Banking and the State

Mises Daily: Friday, February 01, 2013 by Thorsten Polleit

“It had come to be accepted that the pigs, who were manifestly cleverer than the other animals, should decide all questions of farm policy, though their decisions had to be ratified by a majority vote.”  Orwell, G. (1989 [1945]), Animal Farm, S. 34.

The Starting Point: Civilization Begins

The founder of the Medici banking dynasty, Giovanni di Bicci de' Medici (1360–1429), said to his children on his death bed: “Stay out of the public eye.”[1] His words raise the question, "How much do bankers know about the truth of modern money and banking?"

To develop a meaningful answer to this question in the tradition of the Austrian School of economics, one has to start right at the beginning, and that is with the process of civilization.

Civilization denotes the development through which man substitutes the state of the division of labor and specialization (that is, peaceful and productive cooperation) for the state of subsistence (that is, a violent hand-to-mouth existence).

In his magnum opus Human Action (1949), Ludwig von Mises (1881–1973) put forward a praxeological explanation of the process of civilization, which helps us understand the course of its evolution.[2]

To Mises, two factors are at the heart of the process of civilization:...To Read More....