The Woke Plot to Destroy Our Economy

“Woke” people claim that they want to wake up racial and sexual minorities to the way they are discriminated against. Because of past and present exploitation, blacks and other “protected” groups are not getting what is rightfully theirs. The solution to this is for the better off, especially if they are white, to take their wealth and income and give it to those who exploit them.

The woke position rests on a fundamental fallacy. It is that there is a fixed amount of resources, so that if the rich have more, the poor have less. But this is wrong. Resources in the free market are not a fixed sum. As long as the economy is growing, everyone can benefit. The “protected” can do better without taking what the rich have earned. The economist Paul Rubin, who died last month, gives a good account of the fallacy: “Karl Marx called his system ‘scientific socialism.’ Modern leftists advocate a similar ideology and call themselves ‘woke’ to indicate that they understand the world better than the rest of us. Yet the worldview of both Marxists and woke leftists is fundamentally primitive.

Folk economics is the economics of people who are not educated in economics. It is the economic view of the world that developed in our brains before the development of modern economics. During this period of evolution, the economy was simple, with little specialization except by age and sex, no economic growth, no technological change, limited trade, little capital, and warfare between neighboring tribes.

Zero-sum thinking was well adapted to this world. Because there was no economic growth, incomes and wealth did not grow. If one person had access to more food or other goods, or more access to women, it was probably because of the dispossession of others. Because there was little capital, a “labor theory of value”—the idea that all value is created by labor alone—would have been appropriate, and there was little need to protect capital through property rights. Frequent warfare encouraged xenophobia.

Adam Smith and other economists challenged this worldview in the 18th century. They taught that specialization of labor was valuable, that capital was productive, and that labor and capital could work together to increase income. They also showed that property rights should be protected, that members of other tribes or groups could work together through trade, that wealth could be created with the right incentives, and that wealth creation would benefit everyone in a society, not just the wealthy. Most importantly, they showed that a complex economy could function with little or no central control.

Marx’s economic system was based on the primitive worldview of our ancestors. For him, conflict rather than cooperation between labor and capital defined the economy. He believed that the rich only became rich by exploiting the poor, that all income came from labor, and that the economy needed central control because he did not believe that markets were good at self-correcting. The collapse of the Soviet Union, the largest and most expensive social science experiment ever conducted, proved Smith right and Marx wrong.

Members of the woke left want to return to policies based on this primitive economic thinking. One of their biggest mistakes is the idea that the world is zero-sum. That assumption fuels identity politics, which sees, among other things, an intrinsic conflict between blacks and whites. The Black Lives Matter movement and Critical Race Theory stoke racial animosity and rekindle xenophobia. Leftists vilify “millionaires and billionaires” like Bill Gates and Elon Musk as evil and exploitative. They should recognize them as productive entrepreneurs whose innovations benefit us all.

Hating the rich makes sense in a world where you can only get rich by exploiting others, but not in a society full of creativity and useful inventions. Changing tax laws to benefit the rich makes sense with a labor theory of value, but not with an advanced understanding of continuous investment and technological change.

Adopting counterproductive woke policies such as racial job quotas, high taxes, excessive regulation of business, and price controls on certain goods may not return us entirely to the subsistence economy of our ancestors. But adopting policies that penalize saving and investment and that involve excessive government control will diminish social capital, wealth, and real income. If we bow to this primitive ideology, there will be more racial hostility and conflict, slow economic growth, and less invention.”

You might object. Even if the economy is growing and the minorities can benefit without taking resources from the rich, why should they be satisfied with what they get? Can’t they demand more of the growing economic pie? The answer is that this will hurt them, not help them. The economy grows through capital accumulation, and most of this comes from investment by the wealthy. Confiscation of the income and wealth of the wealthy will slow or stop economic growth. This will make the “protected” worse off. The great Ludwig von Mises proposes a thought experiment that brings this point home vividly: “A law which prohibits an individual from accumulating more than ten millions, or from earning more than a million a year, restricts the activities of those very entrepreneurs who are most successful in satisfying the wants of consumers. If such a law had been passed in the United States fifty years ago, many of the people who are now multimillionaires would have been living in more modest circumstances. But all those new branches of industry which supply the masses with articles never heard of before would, if they worked at all, operate on a much smaller scale, and their products would be beyond the reach of the common man. It is clearly against the interests of the consumers to prevent the most efficient entrepreneurs from extending their activities to the limit to which the public approves their conduct by buying their products.”

There is another way the woke movement is undermining our economy, and this is perhaps the most serious of all. Invoking grievances encourages blacks to hate whites. Whiteness is seen as evil by many left-wing revolutionaries, and murderous violence will flow from it. As the great black economist Thomas Sowell notes: “While much of the media has its antennae wide open to pick up on anything that might be construed as racism against blacks, they resolutely ignore even the most blatant racism by blacks against others.

That includes a pattern of violent attacks on whites in public places in Chicago, Denver, New York, Milwaukee, Philadelphia, Los Angeles and Kansas City, as well as blacks in schools beating Asian classmates — for years — in New York and Philadelphia.

These attacks were accompanied by explicit racist statements from the attackers, so it is not as if we need to find out what the motivation is. There have also been riots and looting by these young thugs.”

Let us do everything we can to counter the woke conspiracy to destroy our economy and promote the free market economic policies of Ludwig von Mises and Murray Rothbard. That is the path to a prosperous economy where all groups can live in harmony.

The Best of Llewellyn H. Rockwell, Jr.