It’s either a wage-based economy or slavery

It must be one or the other. There is no third way.

There are only two ways you can get other people to work for you.

You either hire people and pay them a wage.

Or someone owns their labour and commands them to do what they do.

The first form is called the market system. The second is referred to as slavery although in the modern world there are various forms of disguise. But if things need to be donem you must have one or the other.

It is only where we have a market economy that freedom is even possible. The loons of the left wish to replace the market economy with socialism, which for all practical purposes means a return to a slave-based economy.

Every socialist economy must ultimately resort to some form of forced labour with fake versions of market economy. Socialist economies are those in which workers are allocated to the jobs they do in a society with a virtual absence of personal freedom. There are also no private employers so that everyone works for the government. And since there is no private enterprise, all production is decided by the government. And since there is no market economy for the purchase and sale of anything, all production decisions are made by central planners. And since there is no price system, no one can work out which is the least wasteful form of production.

So not only does socialism mean a return to poverty at levels not seen for hundreds of years, it also means all forms of work are forms of slave labour.

It is inevitable and cannot be avoided.

“Time for a class action by the people of Australia against Daniel Andrews”

This may be the longest letter to the editor I have ever seen at the Oz. And it’s right on the money.

History may be repeating itself. According to the National Museum of Australia, the 1918-19 flu pandemic started in Australia in Melbourne, in January 1919, and then spread to the rest of the country after the Victorian health authorities were slow to react.

Why have things gone wrong this time? It is hard to go past the conclusion that, encouraged by their Government, people in Victoria Health have not been paying attention to what should be their core duties.

If we start with Brett Sutton, the Chief Health Officer, we find that he was the main author of a paper in the Medical Journal of Australia published in May. Did this, for example, deal with ways of shortening long waiting lists or preventing people with psychiatric illness becoming homeless? Not at all. Instead, the hospital system was seen, not as a place to look after the sick, but a big polluter: “In 2018–19 every occupied bed-day in a Victorian public hospital generated on average 120kg of carbon dioxide equivalents and 3.65kg of waste, and used 630L of water.”

And it’s not just Australia’s sick contaminating the planet: “If the global health sector were a country, it would be the fifth‐largest greenhouse gas emitter on the planet.” And the plan to improve the hospital system? “It requires all public hospitals and health services to have an environmental management plan and report publicly on their environmental performance.”

Then we have Dr Annaliese van Diemen, Deputy Chief Health Officer (Communicable Disease), sending a tweet in the midst of the pandemic to the effect that James Cook was “an invader from another land, decimating populations, creating terror”.

It may be said that people in Victoria Health are intelligent people who can do two things at once, but the evidence does not support this. How do we prevent this happening again? Make people do their job and not grandstand. If the virus does now take hold, it might also be time for a class action by the people of Australia against Daniel Andrews and the Victorian Health Department, run by Maurice Blackburn, of course.

Paddy Grattan-Smith, Matraville, NSW

Andrews is the most incompetent political leader I have ever witnessed in all the years since I arrived in Australia. He has ruined Victoria’s economy, and with his role in “the National Cabinet” he has done much to wreck much else as well. What do we know about his agreements with the Chinese? What is the actual off-the-books level of debt in still uncompleted road and rail constructions? He can talk the talk, but is so far out of his depths in everything he deals with that had he set out to deliberately ruin the place he could not have done a better job.

My missing reply to Roy Grieve

Getting an anti-Keynesian article published is very difficult. The following is an interesting parable of our times. There are lots of additional details left out here, but this captures the essence of the story. This short note will be published in the forthcoming issue of the History of Economics Review along with the article by Roy Grieve which I had been asked to reply to.

A Note on My Missing Reply to Roy Grieve
Steve Kates

It is quite a shame the article I had written in reply to Roy Grieve’s will not be published along with his. When his paper was submitted in 2018, I was asked by the editor to write a reply which I quite happily did. Thereafter, I heard nothing for two years until I was told what I had written was not suitable, would not be published, and was offered a truncated version of my paper that I could include instead.

The problem with my paper I was told was that I did not address the core issue Roy had raised which was the wages fund. Since Roy was replying to a paper I had written, the probability that I might have a better idea of what the issues are ought to be seen as extremely high. The editor nevertheless continues to believe the central issue is the wages fund. Since the paper Roy was replying to is titled, ‘Mill’s Fourth Fundamental Proposition on Capital: A Paradox Explained’ (Kates 2015), that ought to be recognized as the issue we were debating. In my reply to the editor, I made it clear the wages fund had nothing to do with Mill’s argument, nor did I wish to contribute further. Mill’s proposition by the way, if true, completely undermines Keynesian economics and modern macro. In Mill’s words, ‘demand for commodities is not demand for labour’ – increases in aggregate demand do not lead to increases in employment.

Roy understood that leaving out my paper diminished the impact that having his paper and my reply together would have had. He therefore wrote to the editor to suggest I add something on the wages fund. And I agreed. I wrote to the editor and said that I was prepared to write an article along these lines:

1. The wages fund has nothing of significance to do with Mill’s Fourth Proposition on Capital.
2. The ‘wages fund’, if understood properly, makes perfect sense.
3. The wages fund, if understood properly, is even an integral part of modern economic theory.
4. Much of the difficulty in understanding the classical view on the wages fund is due to the shifts in terminology since the middle of the nineteenth century.

The final point is the theme of my latest book, Classical Economic Theory and the Modern Economy (Kates 2020a), where all this is discussed more generally. In the end, I have been offered these 600 words. You cannot therefore see within the pages of the journal either my response to Roy or my explanation of the wages fund in modern terms.

Let me therefore add this. I admire Roy’s paper which does something almost never seen. He explains my argument in defending Mill, not only understanding exactly what I had written but also understanding Mill’s argument to near perfection. He nevertheless argues in his paper Mill’s Fourth Proposition depended on the wages fund, so that when Mill abandoned the wages fund in 1869, he had pulled the rug out from under his own Fourth Proposition. If you read my reply to Roy, you will see that I do not agree.

You can read my original reply to Roy at SSRN (Kates 2020b). My explanation of why the wages fund is even to this day embodied within modern economic theory will have to remain a mystery.

Steve Kates
Submitted 11 June 2020


Kates, S. 2015. ‘Mill’s Fourth Fundamental Proposition on Capital: A Paradox Explained.’ Journal of the History of Economic Thought 37 (1): 39–56.

Kates, S. 2020a. Classical Economic Theory and the Modern Economy. Cheltenham, UK: Edward Elgar.

Kates, S. 2020b. ‘The Single Most Important Issue in Economics Today: A Reply to Roy Grieve on Mill’s Fourth Proposition on Capital’. SSRN.

PDT speech at Mt Rushmore

Plus some context

Democratic presidential candidate Barack Obama vists Mount ...

Silenced Majority Portal: Mt. Rushmore Photo Opportunists ...






PLUS THIS: I was going to add that I thought this was the best speech Donald Trump has ever given, but thought I would see what others said first. I am not alone on this. You might have a look at this comments thread at Instapundit. These are the first four under the heading of “best”.

Trump gave them Hell tonight. I honestly have been depressed by all the COVID crap and antifa crap and the inevitablity of the enemies of freedom. Trump removed all that with a speech and I feel better. Wow, what a president.

In theory, Presidential elections are about competing visions of what America is and what America can or ought to be, as well the personalities of the candidates. Tonight at Mount Rushmore Trump made the 2020 campaign about the idea of America itself. America versus whatever the Democrats think comes after America, because they’ve made it clear they’ve rejected America. And it was the Democrat’s own rioting, pillaging, looting, iconoclastic, BLM/antifa stormtroopers that made that possible.

Well I’ll be damned! I feel a little hope!

Absolutely pitch perfect and immensely inspiring. Really gives me a boost of enthusiasm. And we are going to hear more from Kristi Noem. It’s not inconceivable that she gets elected in 2024 as our first female President.


Have I ever mentioned before that the level of unemployment is unrelated to the level of aggregate demand?

In the news today.

RECOVERY SUMMER! Record jobs gain of 4.8 million in June smashes expectations; unemployment rate falls to 11.1%. Democrats, media hardest hit.

By the way, my latest book has just been released: Classical Economic Theory and the Modern Economy. The two references on the back cover:

‘In Classical Economic Theory and the Modern Economy, Kates seeks to correct this dangerous intellectual detour economists took due to Keynes and finally get modern economists to practice economics beyond the shadow of Keynes. It is a Herculean task, but armed with J.B. Say and especially J.S. Mill, Steven Kates makes as strong an effort for resurrection of classical economy theory as can be marshaled. This will be a must read for all students of economics, and a compelling contribution to the history of economic doctrine.’
– Peter Boettke, George Mason University, US

‘This book delivers hard blows to the tenets of modern economics, retells its history and evolution, and pokes holes at our misperceptions of classical economic theory. The result is as much a burial of the macroeconomics of Keynes as it is a resuscitation of the classical economics of J.S. Mill.’
– Per Bylund, Oklahoma State University, US

For a change, we have two people commenting on a book who actually seem to have read it and know what it says.

“If we don’t act now…”

Watch this first. You won’t be sorry if you do.

This is an article by Gen. Michael Flynn: If We Don’t Act, 2% of the People Are About To Control the Other 98%. And this is someone who knows whereof he speaks.

If the United States wants to survive the onslaught of socialism, if we are to continue to enjoy self-government and the liberty of our hard-fought freedoms, we have to understand there are two opposing forces: One is the “children of light” and the other is the “children of darkness.”

As I recently wrote, the art and exercise of self-governance require active participation by every American. I wasn’t kidding! And voting is only part of that active participation. Time and again, the silent majority have been overwhelmed by the “audacity and resolve” of small, well-organized, passionate groups. It’s now time for us, the silent majority (the indifferent), to demonstrate both.

A long article which you should read. He continues:

I believe the attacks being presented to us today are part of a well-orchestrated and well-funded effort that uses racism as its sword to aggravate our battlefield dispositions. This weapon is used to leverage and legitimize violence and crime, not to seek or serve the truth.

The dark forces’ weapons formed against us serve one purpose: to promote radical social change through power and control. Socialism and the creation of a socialist society are their ultimate goals.

He ends with this:

To the silent and currently indifferent majority: Wake up. America [Western Civilisation] is at risk of being lost in the dustbin of history to socialism. The very heart and soul of [our Western way of life] is at stake.

In war, as in life, most failure comes from inaction. We face a pivotal moment that can change the course of history.

We the people must challenge every politician at every level….

Now is the time to act.

No one can believe it. Mr DeBlasio is such a nice man. Daniel Andrews too. But there are barbarians at every turn and in every generation. How much did Lenin really care about anyone else? Same for Castro? Same for Mao (and Xi if it comes to that). Same for them all.

Did you watch it? They tried to warn us.

Democrat ignorance knows no bounds

This March 22, 2019, file photo shows Mount Rushmore in Keystone, S.D. Organizers have scrapped plans to mandate social distancing during President Donald Trump's appearance at a July 3, 2020, Mount Rushmore fireworks display and won't limit the crowd due to coronavirus concerns, South Dakota Gov. Kristi Noem said Thursday, June 4, 2020. The Republican governor said the National Park Service is dolling out 7,500 tickets via lottery for the event, which marks the first time in a decade that fireworks will be set off at the memorial in recognition of Independence Day. (AP Photo/David Zalubowski, File)

I searched for as many of these as I could find since I refused to believe it the first time I came across the story.

Trump ‘glorifying white supremacy’ with July 4 fireworks at Mount Rushmore, Democrats say

Democratic Party: Mount Rushmore Glorifies White Supremacy

Rubicon Crossed – DNC Official 2020 Position: Celebrating July 4th Equals White Supremacy….

These lice will do anything to win the election, but what will be left of America if they do?

Thomas Sowell turns ninety

Happy 90th birthday (June 30) to Thomas Sowell, one of the greatest living economists, which begins:

One of my two all-time most favorite economists — Thomas Sowell — turns 90 tomorrow, he was born on June 30, 1930. Here is Thomas Sowell’s webpage and here is his Wikipedia entry. Milton Friedman (my other all-time favorite economist) once said, “The word ‘genius’ is thrown around so much that it’s becoming meaningless, but nevertheless I think Tom Sowell is close to being one.”

In my opinion, there is no economist alive today who has done more to eloquently, articulately, and persuasively advance the principles of economic freedom, limited government, individual liberty, and a free society than Thomas Sowell. In terms of both his quantity of work (49 books and several thousand newspaper columns) and the consistently excellent and crystal-clear quality of his writing, I don’t think any living free-market economist even comes close to matching Sowell’s prolific record of writing about economics.

And while no one else unfortunately understands how he was able to become the economist he became, let me point out that his PhD was on Say’s Law and two of his earliest books were on Say’s Law and Classical Economic Theory. Nor was that just an early part of his career, but he came back to Classical Theory again in 2006.

Sowell, Thomas (1972), Say’s Law: A Historical Analysis, Princeton University Press, ISBN 978-0-691-04166-7.

——— (1974). Classical Economics Reconsidered. Princeton University Press. ISBN 978-0691003580.

——— (2006). On Classical Economics. New Haven, CT: Yale University Press. ISBN 978-0-300-12606-8.

And on this, let me add to what Currency Lad has already written on it’s always our money, via Adam Creighton. Money is a metaphor – probably actually a synecdoche – for the word resources. If you use the word “money” you can be deceived by government spending since a government can always print more of the stuff. Resources, actual labour and capital, are much harder to come by. Here is the point made by Adam Smith in 1776:

Great nations are never impoverished by private, though they sometimes are by public prodigality and misconduct. The whole, or almost the whole public revenue, is in most countries employed in maintaining unproductive hands.

That, by the way, is from the chapter “On the Accumulation of Capital, or of Productive and Unproductive Labour”. There is more sense in that chapter than in the whole of a modern economics text. It is Thomas Sowell amongst a very few others who is keeping that tradition alive.

If you are looking for a modern discussion of classical economic theory, and amongst other things a discussion of productive and unproductive labour, might I recommend my own Classical Economic Theory and the Modern Economy which has just been published.