Theologiae, I, ii, Question 96, Article 2): ‘Now human law is made for the multitude of men, and the greater part of this multitude consists of men who are not perfected in virtue. And so not all the vices from which virtuous men abstain are prohibited by human law. Instead, the only vices prohibited are the more serious ones, which it is possible for the greater part of the multitude to abstain from—especially those vices which are harmful to others and without the prohibition of which human society could not be conserved. For instance, homicide and theft and other vices of this sort are prohibited by human law.’

Gissurarson discussed four disreputable activities, prostitution, pornography, insider trading and tax avoidance. Radical feminists hold that prostitution and pornography are not victimless: on the contrary, they say that both these activities involve the degradation and exploitation of women and should be banned. Gissurarson agreed with them that that prostitution was degrading, but not only for women but rather for all who participated in them. But this did not necessarily mean that it should be banned. Probably, the consequences of banning prostitution and pornography were worse than the consequences of tolerating and monitoring these activities. Gissurarson also pointed out that the internet had largely removed the rogue intermediaries who had in the past oppressed prostitutes and porn actors: now the sellers of sex were often in direct contact with their customers online. This at least weakened the argument from exploitation. The limited resources of the police should be spent on suppressing vices which were harmful to others, as Aquinas had said.

According to Gissurarson, the widely-held idea that insider trading was harmful was not necessarily true. How could you lose money on stock you did not own? It was wrong, Gissurarson submitted, to conceive of it as a loss for someone if he or she did not make the same profit from trading in stocks as an insider did. Of course the insider information should be obtained legally and not fraudulently, not by breach of trust. Moreover, it could be argued, Gissurarson added, that insider trading increased efficiency in that it hastened the adjustment of the market to new information. It tended to correct situations in which some companies were valued below or above their real worth. Gissurarson mentioned a famous example Aquinas used about a merchant from Alexandria who arrived in Rhodos after a famine. He brought a lot of desperately needed wheat on his ship, but he knew unlike the islanders that more ships were on their way. Did he have to reveal this ‘inside’ information? Aquinas said: No. He would be generous if he did so, but he did not act unjustly by not disclosing his educated guess that the supply would soon increase.

Gissurarson emphasised the distinction between tax evasion and tax avoidance. While tax evasion was usually both immoral and illegal, there was nothing wrong with tax avoidance when it simply meant that you tried not to pay more in taxes than you were obliged to do. It was no more wrong than when you wanted to travel and you searched for the best airfare online. Those who criticised it seemed to assume that the level of taxation was optimal which was hardly ever the case. Indeed, the possibility to move from one country to another was an indispensable source of information about the preferences of taxpayers, how much they wanted government to provide of public goods. It was also a necessary constraint on government. Tax avoidance was not only about the mobile rich transferring assets to low-tax countries. It was also about ordinary people responding to a heavy tax burden by switching from work to leisure. The main reason, for example, that the Europeans worked fewer hours than the Americans was that their income was taxed much more. Excessive taxation shrunk the tax base. Gissurarson concluded that tax avoidance was not only useful, but that it was also a virtue rather than a vice, because it was an instance of thriftiness.

Dr. Barbara Kolm and Professor Gissurarson.

The Left has made significant gains in the West over the last few years, especially among young people, despite the total failure of the socialist programme, Professor Hannes H. Gissurarson pointed out in a panel at a New Direction conference in Lisbon 22–25 September 2021. The main theme of the conference was how conservatives and classical liberals could cooperate to meet this new challenge.

Gissurarson identified four reasons for the relative success of the Left: the common enemy that had united the Right in the Cold War had suffered an ignominous defeat; with the general acceptance of capitalism the Right has been deprived of its strongest argument against the Left; an ever-larger proportion of voters have become dependent on government for their livelihood; and the Marxists, in various guises, have taken over the media and the schools, producing a new left-wing generation susceptible to wokeism, ecofundamentalism and other fantasies.

Gissurarson said that the Left’s triumph was not inevitable, however. The Right need not retreat. China had started a new cold war which required the West to unite; many of the more fanciful spending programmes of the Left would utterly fail, and be seen to fail; in countries where the Right comes into power, it should try to reduce the number of government employees and beneficiaries, as the need for welfare benefits has greatly diminished with increased prosperity; and even if the Right should not try to limit the Left’s freedom of speech, it need not subsidise its propaganda in the media and in schools out of taxpayers’ money. But first and foremost, the Right must meet the intellectual challenge with arguments and evidence for the four principles which defined it: private property, free trade, limited government and respect for tradition. In particular, Gissurarson mentioned the huge global network of active and effective free-market think tanks which demonstrated time and again that government was more often the problem than the solution.

Modern conservatives and classical liberals, and most libertarians as well, are members of the same political tradition of the West, Professor Hannes H. Gissurarson argued at the Summer University of New Direction and Fundación Civismo in El Escorial near Madrid 14–19 June 2021. In two talks, on 14 and 18 June, Gissurarson discussed themes from his recent book in two volumes published by New Direction on twenty-four conservative-liberal thinkers, from Snorri Sturluson to Robert Nozick. Gissurarson pointed out that the ideas of government by consent and the right to rebellion were present in both the medieval thinkers he included in the book, Sturluson and St. Thomas Aquinas, although it was John Locke who presented the first systematic political theory in this tradition.

According to Gissurarson, conservative liberals supported the 1688 British Revolution and the 1776 American Revolution because they were made in order to preserve and extend existing liberties, whereas they opposed the 1789 French Revolution (as it evolved) and the 1917 Russian Revolution because they were made in order to reconstruct the whole of society by a small group of fanatics and to impose the values held by this group on the rest. The four leading principles of conservative liberalism were private property, free trade, limited government, and respect for traditions. Gissurarson said that in his opinion Friedrich A. von Hayek had offered perhaps the best synthesis of conservative insights and classical liberal principles with his theory of inevitable individual ignorance which could only be overcome by the discovery process of a free society.