Date: 1950-01-01T07:00:00+00:00
Keywords: liberty
Description: The Education for Economic Freedom The Freeman 1965

The Freeman 1965

Foundation for Economic Education

Let's Not Save the World . The Moral and Mysterious. Is the U.N. Really Necessary? 59 62 John Chamberlain Edmund A. Opitz 3 W. A. Paton 12 Dean Russell 17 William Henry Chamberlin 19 Associated Industries of Missouri 27 Leonard E. Read 29 Paul L. Poirot 39 Clarence B. Carson 45 1965JANUARY Books: The Great Difference Lifetime Job Security . On Freedom and Order Let's First Mend Tommy's Trousers . The Flight from Reality: 4. Cutting Loose from Reality The Mobility of Labor . Other Books .

au "~~,"'Y.NTAGEIIGI co TF EIAL SAVERS FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Earnings for 1964 paid at 4.9% per year. MAIN OFFICE 9th & Hill, los Angeles SAVE·BY·MAIL-We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home'Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUN,J AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California ~ The "great society," suggests the Reverend Mr. Opitz, will come, not from seeking it, but as a dividend of living our own lives in a truly human way .. p. 3 ~ A noted scholar and teacher simply and clearly points up the importance of first putting one's own house in order before minding other peoples' business .. p. 12 ~ Dean Russell shoots down the old myth about the immobility of labor ... p. 17 ~ When William Henry Chamberlin asks about the necessity for the U.N., many readers will have an answer; but here is some additional am-mu nition ...p. 19 J." An editorial from the Associated Industries of Missouri points out that a company can't guarantee lifetime jobs unless it has been guaranteed lifetime customers .. p. 27 ~ Not from the planned Welfare State, but from the competitive forces of the open market, comes the orderli ness we need in our lives, says Leonard Read .... p. 29 .~ Are we so engrossed in a search for common interests that we forget how much our very lives depend up on our differences? ., p. 39 J." Dr. Carson gets down to cases in this chapter, explaining how various philosophers of the past initiated The Flight from Reality . p. 45 ~ John Chamberlain examines and even digs beneath The Foundations of Morality set forth in the new book by Henry Hazlitt . ....p. 59 ~Not so sound, our reviewer con cludes, is the utopian blueprint for The Other America by Michael Har rington .. p. 62 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

JANUARY 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, NO.1 President, Foundation for Economic Education ill anaging Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except "The Flight from Reality." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost"of the printing.

EDMUND A. OrITZ LET'S NOTSAVE THE WORLD! STATUS QUO is a Latin phrase meaning, in a modern translation, "the mess we are in." A great number of our contemporaries must understand it so, because never have so many persons and organizations come forward with such a variety of schemes for re forming other people and improv ing the world. This is the age of the Man with the Plan. The re former, with his blueprints for social uplift, is in his heyday. I suppose that I too would be classified by some as a reformer, for I travel around the country making speeches and taking part in seminars. And the gist of what I have to say is that, indeed, things are in bad shape, but that they might be improved if we apThe Reverend Mr. Opitz is a member of the staff of the Foundation for Economic Educa tion, Book Review Editor of The Freeman, lecturer, and seminar discussion leader. This article is from an address before the Montreal Dental Club, October 28, 1964.

proached economic and political problems in a different spirit. If the distinguishing mark of a re former is his yen to save the world, then I am not a reformer - in this sense. The principal re form I seek is the reformation of reformers! But I live close enough to the tribe so that many of them send me their literature. Across my desk come the out pourings of many earnest souls, offering salvation to the world if only the world will embrace thei r particular panacea. The panaceas peddled by these folk come in all sizes and styles, ranging from world government to a low cho lesterol diet. In between are the socialists, the land reformers, the money reformers, the prohibition ists, the vegetarians, and those who believe that the world is in the strangling clutch of a far-flung conspiracy of sinister men \vho operate anonymously behind the 3 4 THE FREEMAN January scenes. As I read this material, I am thankful that the world has so far refused to let itself be saved on the terms each and everyone of these reformers lay down.

These people differ wildly among themselves as to the details and precise nature of the remedy; but they are in basic agreement as to the general pattern reform should take. Reform - as they under stand it - consists of A and B put ting their heads together and de ciding what C should be forced to do for D. William Graham Sumner said something like this about a century ago, vvhich means tha t this reformist mood has been with us for a long time. People Are the Basic Ingredient Every reformer, presumably, yearns for the good society - how ever much reformers might dif fer among themselves as to the earmarks of the good society and the appropriate means for reach ing it. Each reformer is confident, however, that all we have to do is install his machinery and utopia will arrive tomorrow. But in his preoccupation with the apparatus for making society over, the reformer omits one im portant factor from his calcula tions: he omits people. It is the people comprising a given society who make that society what it is, and it is they who distinguish it from other societies made up of people of a different sort. Chinese society is unlike Hindu society; and how different is each of these from Western society as we know it in New York or Montreal! The characteristics of a given society are derived from the nature of its people; a society is warlike if its members are belligerent; an agri cultural society is one in which people are farmers; a society whose members go down to the sea for trading or fishing is a maritime society; and so on.

It follows from this, that a good society is not to be achieved by any kind of social apparatus or political machinery, however elab orate; a good society is the happy by-product of good people func tioning at par, and it comes about in no other way. If you have good people - defining "goodness" so as to include a modicum of intelli gence :- a good society follows au tomatically. But without the right kind of people, a good society is impossible. A Parable Let me, at this point, offer you a little parable. This story has to do with a bright boy of five whose mother took him to a toy store and asked the proprietor for a challenging toy for the young man. The owner of the shop brought out an elaborate gadget, loaded with 1965 LET'S NOT SAVE THE WORLD! 5 levers, buttons, coils of wire, and many movable parts. The mother examined the complicated piece of apparatus and shook her head. "Jack is a bright boy," she said, "but I fear that he is not old enough for a toy like this."

"Madam," said the proprietor, "this toy has been designed by a panel of psychologists to help the growing child of today adjust to the frustrations of thecontempor ary world: No matter how he puts it together, it won't come out right." The world never has come out right, despite the best efforts of countless men, but this very fact incites every new generation of . reformers to even more frantic applications of their esoteric cures. Utopians, dreaming of an earthly paradise, have drawn up their blueprints for a heaven on earth, but in practice, every attempt to realize a perfect society has re sulted in an intolerable society. Newfangled heavens on earth-as exemplified in the totalitarian countries - resemble·· nothing so much as the old-fashioned hell. My idea, on the other hand, is to seek - not a perfect society - but merely a tolerable one. If we cut our garments to fit the cloth and work toward a tolerable society, we may yet achieve it.

In other words, I am deeply dis trustful of any and every "perfeet" solution for social problems. Human life, as a matter of fact, is not a problem to be solved; it is a reali ty to be lived. I am defining the reformer as a type of man who is determined to save the world, even to the point of disregarding the wishes of· the people involved. His opposite num ber is one who believes that people have a right to live their own lives, and that when their lives are Iived in a truly human way the good society will appear as a bonus or dividend. Three Reformers Reform is in the air in the mod ern world, .and most of us absorb some of it through our pores by a kind of osmosis. The average man, whenever anything goes wrong, says, "There ought to be a law .... " But. the reformer mentality is best understood by examining sev eral fully developed examples of this type of mind. American politics for more than a generation has been dominated by the New Deal-New Frontier New Republicanism psychology.

As the proponents of this doctrine view the matter, society is to be masterminded by a political quar terback calling plays from Wash ington. Join scientific humanism to majoritarian political processes, they say, and achieve peace, prog ress, and plenty. One of the lead6 THE FREEMAN January ers of the early New Deal Brain Trust was a professor of econom ics named Rexford Guy Tugwell, who poetically acknowledged: I have gathered my tools and my charts; My plans are fashioned and practical; I shall roll up my sleevesmake America over. Somewhat earlier, there was the philosopher and ed uca tor, John Dewey. Dewey introduced many changes into the curricula of our schools; he is thought of as the godfather of progressive educa tion and the classroom emphasis on adjustment to the group. But more fundamental than even these things, Dewey was a prime mover in the installation of a new Welt anschauung. John Dewey worked out a major reconstruction of phi losophy, life, and society, and him self best articulated the new mood and temper which he championed.

This new outlook, in his own words, "marks a revolution in the whole spirit of life, in the entire attitude taken toward whatever is found in existence." What is this revolution? It is "a change from knowledge as an esthetic enjoy ment of the properties of nature regarded as a work of divine art, to knowing as a means of secular control. . . . (Nature) is now something to be modified, to be in tentionally controlled. . . . Ideas are worthless except as they pass into actions which rearrange and reconstruct in some way, be it little or large, the world in which we live .... Modern experimental science is an art of control." Carry this matter back to the middle of the nineteenth century and we come to the man from whom so many twentieth century problems stem - Karl Marx. The determining factor for men, Marx wrote, is "the mode of production in material life." A man's very consciousness is determined by his social existence .. "Men's ideas," he added, "are the most direct ema nation of their material state."

The logic of this is fantastic, for according to Marx's own state ment, he himself is a mere mouth piece for the material productive factors of 1859; Marx's mouth may frame the words, but his mind does not generate the ideas. The ideas come from "the mode of production in material life." Marx does not stop here; he goes on to fashion an idoL Declar ing himself an atheist, he excori ates those who do not "recognize as the highest divinity the human self-consciousness itself." This ne,,, mortal god has only one obligation to the world: Change it! Aris totle's god, the Prime Mover, de rived esthetic enjoyment from contemplating the world he had made; and many philosophers, and ordinary folk as well, have enjoyed 1965 LET'S NOT SAVE THE WORLD! 7 the starry heavens and the glories of nature. But if Marx were to have his way, such pleasures would be pro hibited. "The philosophers have only interpreted the world in vari ous ways," he wrote; "the point, however, is to change it.," (1845) A contemporRry of ourg, BertrRm Wolfe, writing critically of Marx ism, gives us this interpretation: "History was to be given a new meaning, a new goal, and a new end in Time. . . . At last man would become as God, master of his own destiny, maker of his own future, conscious architect of his world."

From now on a kind of activism will take over in human affairs. Everyone is supposed to be· doing something all the time. In the United States, if anyone wants to apply a withering epithet to Cong ress, he calls it "a do-nothing congress." We are so busy acting that we have no time for thinking. We don't much care where we are going, just so long as we can get there in a hurry. With the result that nearly everyone is afflicted with a bad case of the jitters. The mood of our time may be summed up in one word - disenchantment. The recurring theme of our litera ture is "alienation." Modern man, who should be the proud, upright lord of creation, has to be kept going by increasing doses of aspirin, tranquilizers, and psycho analysis. We're in the position of the man riding a tiger; we don't like the ride, but fear we'll be worse off if we dismount. We know there's something wrong with us, but we've learned to live so well with our illness that we're afraid the cure would kill us!

Letting Things Alone Well, what's the alternative? The journal with which I am asso ciated is called THE FREEMAN. Be tween 1920 and 1924, the editor of THE FREEMAN was a unique per sonality named Albert Jay Nock. Associated with Nock was a group of young writers such as Suzanne LaFollette, Van Wyck Brooks, and Lewis Mumford. Someone re marked to Nock, "You've done wonderful things for these young people." "Nonsense," said Nock, "all I've done was to let them alone." "True," replied his friend, "but it would have been different if someone else had been letting them alone." Letting someone alone is not the same thing as doing nothing. It requires great effort on the part of parents properly to let our chil dren alone, so that they will grow up, not as carbon copies of our selves, but as their own unique personalities. Rightfully letting things alone, 8 THE FREEMAN January in statecraft, is Edmund Burke's policy of "a wise and salutary neg lect." But it is to medicine that we must turn for the clinching illustration of this technique.

Certain medical theorists of about a century ago examined the human organism and found it,a crude contrivance of pipes, tubes, levers, and dead weight. This botched mechanism could be kept going only if someone constantly patched and repaired it. Writing of this antiquated medical theory, an historian says: "This held that the body was a faulty machine and Nature a blind worker. The stu dent made an inventory of the body's contents and· found, as he expected, some out of place, some wearing out, some clumsy make shifts . . .. and some mischievous survivals left over." Medical prac tice, based on this theory, was to interfere with the body's working by probing, operating, removing, and altering. The practice often proved disastrous to the patient! Medical theory has changed in the past fifty years. The modern theory, according to the same his torian, regards the body as "a single unit, health a general con dition natural to the organism ...

and the best diet and regime, to live naturally." This new theory regards the body as a self-regulat ing, and for the most part, a self curative organism. It need not be interfered with except to repair or remove an obstruction that pre vents the free flow of the healing power of nature. Medical or surgi cal ministrations do not create health; the body does that of it self if let alone. The new outlook in medicine is summed up by the title of a fa mous book by Harvard professor, Walter B. Cannon: T he Wisdom of the Body. I believe it was Dr. Cannon who introduced the con cept _of "homeostasis," the idea tha t the human body maintains all the balances necessary to health unless something interferes. freedom in Society There is a striking analogy be tween present-day theories of health and the ideal of freedom in human affairs. The believer in freedom is one who has come to the realization that society is a delicately articulated thing, each part depending on every other.

Hence, arbitrary interference with anyone's peaceable willed action not only diminishes the freedom of the person restrained but affects all other men in society. The at tempt to masterplan society upsets the balance which every part of society naturally has with every other part. Nearly everyone favors freedom in the abstract. Most intellectuals champion freedom of speech, aca1965 LET'S NOT SAVE THE WORLD! demic freedom, freedom of· the press, and freedom of worship. The only freedom which is every where under fire is economic free dom. Why is· this? Following the analysis I have been using, it is self-evident that those who would deny men freedom in the market place assume that, in the absence of political controls, economic life 'would be chaotic. Karl Marx: in deed did speak of the anarchy of the free market. The assumption, in other words, is that manufac turers would not produce the goods consumers want unless govern ment stepped in and told them what to make, and in what sizes, styles, and colors. The assumption is that farmers would grow noth ing but weeds and brambles un less crops were assigned and acre ages allotted. The assumption is that the vast transportation in dustry - which can jet us across the ocean, take us by rail or bus wherever we want to go, provide us with millions of automobiles would still be using wheelbarrows and the oxcart if government did not direct it. Merely to state these assumptions is to expose their ab surditY,but we have .to go one stage further in order to make the absurdity manifest.

What Is Economics? Why is there economics, and what is the economic problem? On the human side of the economic question is man, a creature of in satiable needs and desires but with only limited energy. On the other side of this equation is the world of raw materials. Very few things in their natural state can be used or consumed directly; humanef fort must be expended on them in the form of the work required to grow, manufacture, or transport them. Raw· materials are scarce, relative to human demands for them, and finished products are even scarcer~ And this means that there will always be unsatisfied human wants; people will always want more. For a thing. to qualify as· an economic good, two requirements must be met: the item must be needed or wanted and it must be in short supply. Air, despite the fact that it is necessary to our lives, is not an economic good, for it is not in short supply; under normal conditions there is enough air for everyone and lots left· over.

But conditioned air is an economic good, even though it is not neces sary. for life but only ministers to our comfort. Conditioned air is in short supply, there is not as much of it as people want, merely for the taking, and so they have to pay for it; that is to say, they have to give up something in ex change for it. Economics, then, is the disci10 THE FREEMAN January pline which deals with goods in short supply; and the problem it faces is how to allocate scarce goods so as to best satisfy the most urgent human wants. The free market approach to this prob lem is to rely on the individual free choice of consumers, as manifested in their buying or abstention from buying. The buying habits of peo ple form a pattern which tells en trepreneurs what to produce, and in what quantities, sizes, and so on. This is the tactic of liberty as applied to the workaday world; this is the market economy, or the price system, and if government merely protects people in their productive activities, and in their buying and selling - protects them by curbing predation and fraud the economic activities of man are self-starting, self-operating, and self-regulating. The free market is the only device available to men for allocating scarce resources equitably; its performance is so efficient and so intelligent that it has excited the admiration of those who have studied and un derstood its workings. Virtually everyone of the charges that has ever been directed against the free economy proves, upon examina tion, to be aimed at a problem caused by some misguided polit ical interference with the free economy.

In the United States, no one likes the term, socialized medicine, but there are many people - in cluding some doctors - who sup port a thing called Medicare. The professed aim of Medicare is to increase the availability of medi cal and dental services, and Medi care seeks to do this by political interventions and subsidies. Now medical and dental services are in short supply, relative to the de mand for them. This is to say that medical and dental services are economic goods, and - beca use they are scarce - a way must be found to allocate them. The free market is the only efficient and fair way to allocate scarce goods, and there fore the free market can be re lied upon to furnish the greatest quantity of high grade medical and dental service at the lowest possible price, to a citizenry which has a great variety of other needs and desires to satisfy as well. Ev ery political alternative to the market means a wastage of eco nomic goods and resources; it means less for all.

An Orderly Universe Examine any area of life you wish; events on the surface may not appear to exhibit a pattern, but dig deep and you find order, harmony, and balance. This is a universe we live in, not a multi verse or a chaos. The discovery of 1965 LET~S NOT SAVE THE WORLD! 11 orderliness in nature together with better means of cooperating with that order has resulted in the great progress of the natural sci ences during recent centuries. The human sciences and the social sci ences are somewhat more complex, and therefore we have a little more trouble in these areas. For thou sands of years we have known what we ought to do in the moral and spiritual dimensions of our lives, but we find it difficult to perform as we should at this level. Man likes to think that he can "get away" with things, and so he ig nores or defies the Purpose which manifests itself in and through the universe. The universe toler ates wayward man up to a point, but if man does not learn his own lessons from his waywardness, he is taught the hard way. "Things won't be mismanaged long," said Ralph Waldo Emerson.

Victor Hugo in his great novel, Les Miserables, put the matter more dl'amatically. You recall his long description of the Battle of Waterloo and the downfall of Na poleon. "Why Napoleon's Water loo?" Hugo asks. "Was it possible that Napoleon should gain this battle? We answer No. Why? Be cause of Wellington? Because of Rlueher? No; beea use of Cod! Bonaparte victor at Waterloo that was no longer according to the law of the nineteenth century. Another series of events was pre paring wherein Napoleon had no further place. . . . Napoleon had been denounced in the infinite and his downfall was resolved. He bothered God. Waterloo is not a battle; it is the universe chang ing front." And so I say, Let's not try to save the world! Saving the world is God's job; our job - yours and mine - is to make the world worth baving. ~ Hot and Colil THE STURDY INDIVIDUALISTS in the country who resent any polit ical interference apply for it every week. The manufacturers, whom I will call the sturdy believers in private enterprise, think Government ought to keep out of it, are with us every week or with the Tariff Board every week o:r with something or other every week.

There is hardly a section in the community today that does not in one breath protest its undying hostility to Government activity and in the next breath pray for it. Australian Prime Minister, ROBE1T G. MENZIES, before the National Press Club in Canberra, September 14, 1964 LET'S 9Vt4& MEN TOMMY'S TROUSERS w. A. PATON A STORY that was, one of my grand father's favorites, and which he enj oyed embellishing with local color and varying details, needs retelling. The yarn, in a nutshell, was as follows: Little Tommy was out on the street, very dirty and with both the knees and seat of his pants in tatters. A passing neighbor, noting that the youngster's condition wts somewhat more disreputable tluLn usual, complained: "For heaven's sake, Tommy, why doesn't your mother mend your trousers?" To which query Tommy replied cheer fully: "Oh, my mother is too busy Dr. Paton is Professor Emeritus of Accounting and of Economics, University of Michigan, and is known throughout the world for his outstanding work in these fields. His current comments on American attitudes and oehavior are worthy of everyone's attention.

12 to do that. She's over at the pa1' sonage sewing for the heathen." The lesson to be learned from this miniature tale is quite obvi ous, but nevertheless seems to have been widely forgotten along with many other pearls in our accumulated stock of common sense - at this juncture. The point to be made, of course, is the de sirability of putting one's own house in order before tackling the chore of redding up either the place next door or a more distant establishment, at home or abroad. This bit of homely wisdom is age old and is reflected in many fa miliar adages and admoni tions that have come down through the centuries. "Let every man mind his own business" is the blunt and 1965 LET'S FIRST MEND TOM MY'S TROUSERS 13 restrictive way that Cervantes (and doubtless others before him) put it.l Biblical injunctions in this area range from the pithy "physi cian, heal· thyself" to the striking and unforgettable "cast out first the beam out of thine own eye, and then shalt thou see clearly to pull out the mote that· is in thy brother's eye."2 A Man's First Duty The view that self-improvement comes before trying to remake the other fellow certainly has sub stantial merit, and straightening out one's own thinking and devel oping one's own character are such difficult and lengthy undertakings as normally to require many years of effort and growth - a lifetime for a lot of us, with the task still unfinished at the end. In other words, only a few ever reach the stage where they are fully justi fied in "telling off" the folks whose ideas and actions they regard as objectionable. Not many are truly "called" to this task.

This is not saying that all teach ing and preaching activities should 1 According to Bartlett, from Lock hart's translation. The· only statement along this line that I have found in my old copy of the Adventures of Don Quix ote, a translation by Charles Jarvis, is the following: "Let everyone turn him self round, and look at home, and he will find enough to do." 2 See Luke 6 :41-42, for the complete parable. be condemned. Family conduct is closely related to individual be.;. havior, and parents have and should accept the major responsi bility for guiding the actions and molding the attitudes of their children, as well as taking on the humdrum job of providing food and the other physical essentials. Many persons are reasonably com petent to give instruction to young or old in specific· subjects such as algebra or piano playing. But when we turn to the broad fields· of economics, politics, and morals (to say· nothing of· soci ology, and the burgeoning array of satellite pseudo sciences dealing with human behavior), the num ber adequately qualified to teach - or preach - is painfully small.

Anyone has a right to offer· his services in these difficult and con troversial areas, in· a free market, but it is unfortunate when an edu cational structure develops which in effect compels high school and college students to suffer under continuous dosing by instructors who have little more by way of strings to their bows than zeal for "social reform." Group Reformation The lesson may also be readily applied to group policies and ac tions aimed at ind ucing other groups, by persuasion or compul sion, to change their ways. The 14 THE FREEMAN January outstanding current example, of course, is the massive "foreign aid" program of the United States, which bids fair to become a per.., manent millstone on the neck of American taxpayers. How did we ever get this way? As one looks over the prevailing landscape in this country, and takes note of the conspicuous blemishes and blotches, it makes the sensitive person cringe with embarrassment \vhen he considers the pose we have assumed of Santa Claus and mentor for the whole wide world.

Yes, we have attained a high level of material well-being, but what else do we have to crow about, es pecially now that our constitu tional form of limited government is on the verge of going down the drain and a large part of our structure of liberty - freedom to assume responsibility and make decisions - has· been washed away by the tide of socialist interven tion ?:{ And look at the daily reports of increasing crime, including many grisly and terrifying cases a Almost everybody, including most politicians, still give lip service to "free enterprise," but the plain fact is that American business is seriously hobbled by an ever-expanding network of re strictions, regulations, and interfer ences, especially at the Federal level, and the mechanism of the market, indis pensable to a free economy, is limping badly and no longer giving effective guidance in the utilization of resources.

(fostered in part by the prevailing policy of coddling lawbreakers, by social workers and the courts); the senseless slaughter on the highways (more than a third of all Americans who die between the ages of fifteen and twenty-five are killed in automobile acci dents); the widespread outbreaks of rioting and looting, uncon trolled for days at a stretch; the growing swarm of rude, dishev eled, and otherwise obnoxious young people, to be found every where, and now conspicuously in evidence on college campuses; the contemptuous brushing away of moral standards, in all levels and sections of American life, includ ing top governmental officialdom. Strength Through Struggle It's not a pretty picture, and as one contemplates the scene, he gets to wondering if affluence is superior to austerity as a condi tion for mankind, for the long pull. There is considerable evi dence that the pinch of poverty has merit as a character builder.

In climbing the slope and over coming obstacles the human being often exhibits amazing courage, persistence, and resourcefulness. But when he gets to the top, has it made, he doesn't seem to know how to maintain either his energy or his integrity. At this stage he's inclined to forget the factors 1965 LET'S FIRST MEND TOMMY'S TROUSERS 15 required for material progress, and look to government, "Big Brother," as a means of securing him in the enj oymen t of his gains to date and at the same time pro viding more and more for less and less effort. Can the race stand prosperity? is a truly basic ques tion. In any event, it is quite appar ent that the astronomical hand outs of more than one hundred billions abroad during the past twenty years have not won us either the friendship or respect of the handoutees. They take our moneY,and want more; but they don't like us and they don't change their political and social views and practices to conform to those we are supposedly trying to export. And possibly one reason Uncle Sam's give-away program is a flop is that he doesn't have his own house in order, doesn't set a good example.

The foreign aid program is po..; Ii tical, widely publicized, even somewhat patronizing. There is much accompanying talk of "un derdeveloped," "backward" na tions. If the folks abroad, in Latin America, in Africa, and elsewhere, find this annoying and become nastily resentful (to the point, at tilnes, of offering violence to the giver), it should not be surpris ing. Perhaps there is something to be said for the ideas and ways of life of these "back\vard" peoples, including the remaining primitive tribes of the deserts, jungles, and forests, even if they lack automo biles, television sets, and central heating. Who are we to criticize and give way to the uplifting urge on the grand scale? Even if \ve assume that we are smart enough to run the other fellow's life aR well as our own, isn't it a bit pre sumptuous to attempt this, par ticularly if the other fellow pre fers to take care of his own af fairs? Are we justified in inter fering with the opportunity of others to realize the satisfaction that comes from accepting respon sibility and climbing the slope in their. own way?

The Helping Hand Do these unfavorable comments on massive aid for the "heathen" abroad (and which are scarcely less applicable to governmental welfare programs and antipoverty drives on the domestic front) aim in the direction of condemnation rather than praise for the some what instinctive urge to lend a helping hand to a fellow man in distress? Was the Samaritan of the famous parable on the wrong track? Having spent a substan tial number of years of my life in a primitive farm community, where the helping hand was much in evidence, in the form of par16 THE FREEMAN January ticipation in barn raisings, husk ing bees, threshings, and so on, as well as in connection with specific accidents, fires, and other misfortunes, I can't escape the conclusion that there are circum stances under which the individual may properly render assistance to neighbors - and strangers, too and to that extent interfere in their affairs.

I recall the time that I was driv ing the nine~mile trip to town with a team and bobsled, hauling a 5,OOO-pound load of baled hay. Snow was deep on the road, and there had not been much traffic since the last fall. As a result, probably, . of a mite of careless driving, a runner went down in a soft spot and all the bales of hay, and myself, left the rack and were piled up every which way in the deep drifts along the road. Reload ing 200-pound bales under these conditions is difficult, and I was much pleased when Irving Abbott drove up behind me and helped mightily with advice and muscle. (In this case, Irving wanted to get the road unblocked as well as to help me out.) Six Suggested Requirements or Limitations on Aid Giving counselor other assist ance is ticklish business, and if aid is to be constructively helpful, without bad side effects, there are severely limiting factors to be ob served. First, aid should generally be on an individual rather than a group basis (although private as sociation activity need not be ruled out) ; second, it should be strictly voluntary, not given at the point of a gun or under compulsion by government; third, it should be welcomed, if not actually invited, by the recipient; fourth, it should be related to specific difficulties and distresses (such as the per sonal example just recounted) and should not become continuing, habitual; fifth, wherever pr~~,ti cable the kind deed should bEt in the form of the needed service or goods (for example, helping a neighbor to repair tornado dam age to his home, or providing emergency shelter) ; sixth, in gen eral the giver of aid should be in close contact with the distress he is trying to relieve, or at least be familiar with the facts. Under these specifications the helping hand can be defended. But aid so restricted is a far cry from con tributions to all sorts of domestic or distant "reform" and "welfare"

programs and causes, about which the giver has no firsthand or de pendable information as to nature or accomplishments. Aid to others in this framework,moreover, is completely at odds with massive and continuing programs of grants at the political level, for which we 1965 LET'S FIRST MEND TOMMY'S TROUSERS 17 are compelled to dig down in our pockets to provide the funds. The inherent obligation of each individual, to sum it up, is to im prove himself intellectually, tech nically, morally, to the utmost of his ability, and provide service to his fellow men primarily through the proceBB of voluntary exchange, on the free market if such an in stitution is available. He should not become so preoccupied with the faults or the wants of others, real or fancied, as to forget his own limitations, and that charity begins at home. At the same time he should be glad to lend a helping hand on occasions where tempo rary assistance is clearly needed arid will be welcomed. But he should always remember that every man deserves the precious opportunity to assume responsi bility for his own course, whether he is swimming courageously up stream or paddling lazily, with plenty of company, in the other direction. ~ THE Reprints available, 3 ¢ each.

DEAN RUSSELL LABOR IT IS OFTEN CLAIMED that "capital" has an advantage in bargaining with "labor" because capital can move easily from one place to another while labor must stay put. In truth, however, the reverse of that tired old cliche is more in harmony with reality. For the is sue is not capital in the form of dollar bills but capital in the form of factories and machines. And Dr. Russell is a member of the staff of the Foundation for Economic Education. factories are not quite as mobile as factory workers. It is true that there have been cases of factory machinery being dismantled and moved from one state to another. But this is so rare that the event is headline news - and the union leaders im mediately demand a law to pte vent the machinery (and the own ers) from "escaping." Meanwhile, millions of workers shift around happily every year.

18 THE FREEMAN January That story is partially told in the following two statements from the book, Economic Forces in the U.S.A. (Department of Labor, Bu reau of Labor Statistics, sixth edi tion, 1960): "Between March 1957 and March 1958 about 33 million people, a fifth of the whole population, moved from one house or apartment to another. Over 5V2 million of them (3 per cent of the population) moved out of one state into another." (page 16) Thus, it is obvious that moving as such presents no particular problem. But what about changing jobs? "It has been estimated that with an average of about 68 million persons in the labor force (eco nomically active) in 1954, roughly 100 million shifts, either into or out of the labor force, or between farm and nonfarm jobs, took place. If an additional 70 million job changes occurred within farm and nonfarm employment, then a total of 170 million moves were made in that year - a ratio of over 200 per cent of the average labor force." (page 31) And still it is claimed that "la bor" is at a disadvantage in bar gaining for wages with "capital"

because capital can move while labor can't! During the past 30 years, I have lived for longer than one year in each of six different states and two foreign countries. And I have changed jobs at least ten times. During the last three decades, how many times have you changed jobs or moved from one place to an other? We Americans are a mov ing people. Even in those cases where it would be a considerable hardship for a worker to quit his job and move to another state to search for a new job, he still isn't at any disadvantage in bargaining with his employer for higher wages. For to whatever extent a threat to move can cause wages to rise, that service is done anyway by the workers who can move and are quite willing to do so. They are the ones who make sure that the high est possible wages are paid to all, including even those who would rather take a cut in pay than to move. As long as the market remains free, this situation necessarily must continue for all industries and all workers. For it is only in a controlled economy that men are forbidden to move and to shop around for better jobs. And thus it is only in a controlled economy that workers are at a disadvantage in bargaining with their employ ers.

On this issue of mobility, clear ly, it is labor (not capital) that still has the advantage here in the United States. ~ Reprints available at 2 cents each.

THE UNITED NATIONS has been and is the recipient of an enor mous amount of propaganda bally hoo, official and unofficial. Its sup posed virtues and merits are trumpeted from the housetops; criticism of its numerous failures and structural defects is hushed and muted. Universities, churches, civic organizations are pressed into service in the UN cause. As a result, there has been created among the American people a widespread image of a universal organization serving the purposes of peace and justice and entitled to maximum individual and na tional support. The truth, as a very concise sur vey of the indis putable facts of the UN record shows, is quite different. There have been a num ber of small wars and still more threats of war since the UN was established almost twenty years ago. Its influence on these wars and threats of war has been neg ligible, if not nonexistent. If only because of the tremendous risk of self-annihilation involved in a ma jor conflict in the nuclear age, there is no reason to suppose that any big war would have taken place if the United Nations had not been brought into existence.

Should some future would-be WILLIAM HENRY CHAMBERLIN Mr. Chamberlin is a skilled observer and reporter of economic and political conditions at home and abroad. In addition to writing a number of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines. 19 20 THE FREEMAN January \vorld conqueror decide to take the risk of unleashing such a conflict, the disapproval or censure of the United Nations, proved impotent in so many cases, would be the least of his worries. Those who still live in a dream world of euphoria about the United Nations and its achievements would be \vell advised to read the chapter, "Paul Bunyan and the United Nations," in the recently pub lished tart, realistic book on in ternational affairs by retired American diplomat, John Paton Davies. l To quote some of the more pungent paragraphs: "The UN . . . is an arena of conspiracy, petty intrigue, and bombast. Some conflicts of na tional interest may be resolved in the UN, but many are inflamed and spread from local or regional disputes to worldwide proportions.

"The level of irresponsibility in the UN will continue to rise with Dr. Jagan's Guiana, Red China and more freshly cut-adrift colonies in prospect for member ship ... The more, perhaps, the merrier, but not, perforce, the wiser. "Many of the new statesmen frequenting the UN, prominent among whom were Alex Quaison Sackey, Raul Roa, Sukardjo Wir1 Foreign and Other Affairs by John Paton Davies, Jr. (New York: W. W. Norton Co., 1964). jopronato, Dondogyo Tsevegmid, and Vengalil Krishan, Krishna Menon, were enthusiastic practi tioners of busybody diplomacy ... "It is sometimes contended that the UN plays an indispensable role as a seminary in which im mature nations can be tutored to stay out of mischief and fit them selves for our kind of interna tional society. This view glosses over the competitive tutelage by the Communists, the presence of mature delinquents in the UN and the depth of antipathy to our kind of society in the immature nature. In any event the artificial environment of the UN is a poor cram course for international real ities."

Look at the Record Perhaps the best means of test ing the efficacy of the UN's sup posed role as a keeper of the peace is to run over the more serious international crises and conflicts that have occurred since it was organized and recall what it did, or, far more often, failed to do, in each. 1948-49. The Soviet blockade of all routes of rail, road, and water access to West Berlin, de signed to force the Allied powers to quit the city by creating con ditions of mass starvation. The blockade was countered and fi nally broken by the American1965 IS THE U.N. REALLY NECESSARY? 21 British airlift, supported by the enthusiastic cooperation of the population of West Berlin, which gladly put up with temporary hardship rather than fall under communist tyranny and slavery. If there was any official protest from the UN against this inhu man effort to starve a large city into submission the fact has es caped the historical record.

June, 1950. A North Korean army, completely outfitted and sup plied with modern weapons by the Soviet Union, crossed the 38th Parallel and invaded South Korea, massacring all known anticommu nists as it advanced. This time, due to the accidental circumstance that the Soviet representative was boycotting sessions of the Security Council and was unable to cast his veto, the Security Council was able to authorize resistance, of which about 98 per cent of the burden in lives and treasure fell on South Korea and the United States. Small units from Great Britain, France, Turkey, Greece, and a minority of UN members fought creditably in Korea. But, by and large, it was a UN war and a U.S.-South Korean fight. And against the help supplied by a few UN member states must be set the backseat driving and interference with strategic neces sities \vhich would not have occurred if the United States had been fighting the war indepen dently. One need only recall the failure to bomb the bridges over the Yalu River over which Chinese forces poured after the North Korean army had been thoroughly shattered, the rejection of Chiang Kai-shek's offer to send Chinese nationalist troops to Korea, the rejection of General MacArthur's proposals to blockade the coast of mainland China and bomb selec tive targets in China after the Chinese intervention was an ac complished fact. Most of the UN member states, notably India, seemed more afraid of victory in Korea than of having the Ameri can effort there end in frustrated stalemate.

1956. Hungary and Suez. Al most simultaneously, the Soviet government, by massive military intervention, overthrew the legiti mate government of Hungary; and Israel, from one direction, and Great Britain and France, from another, invaded the territory of Egypt. The Israeli attack followed a series of incursions into Israel by guerrillas organized on Egyp tian soil and the Anglo-French military move was in reaction to Egyptian dictator Nasser's nation alization of the Suez Canal, in which most of the stock was held by French and British citizens.

22 THE FREEMAN January On Hungary, by far the more flagrant and unprovoked of the two breaches of the peace, the UN did absolutely nothing, apart from serving as a forum for some criti cal speeches. In the case of Suez, a United Nations security force "vas sent to patrol certain sensi tive areas along the Israel-Egyp tian frontier. But the fighting ceased because the British and French withdrew under the com bination of diplomatic and econ omic pressure from the United States and threats from Moscow. 1958. Red Chinese bombard ment of the offshore islands of Quemoy and Matsu held by the Chinese Nationalists. UN action, nil. The Nationalists maintained and still maintain - possession of Quemoy and Matsu mainly be cause the American Secretary of State at that time, John Foster Dulles, refused to be bluffed and intimidated by Red Chinese shells and an accompanying barrage of fainthearted articles by fright ened commentators in the United States into putting pressure on Chiang Kai-shek to evacuate.

Quemoy and Matsu, written off as "indefensible" by advocates of ap peasement who suddenly turned into armchair military strategists, easily withstood the effects of the bombardment, which tapered off into a token operation. 1960. The Congo. The prema ture Belgian abandonment of po litical responsibility for this vast rich area of Central Africa - in habited by illiterate primitive na tive tribes quite uncontrollable by the few half-educated native poli ticians in the cities - created a chaotic vacuum in which first Soviet, later Chinese, communism sought to create conditions for a takeover. So complete was the breakdown of elementary condi tions of normal life, following the wholesale mutiny of the ragtag and bobtail armed forces, that even the first left wing "Presi dent" of the Congo "Republic," Patrice Lumumba, called for UN aid in restoring law and order and making it possible for public service to operate. For almost four years a UN military force, re cruited from Sweden, Ireland, India, and some African states, was operating in the Congo; and the UN assumed wide advisory functions in civilian administra tion and economic life.

The whole venture ended in polit ical, moral, and financial bank ruptcy, mainly because the polit ical directions which were voted by the UN General Assembly re flected the ultranationalist views of African and Asian member states, not the realities of the chaotic Congo. It would take too long to reconstruct the whole 1965 IS THE U.N. REALLY NECESSARY? 23 murky story of Congo farcical politics, tribal feuds, intrigues, and bewildering shifts of leading government figures. But the UN got involved in senseless feuds with the two most constructive forces in the Congo: (1) Moise Tshombe's orderly bi rg,(!ig,l g,dminigtrg,tion in Kg,tg,ntrg" which protected Europeans and made it possible for the copper mines and other industrial enter prises to function smoothly; and (2) the Belgian technical specialists who were willing to continue serving in the Congo if they could receive elementary assurances of personal security, who were thor oughly acquainted with the coun try and its ways, and who were desperately needed if essential health and transportation services were to be kept in operation and the Congo was to be saved from a lapse into its original barbarism.

The result was that, although some UN experts rendered valu able service, the balance-sheet of UN intervention was far from pos itive. When the last UN forces left the Congo the situation was little, if at all, more orderly than it had been when they took over. The grossest misuse of the UN force was to attack and overthrow Tshombe's administration in Ka tanga. It was indeed a sorry day in December, 1962, when simul taneously the UN forces battered their way into Elizabethville, cap ital of Katanga, and the United States advanced a large loan to the brash anti-Western dictator of Ghana, Nkrumah, who had been making all the mischief in his power in the Congo, following the abdication of Belgian power. There wg,g g, fing,l tou(!h of irony when Tshombe, vilified and, denounced by all the propaganda resources at the disposal of the UN and also of the United States, took over the central administration of the rickety Congo government and was accepted in Washington as the man most likely to create some semblance of unity, peace, and orderly condi tions in his dis traught country. So - although, in contrast to the usual record of in action in the face of threats to peace, there was UN action in the Congo - the course and result of this action give little ground for hope that this conglomerate or ganization of nations with widely differing forms of government, economic and social systems, and degrees and standards of educa tion can successfully guide such a difficult and complex enterprise as the reconstruction of the Congo.

1958-62. The off-and-on Soviet threat to the independence and security of West Berlin. This was a continuing and potentially very 24 THE FREEMAN January serious threat to freedom and to international peace. In November, 1958, Soviet dictator Nikita Khru shchev, perhaps intoxicated by So viet successes in space explora tion, gave a six months time limit for the withdrawal from West Berlin of the small American, British, and French forces which are the guaranty of the inde pendence of West Berlin, an island in the surrounding sea of the So viet Zone. This time limit was subsequently canceled, then reim posed, and put off again. What the UN did, even in words, about this real and constant threat to peace in Berlin was precisely nothing. 1962. There was an even more dramatic confrontation, with pos sibilities of nuclear conflict, in Cuba in the autumn of 1962. Khru shchev smuggled a considerable number of Soviet intermediate range missiles, capable of dev astating American cities, into Cuba. The United States govern men t imposed a naval blockade and was prepared to resort to stronger measures to get the mis siles - which Khrushchev prob ably intended to use for blackmail ing purposes on the Berlin issue removed from Cuba. After a tense few days the Soviet dictator backed down and consented to re move the missiles. And this also marked - at least for the next two years, until Khrushchev's fall from power - the end of the So viet-provoked Berlin crisis. The firmness which the United States showed on the issue of Soviet mis siles in Cuba finally convinced Khrushchev that he could not force the Western powers out of West Berlin without risking a major war.

It is Interesting and significant to note that in the ultimate show down over the Cuban missile threat the UN made no contribution to a settlement. The American peo ple had to rely on the purpose, strength, and firmness of their own government. It is also worth remembering that the UN never uttered a peep of censure or pro test against the erection of the notorious wall which cut the city of Berlin in two, separated from each other members of thousands of families, and was repeatedly the scene of acts of revolting cruelty when armed guards shot down East Germans making a des perate attempt to escape to the liberty of the West. Another violation of peace in the autumn of 1962 "vas the Red Chinese invasion of India. That country had been one of the most persistent advocates of neutrality, of nonalignment between East and West. In season and out of season India had urged the admission of Red China to the UN. But when 1965 IS THE U.N. REALLY NECESSARY? 25 Red China made this rather un grateful return for India's good offices, India had to look for help to the United States and Great Britain, not to the UN.

Other acts of violence and ag gression on which the UN has not uttered even the mildest protest or condemnation are India's for cible seizure of Goa in 1961, the Indonesian annexation of West New Guinea, preceded by landing of troops in the area, and the cur rent guerrilla war which the In donesian dictator Sukarno is wag ing against Malaysia. A False Image American public opInIon has been deluded long enough about the nature and possibilities of the United Nations. A false image has been created of an organization with an independent personality of its own, which it is the duty of the United States to support and strengthen as an effective shield of international peace. But it is nothing of the kind. Over 100 Soviet vetoes prove that the UN, even if it desired, could take no effective action against any ag gression, direct or indirect, which the Soviet Union might favor. lV[oreover, the present UN, now swelled to more than double its original membership, largely be cause of the proliferation of new independent African and Asian states, many of them minuscule in population and resources (Africa is absurdly overrepre sented because of the fragmenta tion of the French colonial empire into a dozen minor principalities) is more and more dominated by a spirit of have-not neutralism.

About the only resolutions for which a majority is certain in the UN Assembly are intemperate de nunciations of "colonialism" (so long as this is not of Soviet or Chinese origin), appeals for all out disarmament, with no provi sion for necessary safeguards, and expressions of the belief that the rest of the world owes the "underdeveloped" areas a living. The UN Charter envisages the Security Council, composed of five permanent and six nonpermanent members, as the strong executive right arm of the organization. But a paralyzed right arm is of little value. And what common purpose can be expected from a Security Council now made up of the United States, the Soviet Union, Great Britain, France, Na tionalist China, Bolivia, Brazil, Czechoslovakia, Norway, Morocco, and the Gold Coast, the last one of the little splinters of the French colonial empire? Obviously, none at all. And conflict and diversity of viewpoints explain why the Se curity Council has accomplished virtually nothing during the last 26 THE FREEMAN January two decades. The United Nations does not live up to its name. As an association of profoundly divided nation states its deliberations and resolutions often suggest the Bib lical Tower of Babel.

The Present Alignment In the UN as now composed it would be impossible to count on even an adverse vote of censure, much less on any positive effec tive action against aggression di rected from Moscow or Peiping. On the other hand, there is serious danger that undue respect for UN resolutions on such issues as the conduct of the South African gov ernment and the settlement of the status of Southern Rhodesia could draw the United States into actions which are contrary to its best interests. The attempt to place the au thority of the United Nations be hind acceptable statements of principle has been unsuccessful because of the basic incompati bility between communist and free society ideals. A UN pro posed convention on freedom of the press and information came out so badly that the United States felt obliged to withdraw its support. The point was that communist-ruled states regard freedom of the press and all other freedoms as privileges, to be granted or withheld at thediscretion of an absolute state, while the framers of the United States Constitution upheld the principle of man's natural, God-given rights, which no government may lawfully deny or abridge.

There is every likelihood that on such issues as crusading anti colonialism, share-the-wealth proj ects, and unsound disarmament schemes the United States may find itself in the embarrassing position of being outvoted in the UN Assembly. In view of this pos sibility, in view of the proved in capacity of the United Nations to serve as an effective deterrent to wars and threats of war, advocacy of "strengthening" the organiza tion makes little sense. Small wars and internal distur bances have occurred in many areas, in Cyprus, in Yemen, in Vietnam, along the Chinese-Indian border, in Algeria, and the Congo, to mention only a few. And the United Nations has displayed no ability to stop these. Nor has it been a factor in warding off the occasional threats of bigger con flicts. It is a fifth wheel in inter national relations. America's best security against blundering into war or having war forced on it by an insatiable aggressor re mains just what it has been in the past: the power of its armed forces, the stability and validity of its alliances, the firmness, skill, 1965 IS THE U.N. REALLY NECESSARY? 27 and intelligence of its diplomacy.

The United Nations can accom plish nothing that old-fashioned diplomacy cannot do better, if only because of the absence of the play of Klieg lights on the latter proceedings. The UN has received such a propaganda bUild-up that it would probably not be practical politics to recommend outright American withdrawal, except in response to some gross affront to the Ameri can moral sense, such as the ad mission of Red China to membership. If such a contingency should loom, it would be wise and ap propriate for the United States government to make it clear that there is one UN seat Red China can have any time: ours. Barring any such challenge, the most suitable policy would be that of disengagement, of realist ically downgrading the importance of an organization where there is such a divorce of power -and re sponsibility, where Upper Volta votes in the Assembly on equal terms with the United States, the Soviet Union, and Great Britain.

~ LI FETI E SECURITY RECENTLY the head of one of America's largest labor unions came up with an old idea - that corporations should guarantee life time job security to workers. This idea is certain to appeal to many people because it sounds like a worthwhile and humane goal - but this suggestion is based on a false idea. Then there are also some An editorial release, October, 1964, Associ ated Industries of Missouri. hidden implications that run con trary to the course of events. First, why is the idea of life time job security, guaranteed by a corporation, built on a sandy foundation? Simply because a cor poration, regardless of size, does not have the economic power to fulfill such a guarantee. From an economic standpoint, an employee doesn't retain his job at the discre tion of the corporation - but, 28 THE FREEMAN January rather, at the discretion of the corporation's customers.

In other words, while a worker's paycheck is handed to him by the corporation, it doesn't come from the corporation. All wages come directly from consumers who buy what the corporation offers for sale. If customers stop buying, wage and other expense monies stop coming in - and all the good intentions or guarantees in the world won't enable a corporation to keep unneeded employees on the payroll. There just isn't enough money in the till to do so. In short, since consumers hold life or death power over all jobs, only they are able to guarantee job security and this they won't do! And why won't they? Consum ers won't guarantee you your job, or me my job because the only guaran tee they have of getting the most for their money is their free dom to shop. This is called the "discipline of the free market." And, if we think about it, we wouldn't have it any other way because we, in the final analysis, are consumers ourselves. We work to fill our wants; and when we fill our wants, we consume.

Second, what about the hidden implications mentioned above? The most obvious is that, to gain the greatest degree of job secur ity from consumers, employees must readily submit to consumer demands. But consumers don't im pose their demands on employees directly, they do it through em ployers. Since this is so, the best way employees can meet consum er demands is to allow their em ployer, the corporation, as free a hand as possible in meeting con sumer demands. This calls for a high degree of flexibility in areas of cost control (of which wages are a part), work rules, and others too numerous to mention. Em ployees who thus cooperate with their employer in wooing the con sumer dollar will come closest to winning lifetime job security. In short, workers will be wiser to look to the consumer, the real source of job security - not to the corporation. ~ Plato "THE ONLY STANDARD today is the pleasure of the hearers no matter what sort of men they are, but those are blind who have no clear standard, and the divine is the eternal measure."

LEONARD E. READ My PURPOSE in this essay is to throw some light on an important but obscure argument concerning the orderly nature of the free mar ket economy. Unless the point is understood, the free economy stands in danger of extinction. But if the point is to be clarified, it must first be isolated from the general confusion that attends the fear of chaos and the desire for order. Most of us claim an affinity for freedom; but if given a choice be tween a freedom suspected of chaos and a regimentation assured of order, we would choose the regi mentation. We instinctively fear and detest the opposite of order which is chaos, and for a good and compelling reason: man cannot exist unless nearly everything in his life situation is orderly, that is, unless a vast majority of ex pectations can be taken for grant ed and counted on to materialize. Man's existence requires a fairly dependable level of order.

For example, man could not exist if he could not count on oxy gen in the next volume of air he inhales or if he could not confi dently expect Old Sol to rise on the morrow. Were there any doubt about the continual rhythm of these events, the doubt alone would do him in. Or let only minor mishaps intrude themselves into the autonomic nervous system \vhich, beyond conscious effort, controls heartbeats, breathing, glandular and countless other bod ily activities - and man's earthly days are over. Man is a nervous animal and one of the conditions of survival is a dependable, order ly sequence of things to come. Nor need we limit our observa tions to the necessity for orderli ness in nature or in man's person; also required is an orderly social environment so that man can 29 30 THE FREEMAN January know what to expect, within lim its, from his fellow men. Suppose, f or instance, that no one could be counted on to keep his word, that promises were meaningless, that capriciousness in everything were the rule: buy a can of beans only to find it filled with mud; hire workers who refuse to work; con tract one price and get charged a higher price; earn a livelihood that is subject to confiscation at anyone else's pleasure; act peace fully but with no security of body and limb; and so on and on. Man can endure but little of this; he can't cope with life at sixes and sevens, with many things in the realm of uncertainty. And because of this he will pay almost any price - even his freedom - for cer tainty, for order. Indeed, when confronted with but a modicum of chaos, he will accept with alacrity numerous variations of the goose step, those constraints which mini mize uncertainties and thus give him the semblance of order.

But most of these "goose steps" which give a semblance of order such as controls of prices, wages, rents, hours of labor, or "planned" prod uction and exchange - eco nomic freezes, one might say - are not, in fact, order. On the con trary, these rigidities are exam ples of chaos and of interference with men's choices and expecta tions. IIWhere We Want to Bell The truth is that order and chaos in the economic realm are the reverse of what is generally supposed to be the case. It is doubtful if anyone could more strikingly phrase this common con fusion than was done by one of our country's most powerful labor officials. He wrote: Only a moron would believe that the millions of private economic de cisions being made independently of each other will somehow harmonize in the end and bring us out where we want to be.! If "where we want to be" is un der a dictatorship, this statement about the market might make sense. Otherwise, this evidences an utter confusion as to the nature of man and the nature of the market.

Analogous to the labor leader's "millions of private economic de cisions" are the "millions" of cre ative decisions within each human being, such as: 1,000,000,000,000, 000,000,000,000,000 atoms of nu merous configurations; some 30, 000,000,000,000 cells; bone mar row producing 1,000,000,000 new red blood cells every 60 seconds; each kidney having some 5,000,000 complex glomeruli; a diencepha lon, a portion of the brainstem that acts independently of con1 See The New York Times, June 30, 1962.

1965 ON FREEDOM AND ORDER 31 sciousness; a cranium filled with nerve tissues having a seemingly unlimited supply of neuroblasts unfinished nerve cells - which can, with conscious effort and other dis ciplines, be transformed into func tioning neurons. Such enormous, utterly staggering phenomena of man's composition - "fearfully and wonderfully made," unfathomable to our finite minds - appears as chaos. These trillions upon tril lions of data, about which we have but the dimmest notions, can eas ily tempt one to conclude: "Only a moron would believe that these will somehow harmonize in the end and bring us out where we want to be." These phenomena are not cha otic as they appear to be but, in stead, are an order of creation we cannot comprehend. For they do harmonize and bring us out where we want to be: a human being, the most amazing example of order within our awareness. Of Markets and Men Order, I suspect, is never the product of chaos; it would seem that only order can beget order.

And I firmly believe that this rule applies as much to the market as it does to man. True, we do not seriously question the point as it relates to man; we are so dumb founded by the mystery of life tha t we readily concede that only God can make a tree - or a man. But there is all too little of this faith and humility as it concerns the market. Here, when we witness millions of economic decisions made independently of each other, vie ,vill, if not perceptive,' call them chaos; whereas, in fact, we are viewing an order the complex ity of which cannot be brought within our limited grasp. What we lightly pass off as chaos is but a reflection of our failure to com prehend. Take. only a casual look at our economic world. Visit Russia, Red China, Cuba, East Germany. Like our labor official and many of our educators and business "leaders," these unfortunate people do not understand how millions of de cisions made independently of each other could possibly har monize in the end and bring about efficacious results; that is, their minds, deficient in awareness, sensing only chaos in the complex data of the free and unfettered market, proceed to bring "order"

out of it. How? A Mr. Big takes over and substitutes his one source decisions for the millions of decisions that would otherwise be made independently of each other. But observe that one man's orders bring about everyone's cha os, as deadening in the end as if he himself were to take over the forces that make him a human 32 THE FREEMAN January being. He can no more mastermind market data than he can the data of his o\vn being, that is, without disaster. A Housewife's Nightmare Unfortunately, the chaos brought on by one-source decisions - dic tatorship - is seldom thought of as chaos once the subjects have endured it for a short time. Like wild animals placed in zoos - as soon as the shock of contrast is over - the subjects come to think of their fetters as more a part of ordered than chaotic life. But let an American housewife, for in stance, accustomed as she is to an economy in which decisions are made more or less independently of each other - where the free market is approximated - awaken suddenly to a Russian, one-source decision situation: the larder bare, no telephone, no car, no taxi avail able, standing in line hours on end only to find a scrap of this or that for her family; freedom of ex pression, of writing, of religion denied; a suppression of desires, aspirations, ambitions. What a shock such a sudden contrast would evoke! Mrs. America would, indeed, be conscious of an unbe lievable chaos; she would correctly conclude that a great deal of order had been removed from her life situation.

The more a country's economy is politically ordered or "planned," the more chaotic is production and exchange. Conversely, the freer the market - that is, the greater the extent that economic decisions are made independently of each other - the more order there is in production and exchange. Try making purchases in Havana and then try in Chicago or Keokuk. You will have little doubt as to where the order is. Or if it be argued that Cuba hasn't had time to "make socialism work," then compare experiences in Moscow with Hong Kong. Russia has been at it for nearly half a century! Also bear in mind that the chaos which is manifest in the Moscow market place must have its origin in chaos: a one-source-decision ap paratus; that the order which is manifest in the Hong Kong mar ket place must have its origin in order: millions of economic deci sions made independently of each other. The Nature of Things Order is not necessarily charac terized by things in a static, mo tionless relationship, as is so often thought. Take, for instance, heav enly bodies: motion in relation to one anoth er is of their nature; they manifest order only when orbiting. Were they to behave con trary to their nature, that is, were their s\vift flight through the void 1965 ON FREEDOM AND ORDER 33 to halt, cosmic chaos would result.

Now, reflect on neat rows of cemetery headstones. As distin guished from heavenly bodies, a static, motionless relationship of each to the others is of their na ture. Were these headstones to go into motion or orbit, a behavior contrary to their nature, vve would observe the contrary of order; chaos! These observations are meant to suggest that it is the frustration of the nature of a thing that spells chaos - order consisting of what is in harmony with a thing's na ture. What is order in one instance might be chaos in another. The nature of the thing prescribes the characteristics of the order and the chaos peculiar to it. The Nature of Man Consider the nature of man. The Greek philosopher, Heraclitus, amusingly oversimplified it when he suggested that man is on earth as in an egg; that he cannot go on forever being a good egg; that he has to hatch or rot. Man's nature, as distinguished from that of other animals, is to evolve, to emerge; it is to grow in conscious ness, awareness, perception; it is to make strides as a rational ani mal and, eventually, to make choices with intelligent discrimi nation and, to some extent, to will his own actions. Men - potentially, at least - must be included in cre ative phenomena and any thwart ing or frustration of this, his sensitive and spiritual nature, must induce chaos. The man-im posed goose step in its social, po litical, and economic versions the headstone kind of static, mo tionless order - is the antithesis of any order that has to do with expanding consciousness.

Man, in the light of his destiny, is not a static organism. This is unthinkable. Furthermore, the free and unfettered market is but the unfrustrated economic mani festation of man's creative, emerg ing, spiritual dynamism. Man en joys freedom only if he be free to act. This is self-evident; it needs no proof. Thus, it follows that man can be free only if his peaceful, creative actions are not aborted. This is to say that man can be free to emerge in the direction of his destiny only if his market - eco nomic expressions of men - be free. The free market, founded on economic decisions made inde pendently of each oth,er and rest ing, as it does, on common con sent, is consonant and in harmony with freely acting man. Dyna mism, in this context - moving, flowing, creative, kinetic energy - is as much a characteristic of the free market as it is of the in dividual human being, man and his market being but two parts of a 34 THE FREEMAN January whole: this dynamism is of the nature of each. Order in either case - man or his market - exists only as this dynamism, showing forth peacefully and creatively, finds unfrustrated expression. Any man-imposed goose step must breed chaos just as surely as if some human dictator were to stop the heavenly bodies in their orbits.

In the above I have tried to suggest that we must look to the nature of a thing to determine what is order and what is chaos. Whenever we impose the headstone variety of static, motionless order to man and his market, that is, whenever we substitute one-source decisions for millions of decisions made independently of each other, we get chaos for our unintelligent pains. And it is axiomatic that freedom must disappear as we practice the error! The Miracle of the Marlcet To illustrate the mysterious or der of the free market, think of anyone of a million goods or serv ices: corn flakes, atomizers, hats, automobiles, radios, TV sets, tele phones, machine tools, computers, illumination, and so on, things that are left more or less to countless decisions made inde pendently of each other. Millions upon millions of tiny think-of thats, little creativities, individual acceptances and rejections, whims, likes and dislikes - forces too nu merous ever to recount and which appear as chaos but are, instead, complex order - miraculously com bine to form the fantastic order of these artifacts by which we live.

Observe that the order of these is so perfect, their production and exchange and their demand and supply so nicely balanced, that we take them as much for granted as we do the air we breathe. Never a second thought! No argument! And, further, the very fact that an automobile, for instance, is an or derly mechanism is testimony in itself that it originated out of or der, not out of chaos. Now, reflect on those goods and services no longer entrusted to the millions of economic decisions made independently of each other in a free market but delegated in stead to one-source governmental decision as a way of bringing "or der" out of "chaos." To cite a few: an ever-enlarging part of employ Inent, many wages, prices, ex changes; a good deal of housing; wheat, tobacco, corn, cotton; more and more power and light; roads, education, money value, and others. Observe the imbalances and note that these are the only goods and services we ever argue about. By this method, we do not bring order out of chaos but, rather, chaos out of order! The very fact that these are in a cha1965 ON FREEDOM AND ORDER 35 otic state is testimony in itself that they have their origin in chaos.

One consequence of confusing order and chaos is a static market and its aftermath, a frustration of man's nature, the free market be ing but the extension or manifes tation of the free man. Damage cannot be done to the free market without an equal damage to man's nature. When men are compelled to look to a one-source decision in stead of to the individual deci sions of men, man is robbed of his wholeness. Self-responsibility, the corollary of self -decision and the wellspring of man's growth, gives way to cheap politics, mass plun der, pressure grouping, protection ism. Any time a society is organ ized in such a manner that a pre mium is put on the obeisance paid to political planners and when lit tle, if any, reward attends integ rity and self-reliance, the mem bers of that society will tend more to rot than to hatch! If human beings were meant to be ordered in such fashion as are the moving atoms in a molecule of motionless mineral, is it conceiv able that anyone man or organ ized group of men would be capa ble of planning and directing the lives and activities of all others?

It is precisely because we differ from one another, because - as even the communists admit - each has his needs, that human beings require freedom to express those needs and to satisfy them, individ ual by individual. The free market affords a mechanism for the ex pression of these countless differ ences, in the bidding and asking prices, the voluntary buying and selling of scarce resources, where by each may pursue his own prop er interests without infringing up on or denying the nature and the interests of any other peaceful person. When alternatives have been sought to the open market, the result always has been some variation of the master-slave ar rangement, with one man's order bringing chaos into the lives of others. Why the Confusion? We are led to speculate on why this confusion about order and chaos. While there are few who put the case for the headstone va riety of order as boldly and as honestly as the labor official, all who argue for and introduce rigid ities into the market are up to the same mischief. Sadly, not a cate gory of the population is exempt: teachers share heavily in the guilt as do preachers, business and civic leaders; indeed, were it said, "Let him who is without sin cast the first stone," few rocks would fly.

When the error is as general as this one, the cause must lie very 36 THE FREEMAN January deep, indeed. Inspect this suspi cion of mine and see if it makes sense. Man - most men - suffers a fearful contradiction. There is on the one hand his God-given na ture: to be born on this earth, to grow and to emerge in conscious ness; to age and, eventually, to de part this earth. This cosmic, evo lutionary tug is a powerful force but not as a rule, a force about which man is sharply conscious. Then, on the other hand, there is man's slight, budding ability to reason and choose - an ability still linked to an abysmal ignorance. Being but dimly aware of his nat ural destiny or how ignorant he is, man tends to ascribe to his reason an omniscience out of all propor tion to what the facts warrant. Thus, man - most men - is con fronted with two powerful com mandments that are in conflict, one might say, at war with each other.

Man's nature calls for a flexing, an improving use and a continuing growth of the faculties, regardless of how uncomfortable or painful this perpetual stretching may be. Then, in opposition, is his defec tive ability to reason which com mands him to remove himself from the struggle, to get out of rather than into life, in a word, to seek ease. That man's "reasoning" is often a more powerful push than is the tug of his natural destiny is evi denced by his fear of earthly de parture. Viewed rationally,. it would seem that departing this earth is as congenial to man's na ture as being born. Both arrival and departure are but two parts of life's equation; whatever has a beginning has a conclusion. Yet, note how general the fear is. Afraid to Die-or Live But no,v to my point: Not only is man - most men - fearful of that aspect of his nature which is his earthly demise, but he is equally fearful of that aspect of his nature which is life's living!

Observe the tendency to run away from problems, obstacles; the pas sion for wealth as a means of re lief from employment; the yearn ing for security; the ambition to retire; and, specifically to my point, the dread of competition and the craving for protection. Man - most men - as a conse quence of this "reasoning," seeks a static, motionless kind of order - the headstone variety - while his nature calls for an order of the dynamic variety which man, un less perceptive, looks upon as chaos. Competition - our attitude to ward it - gets to the heart of the problem. It is the great antistatic force, the enemy of status; com petition is the activating agent, 1965 ON FREEDOM AND ORDER 37 the gyrator, so to speak, in man's life and in his market; it keeps things whipped up, moving, chang ing, improving, always uncomfort able, sometimes painful, but, none theless, dynamic. A· noncompeti tive society is a monopolistic soci ety. Competition is the ally of man's natural destiny and, thus, it is the preservative of his free dom; without-competition man's market and man himself would fall into a state of lethargy; the static kind of order would prevail, in which freedom is impossible.

Be it noted that human beings, as if in response to their natural and evolutionary destiny, favor competition for everyone - except one person: self! As for self, "reason" takes command and seeks protection against the uneasiness competition imposes. When everyone favors competi tion for me - except me - it would seem that the competitors have it, that protection for me would be impossible. But when we let gov ernment - organized police force intervene in the market place, that is, in creative human actions, thus permitting government a power sway over and beyond keeping the peace, we provide a fatal flaw in the armor of freedom. It is called logrolling: "I'll vote for your pro tection if you'll vote for mine." And, as protection spreads, com petition correspondingly decreases, monopoly increases, and freedom diminishes. We achieve the head stone kind of order which, for man, is chaos.

We may never be able to mend the aforementioned flaw until we acquire a more rational view of competition - human dynamics than we now have; not a more ra tional view of competition for others - this we possess - but for self. If I concede that competition is desirable for all others, how, rationally, can I make an excep tion of myself? It doesn't make sense. Keeping in mind man's natural, evolutionary destiny, competition is as good for me as for anyone else. Admittedly, experience helps in being rational: About forty years ago my competitors ran me out of the wholesale produce busi ness. I had to sell my home, furni ture, car, everything to pay the creditors. Broke! A painful ex perience, indeed! But had it not been for competition, I would, no doubt, be in that business today. Not that there is anything wrong with being a wholesale produce merchant; it is that I did not be long in that role. Others were bet ter fitted for it. And, important to me, I was led - not happily at first - to discover that there were other employments that better suited my aptitudes. Competition made it possible for me to discover how 38 THE FREEMAN January best to allocate those few resources peculiar to my own person. Com petition is at once the economizer and activator; it helps to keep us on the creative move and to find the niche appropriate to the dis tinctive abilities of each.

If the above reflections are at all valid, it is certain that individual freedom cannot exist among peo ple whose main emphasis is on se':' curity, status, protection. Building fences (protectionism) against freedom in transactions (the free market) is of the same ill-suited order as rejecting those evolution ary forces which conspire to make improving human beings out of mankind. The fixations and rigidi ties implicit in status are of an order in which freedom is impos sible. Freedom exists only as her im perative is observed: all peaceful and creative actions unrestrained. True, this calls for an order so complex that it gives the appear ance of chaos but, instead, it is only incomprehensible order; it is the order of a living tree, of emerging man, of creation going on before our eyes. Freedom is a condition of all creation, including man's share in it. /~ The Pressure to Succeed NOTHING IS MORE DANGEROUS to the well-being of a theatre than when the director is so placed that a greater or less receipt at the treasury does not affect him personally, and he can live on in careless security, knowing that, however the receipts at the treasury may fail in the course of the year, at the end of that time he will be able to indemnify himself from another source.

It is a property of human nature soon to relax when not im pelled by personal advantage or disadvantage. WOLFGANG VON GOETHE, from Eckermann's Conversations of Goethe PAUL L. POIROT VARIETY is much more than the spice of life. It also is the bread and butter of life, the meat and potatoes. A gray sameness is the hue of death, not life. This is common knowledge. Yet, many of us today are so preoccu pied with the search for common causes, common interests, and common denominato'rs that the variety among human beings upon which our lives and livelihoods de pend is threatened with oblitera tion. We forget that our differ ences, not our likenesses, afford the only reasons there are to asso ciate and cooperate with one an other. Could anyone, or any possible combination of us, help any other if all of us were in every way the same? And in that event, even if we agreed to do one another's laundry, what could be the point?

It would all be the same in the end, and no one would have gained anything by reason of such ex changes. So, perhaps 'we need to remind ourselves and one another of our individual natures, our differences, our variable abilities, and our variable needs if we would con tinue to develop our respective lives in the company of others. Instead of seeking sameness from the cradle to the grave, let us ex plore and exploit the differences by which we live. "Human equality" is not a working formula of the Creator; it is a technical terln of limited political application. 1 Our mani1 We acknowledge that men should be "equal under the law." Civilized co existence requires certain minimum rules such as mutual respect for life and property. Penalties are to be as sessed impartially against any violator of these basic rules. 39 40 THE FREEMAN January fest and manifold inequalities ex tend to every facet of our beings, from the tiniest of our physical features to the highest povvers of our intellects and spirits, includ ing all the goods and services and products and all the other results tovvard vvhich human thought and action are directed. No tvvo indi viduals are equally motivated to any given end nor equally endovved to achieve it; nor are the economic, political, and moral circumstances of anyone's environment precisely the same as for any other.

It may be argued in this con nection that persons can and do cooperate or combine their similar qualities in a joint venture, as do the oarsmen of a college crevv, or the "Rockettes" at Radio City Music Hall, or the helpful neigh bors at a barn raising. But it should be remembered that col lege crevv racing remains a popu lar sport precisely because oars men are different rather than identical; othervvise, no crevv ever could vvin or lose a race. The pre cision dancing of the "Rockettes" does not reveal the divergent rea sons vvhy each girl dances, or the reasons vvhy customers pay to vievv the performance. Each man straining to hoist the side of a neighbor's barn vvill have in his mind's eye the help he expects on his ovvn pet project vvhen the time comes. Through different eyes vve see different vvorlds against vvhich to match our different scales of values. And by vvhat human stand ard can anyone attest that this is not the vvay things are or ought to be?

Whether or not vve like it, this is the competitive nature of our vvorld. Every moment for every living thing is a continuing strug gle to bring its differences into harmony vvith an ever-changing environment. The living is in the struggle and the competition. The individual living entity loses its identity - dies - vvhen it ceases to compete, vvhen it lets itself be fully merged into another body or or ganism or group or system, becom ing as an atom in a stone rather than a dynamic self-motivated being. Competition the Life of Trade From memory, if not from un derstanding, vve knovv that com petition is the life of trade. This simply is another vvay of saying that all economic relationships, as conducted in the open market, are based upon our differences. As vve survey scarce resources through our different scales of value and respective consumer tastes, vve find opportunities for specialized production and voluntary ex change, to the advantage and satisfaction of everyone involved.

1965 THE GREAT DIFFERENCE 41 Each party to every voluntary ex change must necessarily gain, giv ing up what he values less in order to get what he values more, else he would not freely enter the trade. Now, it is true that many pros pective buyers may be competing for every available unit of un eco nomic good, and this competition may seem to drive up the price that must be paid for the unit. But consider for a moment what price one might have, to pay if he were the only person in the world who wanted a 1965 Cadillac - and the manufacturer knew in advance that this was going to be the de mand situation! The cost would be fantastic. Competition among buy ers does not necessarily mean higher priced merchandise. The fact that several prospective buy ers are in the market affords the opportunity for lower unit costs through mass production. Also, there is likely to be com petition among prospective sup pliers or sellers of any given item and of various substitutes for it.

Such competition to sell is the buyer's insurance that prices will be reasonable. It also affords each manufacturer or supplier a check of his own methods and operations and his finished products against those of competitors, so that any improvements and efficiencies in trod uced by anyone of them will soon be copied and in turn im proved upon by others in the busi ness. Competition also lets a man know promptly when he fails while there is yet time to try his hand elsewhere. This competition among manu facturers and suppliers activates und gtimuluteg the mUl"ketg for labor and raw materials. The raw materials will be drawn from farms and forests and mines, slowly or rapidly as the market forces may signal, but always with an eye to the conservation of scarce resources and thesubstitu tion therefor of less expensive and more plentiful alternative factors of production. Labor, of course, is one of those always-scarce factors of produc tion which the unhampered mar ket strives to conserve and use sparingly, competitors constantly weighing the comparative costs of additional tools and mechanization versus extra men on a given job.

Competition among employers bids wage rates up to the limits the market will allow at any given time and place. And competition among workers encourages each to 42 THE FREEMAN January move toward the best job oppor tunities available to match his par ticular skills and aptitudes. In every open and unhampered market economy or society there is constant competition among those who want to utilize available goods and services, whether they be ultimate consumers of food, clothing, medical care, shelter, and the like, or ,vhether they be indus trialists seeking additional capital, raw materials, goods and services, to be used in the further output of producer and consumer goods. The same open market serves us all, and serves very well indeed if free to do so - that is, if it is not restricted by artificial man-made barriers to trade and by interfer ence with the voluntary movement of capital and labor. The free mar ket recognizes and respects our manifold differences and affords each indi vid ual the maxim urn op portunity to express his individ uality and to pursue his own in terests by serving others.

Perhaps a reminder is in order at this point, the reminder that our individualities, our different interests, and our abilities to achieve them, extend beyond our persons - our physical bodies and include the private property each has earned and owns. A man's property is the extension of his life, a part of his means of liveli hood, which he may consume or sell or give away or save or use in whatever manner seems to him to best serve his own interests. Thus, property - in land or buildings or tools or consumer items or what ever form - tends to take upon it self the characteristics of each owner and thus to reflect the dif ferences and the infinite varia bility to be found among human beings. Privately owned property is by no means the same as that which is supposedly owned in common and therefore belongs to no one. Private ownership, like personal freedom of choice, is essential if there is to be voluntary exchange or any other act of peaceful co operation among individuals. In other words, we trade upon our differences, not our sameness; and our differences extend to and through the property each owns.

The Unhappy Alternatives To more fully appreciate the blessings of competition and trade through which our differences are exercised to everyone's best ad vantage, let us now consider some of the alternative concepts and plans that always have stood in the way of the slow progress of man toward becoming human. The modern extension of pov erty in India under the successive "Plans" of the Nehru government affords a sad illustration of the 1965 THE GREAT DIFFERENCE 43 failure of compulsory equalization among men. The years of effort to industrialize the economy of India, aided and abetted by gifts and loans through the governments of other nations, have so disturbed her traditional agricultural pro duction that serious famine and mass starvation now seem certain. Heavy taxes have tended to drain from agricultural uses the little capital that might otherwise have been available. Land reform meas ures have taken management re sponsibilities from the more ca pable and transferred the task to those less able to manage. Price control and rationing programs have precluded any progress the free market might have afforded in conserving scarce resources and encouraging further production of those most needed items.

The basic premise behind Nehru's plans was that all Indians either are, or ought to be, alike. And whether recognized or not, this has to be the premise for all schemes of compulsory equaliza tion. There is no more respect for the indi vid ual dignity of those to be aided than for the individual rights to life and property of those compelled to render the aid. Dif ferences among men are to be ob litera ted; and if this is accom plished, then to that extent are wiped away the reasons men have for trading,cooperating, voluntarily helping one another. And with this destruction of mutual re spect goes the loss of self-respect. This is the great problem of India today, and it is the inevitable con sequence of compulsory equaliza tion, all over the world, whenever and wherever it is undertaken. Amer;~an fxper;ment~ Countless other examples could be cited from abroad, but the sad f act is that we already have the counterpart of all of them. right here on our own doorstep in the United States.

After more than a generation of heavily subsidized agriculture, which presumably should have improved the economic status of farmers and given an abundance of food for all consumers, we are now told by the master planners that millions of U. S. citizens go to bed hungry each night and that additional Federal aid is needed for farmers. No less acute is the housing crisis following years of rent con trol, public housing, and urban renewal programs designed to eliminate differences and bring 44 THE FREEMAN January about greater equality in the en joyment of housing facilities. The more the government intervenes in this area, the greater the cry for further intervention because landlords and tenants can no longer find a reasonable basis for volun tary exchange, because prospec tive home builders and prospec tive home buyers are finding more and more barriers in the tradi tional market lines of communica ti~n with one another.

Government intervention by way of the Wagner Act and subse quent labor legislation has all but destroyed the opportunity for com petitive bargaining and peaceful exchange between employers and employees. The higher the govern ment-enforced minimum wage rates and unemployment benefit payments, the more serious be comes the problem of caring for the unemployed. When the law sanctions union practices tha t tend to equalize the output of workers and the wages they re ceive, regardless of performance, this compulsory elimination of dif ferences among men denies them the opportunity to cooperate and trade voluntarily. "Collective bar gaining" and "arbitration" have come to be synonyms for coercion. After 25 years of taxing and coddling the aged under compul sory social security, the oldsters have largely lost the capacity or the will to care for themselves, and it is difficult to see how a self betrayed older generation can command the respect of the young sters expected to support them.

The problems of education in crease in direct proportion to the extent of state and Federal aid and government control over edu cation. There is every reason to expect that electrical services may be come as unreliable and inefficient as the postal service if the govern ment moves further toward mo nopoly of the power and light busi ness. The compulsory elimination of competition is the ultimate in equalization, after which neither love nor money will enable a cus tomer to obtain anything better than the mediocre. Enough examples; the evidence is all about us that our lives de pend upon our differences, that variety is the essence of life, com petition the life of trade. To the extent that we compose our differ ences by force, we diminish our selves and each other - and we die. Let us cultivate and exploit our individualities and our differences, for this way points the upward path of human progress - econom ically, socially, spiritually - the path of peaceful cooperation among men. ~ 4.

Cutting Loose from Reality CLARENCE B. CARSON Let us face . .. the bleakness of the modet'n world: admit that religion and philosophy are projections of the mind, and set about the betterment of man's condition. - JOHN BOWLE on Auguste Comte THE BENT of men to reform - to make over man and society in their image - w'as held in check by traditional philosophy. Philosophy reined in the unbridled imagina tion just as religion tended to puncture the human ego and di vest it of false pride. Above all, rational philosophy imposed a strict discipline upon thought. The philosopher had to keep checking his conceptions and hold ing them up beside reality; ideas had to bear a demonstrable rela tion to reality. Reality had objec tive existence in traditional West ern philosophy; its being did not depend upon the human mind. Men come to know reality by Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books.

the use of reason. But reason was not conceived as a creation of hu man ingenuity; it was rather a marvelous faculty given to man that he might guide himself by its use, its possession not an oc casion for pride but an indication of the obligation to use it. Indeed, traditionally reason was author ity, second only to revelation, and some would give it first place. The weight of authority, of reason, of reality, smothered any incipient reformism. It could be argued that philosophy, coupled with re ligion, usually did the job too well, that philosophers were too sanguine about the possibilities of human improvement, that too Iowan estimate of human nature was usually held, that the imagi nation was too severely circum scribed. 45 46 THE FREEMAN January This may well have been the case. But if the point needed mak ing, it has been made a thousand times over by now. Moreover, the matter need not detain us in this study. The limits of the imagina tion and the character of human nature are matters to be deter mined by reference to reality.

They cannot be made by those en gaged in a flight from reality, nor are such things simply a matter of striking a nice balance between opposing views. Anyone who be lieves that a balance between op posing views bears any necessary relation to truth or right is al ready far along on his flight. My major point is that philos ophy disciplined thought and re quired thinkers continually to re fer their ideas to reality. In these circumstances, reality was the main obstacle to reform, as it al ways is in fact so far as ameliora tive reforms by government are concerned, and such reformers as there were had to keep their pro grams modest or make it clear that they were simply construct ing romances. By focusing upon an enduring reality, philosophers built an im posing amount of knowledge over the centuries. This movement came to its climax, to the present, in the seventeenth and eighteenth centuries. The central insights of this Western tradition of philosophy, to review them, were: (1) there is an order in the universe; (2) this order is rational; (3) reality is objective - that is, exists outside the mind; (4) cause and effect operate in the universe and are inseparably linked together; (5) everything has a nature that is fixed and immutable; and (6) men do not create; instead, they discover , represent, reproduce, copy, and report. So long as these views held sway, the vision of pervasive reform was limited to recognized dreamers and ro mancers.

Philosophers Set the Lead A great reversal has taken place. Today, reformist intellec tuals have gained the upper hand virtually everywhere, though their tenure in many places is probably precarious. They hold sway, and they press for continuous reform in virtually every area of life. A great many developments pre ceded this triumph. One of the most essential of these was the cutting loose from reality. The way was prep.ared for the departure from reality by ac credited philosophers. Figura tively, we might even say that the launching pads were built hy phi losophers. This is not the same as saying that the men in question were no longer in touch with reality. Indeed, no such judgment 1965 CUTTING LOOSE FROM REALITY 47 is intended, and no critique is to be made of the philosophical spec ulations which prepared the way for the flight. It is doubtful that philosophers should be blamed for what other men make of their thought. At any rate, even as con ceptions of the nature of man and the universe were beinu-chlrifisd and propounded, even as these conceptions were being used to buttress order in society and ex tend liberty - that is, in the midst of the eighteenth century - some philosophers began to cut the ground from under the concep tions. The most notable of these thinkers were George Berkeley, David Hume, and Immanuel Kant.

Berkeley Removed the Substance Bishop Berkeley undermined the belief in the substantiality of reali ty. It was a common belief that there are substances such as we denominate wood, glass, iron, and so forth. These substances are called matter, in general terms. By a strict empirical approach, Berkeley demonstrated that we never actually experience any such substances. We see colors, hear sounds, smell odors, taste tastes, and feel hardness or soft ness. If material substances exist, they cannot be known by the senses. "What Berkeley was con cerned to show," says one philos opher, "was that nothing exists independently of minds. He be lieved that people used the word 'ma.tter' to designate such a sup posed independent existent, and he proposed to show that this word, so used, was merely a meaningless noise to which nothing corre sponds."! He argued that only that which can be known can exist, or that it must be known to exist.

But mind knows only ideas. If matter existed, it could not be known. To affirm something as existing but unknowable involved an unacceptable contradiction to Berkeley. Apparently, he was not really interested in proving that we are wrong in conceiving of substance. Rather, he was con cerned to show that it depends for its existence upon our thinking it. As he said, "All the Choir of Heaven and the furniture of earth, in a word all those bodies which compose the mighty frame of the world, have no substance without a mind.":! The objectivity of reality tended to diminish to the vanishing point when this view was accepted. Cause and Effect Denied by Hume David Hume, radical empiricist and philosophical skeptic, chal lenged, among other things, the 1 W. T. Jones, A History of lVestern Philosophy (New York: Harcourt, Brace, 1952), p. 753. 2 Quoted in Ibid., p. 758.

48 THE FREEMAN January conception of necessary causality. Traditionally, effect was said to follow cause of necessity, that is, cause and effect are linked in such a way that they must happen in conjunction. One text describes Hume's reasoning in the follow ing way: But now Hume asks, how have we arrived at this idea of necessary causality? To what actual experi ences or impressions does this idea correspond? The ideas of cause and effect, he replied, are derived from nothing more than our experience of linking two events, one of which immediately precedes the other in time. That which comes first is known as the cause and that which follows is called the effect .... N0 where do I find the impression of a necessary relation between the two. Where, then, does the idea of causal necessity come from? The answer is that it is based upon psychological habit. 8 Hume no more disproved the operation of cause and effect than Berkeley disproved the existence of substance, but he did attempt to indicate that the basis of the belief in cause and effect is psy chological rather than simply em pirical. Moreover, he cast doubt upon the uniformity and regular ity of its operation.

3 Eugene G. Bewkes, J. Calvin Keene, et al., The Western HeTitage of Faith and Reason (New York: Harper & Row, 1963), p. 574. It might be well to add that Berkeley and H ume had done little, if any, more than to demon strate the limits of simple empiri cism. By so doing, they were showing the weakness of Locke's psychology and perhaps some of Descartes' assumptions. Since these latter may have been aber rations from the Western tradi tion, as some philosophers think, the assault might have done noth ing more than to turn thought back into the mainstream. It did not, at least for most thinkers. The centuries-long assault upon Aristotle and the Schoolmen had borne fruit: they were dis credited. Moreover, the Moderns were too proud of their achieve ments to repudiate them in the face of philosophical difficulties. Ties Between Reason and Reality Severed by Kant Instead of returning to the mainstream of Western thought, then, most thinkers continued on the journey away from it. The central figure for this further shift was Immanuel Kant.

Thought has followed divergent paths since the time of Kant, and most of these directions were made possible, if not tenable, by \"hat he did to philosophy. Kant severed some of the major ties be tween reason and reality; this operation very nearly killed meta1965 CUTTING LOOSE FROM REALITY 49 physics. 4 More specifically, he dealt with the questions which Berkeley and Hume, among others, had raised, that is, the question of validating empirically derived data. Kant believed that scientists were accumulating knowledge, that this was much more certain than Hume's skepti cism would allow. Yet he accepted the views that knowledge is mind dependent and that the senses bring us much less information than they appear to do. It turns out, by Kant's exposition, that the mind is equipped with categories - notably of time and space which enable it to arrive at knowl edge with the help of data.

This is most convenient for the scientist, but, having affirmed the central role of the mind, would Kant not go further and let the mind arrive at truth - via reason - independently of the senses? He would not. Such Pure Reason could not give us certain knowl edge. All sorts of conceptions might be arrived at in this man ner, but "these are conceptions the possibility of which has no ground to rest upon. For they are not based upon experience and its known laws; and without experi ence, they are merely arbitrary 4 For an exposition of this develop ment, see Etiene Gilson and Thomas Langan, Modern Philosophy (New York: Random House, 1963), pp. 428-35. conj unction of thoughts, which, though containing no internal con tradiction, has no claim to objec tive reality .... As far as concerns reality, it is self-evident that we cannot cogitate· such a possibility ... without the aid of experience; because reality is concerned only with sensation, as the matter of experience, and not with the form of thought, with which we can no doubt indulge in shaping fan cies."5 Metaphysics Assigned Minor Role Kant went on to maintain that we cannot attain certain knowl edge of the soul, of the universe, or of God by the use of Pure Rea son. They may exist, but reason does not certify this. Since no direct empirical evidence can be had of them, they cannot be ra tionally proved or disproved. The proper use of metaphysics, Kant maintained, is to do with it pre ciselywhat he had done, to reveal the categories or forms of knowl edge, forms which are given such content as they have by experi ence.

In short, metaphysics seems to be relegated to the role of telling us how we know \vhat \ve know we kno\v. Even this role for meta5 Immanuel .Kant, Critique of Pure Reason, J. M. D. Meiklejohn, tr. (New York: Dutton, Everyman's Library, 1934), p. 168. Italics mine.

50 THE FREEMAN January physics is not certain (Kant is baffling and ambiguous, as usual), for he rules that empirical psy chology should be separated from metaphysics,6 and this could con ceivably result in an empirical science of how knowledge is at tained. This leaves metaphysics with the almost wholly negative role of being used to demonstrate the limits of reason. Kant sug gests as much: That, as a purely speculative science, it is more useful in prevent ing error, than in the extension of knowledge, does not detract from its value; on the contrary, the supreme office of censor which it occupies, assures to it the highest authority and importance. 7 If Kant be accepted, the only fur ther use of metaphysics would be in the elucidation of Kant's ideas (a not inconsiderable task), since he has already used it fully in the way it can be used. In short, metaphysics could be relegated to the field of history of philosophy.

In the main, this is what has hap pened. A Substitute for Reason What Kant took away with one hand - the Pure Reason - he re turned with the other - Practical Reason. What we cannot know that is, God, freedom, immortal ity, moral imperatives, principles, 6 Ibid., p. 480. ideals - must be assumed. To ac complish this intellectual feat, Ran t resorted to the traditional distinctions between appearance and reality. The phenomenal world, the world accessible to the senses, the only world that can be known, is only an appearance. The real world is unknown and un knowable, as Kant had earlier demonstrated to his satisfaction. Yet it must exist. No, that is not quite right. We must act as if it existed. Kant affirmed the traditional morality, insisted upon the neces sity of faith, and proclaimed that man participates in a moral order. Pra.ctically, Kant would have it, we do seem to know that there are moral imperatives. There may even be generally accepted beliefs about what many of these are.

They can even be "proved" by the Practical Reason, by which Kant means reason operating upon as sumptions about what reality must be like in ordeer' for appear ances to be as we perceive them. Yet this kind of reason operates upon possibilities, not certainties, so far as philosophy is concerned. Kant said as much himself: It is just the same as if I sought to find out how freedonl itself as causality of a will is possible; for, in so doing, I would leave the philo sophical basis of explanation behind, 7 Ibid., p. 481.

1965 CUTTING LOOSE FROM REALITY 51 and· I have no other. Certainly I could revel in the intelligible world, the world of intelligences, which still remains to me; but although I have a well founded idea of it, still I do not have the least knowledge of it, nor can I ever attain to it by all the exertions of my natural ca pacity of reasons. 8 Thig gtolid GQrmnn, thig rQgo lute metaphysician, this deter mined moralist, had left the house of philosophy in ruins: of this there should be no doubt. Let us review the "achievement." Kant had changed the meaning of "ob jective" from something which exists outside the mind to make it refer to a property of mind it self; he had brought it into the interior 'world of consciousness. 9 He had taught that mind can only know phenomena. Reason can only deal with reason. Then he declares that phenomena is only appear ance, that reality is unknown and unknowable.

Kant did try to put the house to gether again, or at least to build a shelter to protect the contents. This shelter appears to have been sustained only by the will and in tellect of Kant. To put it another way, it was held together by the 8 Immanual Kant, Foundations of the Me.taphysics of Morals, Lewis W. Beck, tr. (New York: Bobbs Merrill, 1959), p. 81. !) See Gilson and Langan, Ope cit., p. 417. will to believe. When that was gone, the edifice collapsed. Since Kant could not bequeath to us the will to believe, he left us only the wreckage of philosophy. It is hardly an exaggeration to say that the history of thought since his time has been largely the story of men picking up this or that piece of wreckage and trying to make a philosophy out of it. Slow, but Inevitable Several things need to be kept in mind in evaluating the impact of the deterioration of philosophy upon men and societies at large.

First, any development in philoso phy may wait a long while before it has any general consequences. Men, even most thinkers, tend to operate on the basis of received ideas, and these may be little al tered in the course of a genera tion. Second, the generality of men do not know what philoso phers are thinking and would probably think them demented if they did. Most men accept the reality of an objective universe outside themselves, are conscious of its resistance to their wills, know something of the rules by which one deals with it (at least so far as these rules have bearing upon their immediate tasks), ac cept cause and effect in the areas to which their immediate deci sions reach, and are not apt to be 52 THE FREEMAN January much concerned about how they know what they know. Third, many of the major developments of the nineteenth century con tinued to rest upon traditional philosophical beliefs and the seventeenth and eighteenth cen tury foundation. Thus, in the polit ical realm the trend was toward constitutionalism, representative government, laissez-faire econ omy, the establishment of naturaJ rights as civil liberties - all of which were based in earlier thought.

Yet the impact did come. It was felt first in the realm of thought itself, as thinkers diverged in vir tually every direction from any unity. One intellectual historian, speaking of nineteenth century thought, says: "In the restless in quiry and searching that have marked men's intellectual pursuits since those days [eighteenth cen tury], it is hard to find any ... clear picture. Not only did men . . . fail to reach a measure of agreement on fundamentals; even within particular fields it is not easy to trace any simple line of development."lo Whatever explanations may be made of this phenomenon, one is central: the loss of the discipli nary role of philosophy. Kant had 10 John H. Randall, Jr., The Making 0/ the Modern Mind (Boston: Houghton Mifflin, 1954. rev.ed.), p. 389. opened the door to every sort of doctrine or idea. It does not mat ter much that Kant had not in tended such a result, or that he had labored mightily to divert men's minds in the direction he wanted them to go. (Let us not attribute too much to Kant. After all, Hume's skeptical work pre ceded his.) But if reason can deal only with reason, not with reality, why should men bother to test their ideas by reason? If Kant can decide what reality is while as serting that it cannot be finally proved that it is that way, why can't men imagine a reality of their own? After all, some men would not be enamored of Kant's mora] universe. If the only knowl edge that can be validated is that which comes by way of the senses, why not narrow the search for knowledge to empirical data? If no final proof can be offered for a transcendental realm, why assume that one exists? Why not simply accept the physical world for all there is? These are, indeed, some of the main directions that have been taken since the time of Kant.

The flight from reality into melio ristic reform was prepared for by these developments in thought. The position ascribed to Auguste Comte, quoted 'at the beginning of this piece, clearly follows the breakdown of philosophy. But the concern here is with 1965 CUTTING LOOSE FROM REALITY 53 the cutting loose from reality, not as yet with the flight from it. De velopments in philosophy pre pared the way for it, but the-ac tual break occurred in specific work by thinkers. There were three major steps in the move ment away from a fixed reality. I. Abstract Rationalism The first of these' was the ap pearance of a widespread tendency to abstract rationalism among would-be intellectuals or thinkers. Abstract reason is reason cut loose from foundations. Reason must have a referent; it must be about something. Abstract rationalism occurs when someone employs rea son without reference to that which is necessary to its valid use.

If reason is to lead to any valid conclusions, it must do so in terms of some reality. That is, it must refer to some metaphysical or physical reality, and, in the case of social thought, it must be tied to the way things can and do hap pen. It should be obvious, then, that no one intends to reason ab stractly, except possibly as an ex ercise in logic. There has been no conscious movement devoted to the use of abstract reason. Rather, its employment can be ascribed to ig norance, or, more kindly, to the failure to attend to reality. There have been many varieties of usages of abstract rationalism. Perhaps the most COlnmon occurs when there is an attempt to apply a rational truth without regard to the concrete situation or to the temporal manner and order in which things can and do occur. Rationalists are most apt to faU into this error. Eighteenth· cen tury thinkers and actors, imbued as they were with rationalism, in clined to attend to the nature of things, were prone to this kind of behavior. Some of the best exam ples of abstract rationalism at work occurred during the French Revolution and its aftermath. The French National Assembly issued a decree in August of 1789 which opened with these words: "The N ationalAssembly hereby com pletely abolishes the feudal sys tem."ll There follows a lengthy list particularizing what was abol ished. The character of many of these provisions is illustrated by the' following example: Inasmuch as a national constitu tion and public liberty are of more advantage to the provinces than the privileges which some of these en joy, and inasmuch as the surrender of such privileges is essential to the intimate union of all parts of the realm, it is decreed that all the peculiar privileges, pecuniary or otherwise, of the provinces, prin cipalities, districts, cantons, cities 11 Eugen Weber, The 'Western Tradi tion (Boston: D. C. Heath, 1959), p. 504.

54 THE FREEMAN January and communes, are once and for all abolished and are absorbed into the law common to all Frenchmen. I :! Presumably, all local preroga tives were abolished by one stroke of the pen. To fill the vacuum cre ated by the abolition of exceed ingly complex and tangled rela tions, the Assembly proceeded to issue, a few days later, a general statement of the new political re lationships which should prevail. The abstractness of some of the principles is astounding. For ex ample: The source of sovereignty is es sentially in the nation; no body, no individual can exercise authority that does not proceed from it in plain terms.l 3 Does this mean that parents shall not exercise authority over their children until the nation author izes them to do so? Possibly not, but who could say? At any rate, catastrophe followed. It might be supposed that the French leaders had not taken suf ficient care in defining their prin ciples. Even so, the matter cuts deeper than that. Another exam ple may reveal the deeper dimen sions of the problem of abstract rationalism. Napoleon sent the following message to his appointee as king of Westphalia in 1807: 12 Ibid., p. 506.

13 Ibid., p. 507. You will find enclosed the consti tution of your kingdom. . . . You must faithfully observe it.... 1-1 Napoleon had caused to be drawn up a Constitution for a kingdom and sent it along to be observed. There had been no examination of the concrete situation, nor was there any consultation of the peo ples involved. There was a logic behind this action. Human nature is everywhere the same. Natural law is universally applicable. Why not dra,v up a code for everyone? Though they may not, must not, be obvious to rationalists, there are many reasons why this should not be attempted. In the first place, it is both superfluous and ridiculous to enact natural laws. Natural laws operate just the same, and universally, whether they are enacted or not. Moreover, natural la\vs are of the nature of principles, not of laws passed by legislatures. These principles may in/or1n human acts, but acts are particular things, and they must be if they are to be enforced by courts. Second, positive law must be cast in terms of the language, the customs, the institutions, the procedures, even the beliefs, of the peoples involved. If they are not, 14 Quoted in R. R. Palmer with Joel Col ton, A History of the Modern World (New York: Alfred A. Knopf, 2nd ed.

rev., 1958), p. 392.

1965 CUTTING LOOSE FROM REALITY 55 they will either wreak havoc or be of no effect, or a combination of both. Reason, engaged in constructing programs, must be informed by the concrete situation, else it be comes abstract rationalism. There have been many other kinds of ab stract rationalism. They cannot be explored in detail here, though some of them crop up in historical exposition elsewhere in this work but they can at least be named~ Abstract rationalism occurR when anyone attempts to maintain that reality is restricted to that which can be known by reason. For ex ample, some have denied the real ity of altruism; it is, they say, only a mask under which self-in terest is hidden. Self-interest can be rationally explained, so they claim, and there is no need to posit altruism to aid in explanation. Reason has been extended beyond its legitimate function and by so doing it has been made abstract.

Another abuse which may be ascribed to abstract rationalism is the raising of temporary phe nomena to the level of universal truths. This results from failing to distinguish between the end ur ing and the changing. Rationalists are prone to this fallacy. A good example of this is T. R. Malthus' formulation of exact laws of popu lation increase and the increase of the means of subsistence. To wit: It may safely be pronounced that the population, when unchecked goes on doubling itself every twenty~ five years, or increases in a geo metrical ratio .... [T] he means of subsistence, under circumstances the most favorable to human industry, could not pos sibly be made to increase faster than in an arithmetical ratio. 15 If these "laws" have any other referent than the recent history of England, it does not appear. Perhaps the most common vaTiety of abstract rationalism in intellec tual circles is the effort to impose a theoretical system upon reality.

This results from what may be a laudable attempt to find the com mon denominator in a mass of phenomena. Numerous instances of this have occurred in the case of historians applying Marx's class struggle theory to history. Abstract reason, then, is reason cut loose from reality. Rationalists may have ever been inclined or have tended to extend the use of reason beyond its proper sphere. But this ,vas greatly aggravated from the early nineteenth century on by the state of philosophy. Kant used the Pure Reason to re duce the sphere of reason to a purely formal role. But then he used the Practical Reason to affirm 15 Quoted in Louis L. Snyder, The Age of Reason (Princeton: D. Van Nostrand Anvil Book, 1955), pp. 150-51. ' 56 THE FREEMAN January what could not be arrived at by reason. The impact of this was to leave "rationalism" unchecked by reason. This allowed such thinkers as Auguste Comte, and later Karl Marx, to produce and propagate their "rational" systems without being subjected to the traditional philosophical checks.

2~ Imagination A second development in cutting loose from reality occurred by way of the Romantic emphasis upon imagination. Romanticism was a conscious movement, more or less, which had its hey-day in Europe in the late eighteenth century and the first half of the nineteenth. Just as most of the paths which modern thought has taken con verge on Kant as their starting point, so romanticism was the spirit or medium in which this thought was developed. There is a vagueness about the thought of Romantics which extended study does little to dispel. Romanticism was a protest, in part, against the Age of Reason, and Romantics tended to exalt the imagination. In consequence, virtually every sort of idea might be advanced and seriously considered. My purpose, however, is to .call attention to a facet of romanticism only, not to make a general de scription or evaluation of it as a movement. The facet which concerns us has to do with the impe tus it gave to the cutting loose from reality. This was mainly by way of the emphasis upon imagi nation, and its unfettered use.

The philosophical background to this is quite relevant. David Hume, .with his radical empiricist approach to knowledge, had shown that we get only bits and pieces fragments - of information from the senses. Thus, though we have a clear idea of a house, for exam ple, we have never seen a house all at once. We· can see part of it at a glance, but to see more we have to shift our perspective; when we do that, we lose sight of the part we saw earlier. Our idea of a house, then, must consist of more than sense impressions; it must have been developed by the imagi nation. Hume moved the imagina tion to a central position for phil osophical consideration. Berkeley had already maintained that all ideas are mind-dependent. Kant claimed that knowledge is possible because of categories in the mind, went further and moved objec tivity into the mind. We can leave the philosophers at this point,· for they were still somewhat disciplined in their speculations. Others were not.

They found in these new theories a license to use the imagination at will. More, some returned to faith and idealism after the demise of 1965 CUTTING LOOSE FROM REALITY 57 reason; they felt not only free to use the imagination without stint but a call to do so. The free and extended use of the imagination was the way to the highest truths. Ralph 'Valdo Emerson, the American, may be used to stand for those who thought in this way. In his tribute to "The Poet," Em erson gives un stinted praise to the unrestricted use of the imagina tion: The poets are thus liberating gods.... An imaginative book ren ders us much more service at first, by stimulating us through its tropes, than afterward when we arrive at the precise sense of the author. I think nothing is of any value in books excepting the transcendental and extraordinary. Ifa man is in flamed and carried away by his thought, to that degree that he for gets the authors and the public and heeds only this one dream which holds him like an insanity, let me read his paper, and you may have all the arguments and histories and criticisms .... Therefore we love the poet, the inventor, who in any form, whether in an ode or in an action or in looks and behavior, has yielded us a new thought. He un locks our chains and adnlits us to a new scene.

The emancipation is dear to all men, and the power to impart it, as it must come from greater depth and scope of thought, is a measure of in tellect. Therefore all books of the imagination endure, all which ascend to that truth that the writer sees nature beneath him, and uses it as his exponent. Every verse or sen tence possessing this virtue will take care of its .own immortality. The re ligions of the world are the ejacula tions of a few imaginative men.I G Romantics, then, were cutting loose from reality by way of the imagination. Man might not yet be a god, though Emerson uses the word to describe the work of the poet, but he was almost cer tainly a demigod. Perhaps he· did not yet create his own reality, but if he did, would he not have reached even greater imaginative heights? In the exaltation of mood, feeling, emotion, what vul garity it would be to hold the imagination to mundane reality!

3. Darwinian Evolution The third movement culminated in the triumph of Darwinian evo lution. This marked the definitive break with an enduring reality and an almost exclusive focus upon· change. The cynic might ob serve that the circle of philosophy had been completed. From Hera clitus in Ancient Greece to Charles Darwin in· the England of the lat ter part of the nineteenth century was a long time and a considerable 16 Ralph W. Emerson, "The Poet," Collected TVOJ'ks of Ralph lVa.ldo Erner son (New York: Greystone Press, n. d.), p, 137.

58 THE FREEMAN January distance, but reality had once again been located in the flux of change. The way had been pre pared for Darwin in philosophy. G. W. F. Hegel had located re'ality in certain ideas at ,vork in history, had made growth and development the center of attention, and had made of the dialectic the process by which historical change took place. Herbert Spencer, the Eng lish philosopher, had elaborated a philosophy embracing the evolu tion of societies. Auguste Comte, the French social planner, had re duced the development of man to three stages. Karl Marx was al ready busily inverting Hegel to make the class struggle which arises out of the control of the in struments of production the mov ing force in history, rather than ideas. It remained for Charles Darwin to give scientific sanction to the philosophy of change. Actually, Darwin did much more. He brought man into the stream of evolution, denied the fix ity of the species, and proposed particular theories that would ac count for change, or so he hoped.

He collected a great deal of mate rial with which he buttressed his generalizations. Above all, his work served as a base for the pop ularizations of evolution. By that time, the attention of thinkers had been drawn almost entirely away from trying to dis cover an enduring reality. They were no longer looking for the nature of things. They were no longer describing an enduring or der but rather seeking for the or der or sources of changes. The quest for natural laws, so far as it survived, was turned toward discovering the laws of growth and development. Thought had moved from eternity into time, and men began to locate "reality" in the future. They had cut loose from reality and embarked on the strange journey into the unknown and the unknowable - unknowable, at least, until they get there, though it is not at all clear how they would know when they had arrived. Even before all this had oc curred, however, some men were becoming increasingly enamored of the visions of the better world they thought they could create.

The imagination could conceive of a better world. Abstract rational ism could be used to give a "scien tific" or "philosophical" gloss to their visions. They were suffi ciently cut loose from reality to believe that they could make a better social world, and they "set about the betterment of man's condition." ~ The next article in this series will treat of "The Utopian Vision."

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN HENRY HAZLITT's The Founda tions. of Morality (Van Nostrand, $9.95) is an ambitious attempt to ground a system of ethics in the pragmatic necessities of daily life. The book, which is in the great line of utilitarian thinking that comes down from Hume, Adam Smith, and Bentham, is lucid, per suasive, and soundly argued; and in a nonreligious age one can only hope that Mr. Hazlitt will succeed in converting those who insist that the claims of morality are purely relative to the moment and subject to change without notice. But if Mr. Hazlitt takes us a good distance, it should also be said that he doesn't reach the end of the road. My own fundamental objection to Mr. Hazlitt's reason ing is that he refuses to admit that he, too, makes a few assump tions, or value judgments, that are intuitive. In his own way he is just as mystical, say, as Albert Schweitzer, or any of the philoso phers of natural law whom he chides in ever so gentle terms.

Before going into the subject of intuitive assumptions, however, one must pay tribute to Mr. Hazlitt's refinement of the grosser view of Bentham's "pleasure-pain" explanation of ethics. He thinks Carlyle did Bentham a great dis service in calling Benthamism the "pig philosophy." To get around Carlyle, Mr. Hazlitt says, "It seems the part of practical wis dom, and the best way to mini mize misunderstanding, to use the terms 'pleasure' and 'pain' very sparingly, if not to abandon them almost altogether in ethical dis cussion." The terms confuse everybody by bringing up visions of the rewards· and penalties of purely carnal pleasure. What Ben tham was really talking about, ac cording to Hazlitt, was "happiness as an aggregate," which could, of course, include a good deal of de nial of short-run pleasures in or der to create the basis for long term satisfactions. Prudence, benevolence, social cooperation, and altruism all find a place in Mr. Hazlitfs refined utilitarianism, for they all help to create a livable community. If Mr.

Hazlitt remains an unreconstructed believer in competitive capitalism, it is because he thinks economic 59 60 THE FREEMAN January competition between separate business units is the only really workable way of inducing people to cooperate to the end of raising the standard of living. This isn't a paradox, for the competitive spirit is what hones any team to the supreme cooperative effort. Capitalist Ys. Socialist Ethics The most telling chapters in Mr. Hazlitt's book are those on the ethics of capitalism versus the ethics of socialism. Capitalism, he says, is not "ethically indifferent," or "ethically neutral," for it de pends on voluntary social coopera tion through mutually beneficial exchanges. Quoting Murray Roth bard, Hazlitt insists that in a sys tem of beneficial exchanges one man's gain is necessarily another man's gain. The system naturally develops more practical social sym pathy than any other, even though some capitalists may be mighty egoists.

In any case, it is socialism, not capitalism, that emphasizes the jungle competition of tooth and claw. The discipline of competi tion between units disappears, and men cut each other's throats in the scramble for preferment within the one big unit of the state. "Office politics" under com munism are magnified beyond be lief. Socialism means coercion of the individual, and he who does not obey does not eat. Naturally, a great maj ori ty of men become sly malingerers under such a sys tem. And, as Hayek said long ago in The Road to Serfdom, in a sys tem that depends on coercion, the "worst get on top." Hazlitt, following Hume, makes the point that no society can be happy if its citizens are not will ing to abide by general rules. It may seem cruel to apply the prin"':' ciple of "equality before the law" to a man who steals because he is in need, but if individuals are to become the judges of their own need a society must thereby be come a jungle of distrust. When judges and juries begin to exer cise too much compassion, de linquency grows by leaps and bounds.

Somewhere, A Premise Most of Mr. Hazlitt's book comes under the heading of elo quently expressed common sense. But when he comes to discuss such things as intuitionism and natural law he reminds me of the psychologists who organized a val iant crusade to kill the word "soul" and ended up by substitu ting for it the word "psyche," which, like the "soul," is also an impalpable thing that nobody has yet succeeded in situating in any specific part of the human ana to my. Besides, as Chesterton said, 1965 THE MORAL AND MYSTERIOUS 61 "psyche" means "soul" in Greek. Mr. Hazlitt thinks that the term "natural rights" is unfortunate in that it has helped to perpetuate a "mystique" which regards rights as having existed since the begin ning of time. But he is willing to accept the "concept" of natural rights as long as it is understood to mean "ideal rights," or the "le gal rights that every man ought to enjoy."

It is at this point that one be comes aware of Mr. Hazli tt' sown dependence on the Schweitzer in tuition that human life is, or should be, held sacred, not because of any utili tarian reason con nected with. the "greatest happi ness of the greatest number," but f or reasons that can only be called religious. Under a cannibal sys tem, the "greatest happiness of the greatest number" could be mathematically fixed at the point where a majority would be con suming a minority without leading to the extinction of the species. But this would not be "right" even though it might be called "rational." One has to fall back on intuitive assumption at some point in the discussion of rights, which is not a pleasant predica ment for anyone who believes in the supremacy of reason. Yet there it is, and I, for one, find it less offensive to accept certain truths as "self;.evident" gifts of a Creator than I do to make no assumptions at all.

For the fact is that every. hu man being who abstains from sui cide proceeds on the assumption that life is worth living, which in itself is not susceptible of "proof" in any scientific sense of the word. One lives, one accepts the Schweit zerian intuition of the sacred value of one's own body and soul (or psyche), just as one accepts the facts of digestion, blood pres sure, reproduction, and a lot of other things. There is no need to try to "ground" the perception of "natural right" in anything; it is simply there. From this initial assumption the whole doctrine of "natural rights" flows. If one has. a right to life, one has rights to liberty and property as the necessary means to sustaining life. A Starting Point Without the first assumption of human life as a sacred gift from a Creator (whatever or whoever the Creator may be), Mr. Haz litt's chosen economic system be comes a purely arbitrary thing.

'Vhy, indeed, should a Soviet com missar give up his post of po,ver merely to satisfy the craving of a peasant for··· his own plot of ground unless the peasant has rights to control his own life? There is no reason why the strong 62 THE FREEMAN January should not oppress the weak if the right to life is not "self-evi dent," Le., beyond the necessity of proof in a scientific sense. These. are deep waters, and I don't feel comfortable when try ing to navigate them. Nobody ever spoke to me out of a burning bush, so I have to take the· felt conviction of a basic right to life on intuitive trust. But there is no sense denying that existence is rooted in mystery. My only objec tion to Mr. Hazlitt's book is that it does not make enough allow ance for mystery. He tries to put the Deity in a hole by propound ing a conundrum: Is a thing right because God wills it, or does God will it because it is right? Now it is entirely possible that, as the Deity sees it, the very formula tion of such a conundrum pro ceeds from a deficiency in the human ability to penetrate mys tery. Cats can't do algebra, the amoeba can't think as a cat - and why should human beings at this particular stage in evolution be expected to know everything? ~ ~ THE OTHER AMERICA: Pov erty in the United States by Michael Harrington (Baltimore: Penguin Books, 1963),203 pp. 95¢.

Reviewed by Edmund A. Opitz THE FIRST THING to do with poor people, Tolstoy said, is get off their backs. This, the very government which has declared war on poverty, is not doing. The new of ficial poverty line for a family is drawn at somewhere around $3,000 a year. Yet, a couple with out dependents who earn this much money are forced by the na tional government to pay an in come tax of roughly $300. Not to mention local and state levies, plus the hidden taxes on every item purchased! Poverty in a society is over come by productivity, and in no other way. There is no political alchemy which can transmute di minished production into increased consumption. Government inter ventions into economic life can. re distribute goods by taxing every one and subsidizing a few, taking money out of the pockets of some and putting it into the pockets of others. But, obviously, no such scheme can elevate the general welfare. The economic welfare of all can be raised only by removing artificial (usually political) im pediments from wealth produc tion. More can be consumed only if more is produced.

Men have been freer to produce up to individual capacity in American society, historically, than in any other society, and our affluence, as a result, is the envy of the world. Hindsight tells us that we might have done even better if our statutes had per1965 OTHER BOOKS 63 mitted as much economic freedom as we said we believed in. Actu ally there has been much anti-eco nomic legislation since 1789, but it was not till a generation ago that we began cutting our eco nomic throat on principle. To the extent that the politically inspired "war on poverty" succeeds, it will be that much harder for poor people to improve their economic circumstances. According to Mr. Harrington, about a fourth of our nation lives on Tobacco Road; between forty and fifty million Americans are "maimed in body and spirit." "The poor," in his view, constitute al· most a separate species, to be analyzed and acted upon politi cally, Le., impersonally.

An ideological passion to change the structures of American so ciety informs this book. It would eliminate the free market economy as well as Constitutional guar antees of liberty which preserve indi vid ual and social sectors of immunity against governmental power. This would not help the poor, and it would hurt everyone. Mr. Harrington declares (p. 17) that the welfare state which arose in the thirties "helped the poor least of all." His super state weI farism would be more of the same, and worse. This is why we must oppose him. Political liberty, the Rule of Law, and the free market are the hallmarks of a free soci ety; and only a truly free society, with its ethical and religious prin ciples in working order, can re solve the problem of poverty. ~ Confused Thinking OUR DIFFICULTY lies not so much with obnoxious Communists in our midst as with the fuzzy-minded people who think we can have totalitarian economics in the hands of bureaucracy, and at the same time to have personal liberty .... Their confused thinking convinces them that they are liberals - but if they are liberals, they have liberalism without liberty. Nor are they middle-of-the-roaders as they claim to be: They are a half-way house to totalitarianism.

HERBERT HOOVER, before the Republican National Convention in Philadelphia, June 22, 1948 a condensed and inexpensivecombined edition of THE LAW ~ CLICHES OF SOCIALISM Frederic Bastiat, French econonlist, states n1an, and author, writing at the time of the Revolution of 1848 in France, clearly showed how the law was then being perverted to use as an instrument of plunder rather than to keep the peace. His great classic, The Law, is here con densed and combined with 42 of FEE's sug gested answers to the more popular socialis tic fallacies, which now, as in Bastiat's time, tend to undermine the foundations of linl ited government and the free society. This attractive 256-page, paperbacked edition of The La'w & Cliches of Socialism, published by Constructive Action, Inc. in California, is now available. Single copy 3 copies 10 copies 25 copies 100 copies $1.00 2.00 5.00 10.00 30.00 ORDER FROM THE FOUNDATION FOR ECONOMIC EDUCATION, INC.

IRVINGTON-ON-HUDSON, NEW YORK, 10533 FEBRUARY 1965 The Formation and Function of Prices . "The Government Is All of Us" . Fallacies in the Current Cult of Progress . Flying Socialism The Flight from Reality 5. The Utopian Vision . Britain Returns to Mercantilism . Is God a Keynesian? . Forty-Eight Thousand Dollars! From Eden to Paradise: Choice vs. Compulsion . Why Social Security Must Fail The Individual and the State . Books: Freeing Our Economy . Hans Sennho/z 3 Leonard E. Read 9 Fred DeArmond 12 Sam H. Husbands, Jr. 17 Clarence B. Corson 20 George Winder 34 William Henry Chamberlin 38 Paul L. Poirot 44 Dean Bonks 46 Dean Russell 55 William H. Peterson 58 John Chamberlain 61 FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Earnings for 1964 paid at 4.9% per year.

MAIN OFFICE 9th & Hill, Los Angeles SAVE-BY-MAIL-We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California 5-St:dl ~ Constant reminders are needed of the way prices function in a free market, and Professor Sennholz does it very well, indeed p. 3 ~ If the government is all of us, as we are so often urged to believe, then what about those taxpayers, asks Leonard Read p. 9 ~ Fred DeArmond points out that despite the rapid modern technolog ical developments - or, perhaps, be cause of them - there remains much about the nature of the universe that men do not comprehend p. 12 ~ A young businessman and airplane enthusiast finds a striking difference inefficiency between privately-oper ated and government-operated air lines, with a strong case for the profit motive p. 17 Y' Dr. Carson reviews the attempts and failures of utopians from the time of Sir Thomas More to date ........ p. 20 .~ Our astute co;rrespondent from England, George Winder, examines some of the problems and mercan tilistic "solutions" of their new Labour government p. 34 JII' Though not ordained, William Hen ry Chamberlin takes it upon himself to question the trend among religious leaders to look to government as their brother's keeper p. 38 ~ An old bill for electrical service, bearing a 1907 postmark, affords a sharp contrast in the trends of prices for postage stamps and kilowatt hours p. 44 ~ It's a long road from Eden to Par adise, observes Dean Banks, and those half-way houses between choice and compulsion are mostly mirages .. p.46 ~ Social security promises something for nothing but affords no way to get your own money back p. 55 ~ A noted business economist ex amines the record and finds no evi dence that "the government sector"

has been starved by the private' sector; quite the contrary p. 58 ~ John Davenport's appraisal of The U. S. Economy provides the stimulus for this month's review by John Chamberlain p. 61 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

FEBRUARY 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.2 President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except "The Flight from Reality" and "The Individual and the State." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

FOR almost two thousand years economic investigation was handi capped by the common notion that economic exchange is fair only as long as· each party gets exactly as much as he gives the other. This notion of equality in exchange even permeated the writings of the classical economists. Back in the 1870's the English man J evans, the Swiss Walras, and the Austrian Menger irrefuta bly exploded this philosophical foundation. The Austrian School, especially, built a new foundation on the cognition that economic ex change results from a difference in individual valuations, not from an equality of costs. According to Menger, "the principle that leads men to exchange is the same prin ciple that guides them in their economic activity as a whole; it is the endeavor to insure the greatest possible satisfaction of their wants." Exchange comes to an end as soon as one party to the ex change should judge both goods of equal value.

In the terminology of the econ omists, the value of a good is de termined by its marginal utility. This means that the value of a good is determined by the impor tance of the least important want that can be satisfied by the avail able supply of goods. A simple ex ample first used by Bohm-Bawerk, 3 4 THE FREEMAN February the eminent Austrian economist, may illustrate this principle. A pioneer farmer in the jungle of Brazil has just harvested five sacks of grain. They are his only means of subsistence until the next harvest. One sack is abso lutely essential as the food supply which is to keep him alive. A sec ond sack is to assure his full strength and complete health until the next harvest. The third sack is to be used for the raising of poultry which provides nutriment in the form of meat. The fourth sack is devoted to the distilling of brandy. And finally, after his mod est personal wants are thus pro vided for, he can think of no bet ter use for his fifth sack than to "feed it to a number of parrots whose antics give him some enter tainment.

It is obvious that the various uses to which the grain is put do not rank equally in importance to him. His life and health depend on the first two sacks, while the fifth and last sack "at the margin" has the least importance or "util ity." If he were to lose this last sack, our frontier farmer would suffer a loss of well-being no greater than the pleasure of par rot entertainment. Or, if he should have an opportunity to trade with another frontiersman who happens to pass his solitary log cabin, he will be willing to exchange one sack for any other good that in his judgment exceeds the pleasure of parrot entertainment. But now let us assume that our frontier farmer has a total supply of only three sacks. His valuation of anyone sack will be the utility provided by the third and last sack, which affords him the meat. Loss of anyone of three sacks would be much more serious, its value and price therefore much higher. Our farmer could be in duced to exchange this sack only if the usefulness of the good he is offered would exceed the utility derived from the consumption of meat.

And finally, let us assume that he possesses only a single sack of grain. It is obvious that any ex change is out of the question as his life depends on it. He would rather fight than risk loss of this sack. The Law of Supply and Demand This discussion of the principle"s of valuation is not merely aca demic. In a highly developed ex change economy these principles explain the familiar observation that the value and price of goods vary inversely to their quantity. The larger the supply of goods the lower will be the value of the in dividual good, and vice versa. This elementary principle is the basis of the price doctrine known as the 1965 THE FORMATION AND FUNCTION OF PRICES ·5 law of supply and demand. Stated in a more detailed manner, the fol lowing factors determine market prices: the value of the .desired good according to the subjective judgment of the buyer and his subjective value of the medium of exchange; the subjective value of the good for the seller and his sub jective value of the medium of ex change.

In a given market there can be only one price. Whenever business men discover discrepancies in prices of goods at different loca tions, they will endeavor to buy in the lower-price markets and sell in the higher-price markets. But these operations tend to equalize all prices. Or, if they discover dis crepancies between producers' goods prices and the anticipated prices of consumers' goods, they may embark upon production in order to take advantage of the price differences. Value and price constitute the very foundation of the economics of the market society, for it is through value and price that the people give purpose and aim to the production process. No matter what their ultimate motivation may be, whether material or ideal, noble or base, the people judge goods and services according to their suitability for the attain ment of their desired objectives. They ascribe value to consumers' goods and determine their prices.

And according to Bohm-Bawerk's irrefutable "imputation theory," they even determine indirectly the prices of all factors of production and the income of every member of the market economy. The prices of the consumers' goods condition and determine the prices of the factors of produc tion: land, labor, and capital. Businessmen appraise the produc tion factors in accordance with the anticipated prices of the prod ucts. On the market, the price and remuneration of each factor then emerges from the bids of the com peting highest bidders. The busi nessmen, in order to acquire the necessary production factors, out bid each other by bidding higher prices than their competitors. Their bids are limited by their an ticipation of the prices of the products. The pricing process thus reveals itself as a social process in which all members of society participate. Through buying or abstaining from buying, through cooperation and competition, the millions of consumers ultimately determine the price structure of the market and the allocation of the income of each individual.

Prices Are Production Signals Market prices direct economic production. They determine the 6 THE FREEMAN February selection of the factors of prod uc tion, particularly the land and re sources that are employed-or left unused. Market prices are the es sential signals that provide mean ing and direction to the market economy. The entrepreneurs and capitalists are merely the consum ers' agents, and must cater to their wishes and preferences. Through their judgments of value and ex pressions of price, the consumers decide what is to be produced and in what quantity and quality; where it is to be produced and by whom; what method of production is to be employed; what material is to be used; and they make numerous other decisions. Indeed, the baton of price makes every member of the market economy a conductor of the production process. Prices also direct investments. True, it may appear that the busi nessman determines the invest ment of savings and the direction of production. But he does not ex ercise this control arbitrarily, as his own desires dictate. On the contrary, he is guided by the prices of products. Where lively demand assures or promises prof itable prices, he expands his pro duction. Where prices decline, he restricts production. Expansion and contraction of production tend to alternate until an equilibrium has been established between sup ply and demand. In final analysis, then, it is the consumer - not the businessman - who determines the direction of production through his buying or abstention from buying.

If, for instance, every individ ual member of the market society were to consume all his income, then the demand for consumers' goods would determine prices in such a way that businessmen would be induced to produce con sumers' goods only. The stock of capital goods will stay the same, provided people do not consume more than their income. If they consume more, the stock of capital goods is necessarily diminished. If, on the other hand, people save part of their incomes and re duce consumption expenditures, the prices of consumption goods decline. Businessmen thus are forced to adjust their production to the changes demanded. Let us assume that people, on the aver age, save 25 per cent of their in comes. Then, businessmen, through the agency of prices, would assign only 75 per cent of production to immediate consumption and the rest to increasing capital. Our knowledge of prices also discloses the most crucial short coming of socialism and the im mense superiority of the market order. Without the yardstick of prices, economic calculation is im possible. Without prices, how is 1965 THE FORMATION AND FUNCTION OF PRICES 7 the economic planner to calculate the results of production? He can not compare the vast number of different materials, kinds of labor, capital goods, land, and methods of production with the yields of production. Without the price yardstick, he cannot ascertain whether certain procedures actu ally increase the productivity and output of his system. It is true, he may calculate in kind. But such a calculation permits no value com parison between the costs of pro duction and its yield. Other social ist substitutes for the price de nominator, such as the calculation of labor time, are equally spuri ous.

Government Interference with Prices Economic theory reveals irref utably that government interven tion causes effects that tend to be undesirable, even from the point of view of those who design that intervention. To interfere with prices, wages, and the rates of interest through government or ders and prohibitions is to deprive the people of their central posi tion as sovereigns of the market process. It compels entrepreneurs to obey government orders rather than the value judgments and price signals of consumers. In short, government intervention curtails the economic freedom of the people and enhances the power of politicians and government offi cials. The price theory also explains the various other economic prob lems of socialism and the interven tionist state. It explains, for in stance, the unemployment suffered in the industrial areas, the agri cultural surpluses accumulated in government bins and warehouses; it even explains the gold and dol lar shortages suffered by many central banks all over the world.

The market price equates the demand for and the supply of goods and services. It is the very function of price to establish this equilibrium. At the free market price, anyone willing to sell can sell, and anyone willing to buy can buy. Surpluses or shortages are inconceivable where market prices continuously adjust supply and production to the demand exerted by the consumers. But whenever government by law or decree endeavors to raise a price, a surplus inevitably results. The motivation for such a policy may indeed be laudable: to raise the farmers' income and improve their living conditions. But the artificially high price causes the supply to increase and the demand to decline. A surplus is thus cre ated, which finds some producers unable to sell their goods at the official price. This very effect ex plains the $8 billion agricultural 8 THE FREEMAN February surplus now held by the U.S. Gov ernment.

It also explains the chronic un employment of some 5 million peo ple in the United States. For po litical and social reasons and in attempted defiance of the law of supply and demand, the U.S. Gov ernment has enacted minimum wage legislation that is pricing millions of workers right out of the market. The minimum wage is set at $1.25 per hour - to which must be added approximately 30¢ in fringe costs such as social secu rity, vacations and paid holidays, health, and other benefits - so that the minimum employment costs of an American worker exceed $1.55 an hour. But in the world of eco nomic reality, there are millions of unskilled workers, teenagers, and elderly workers whose produc tivity rates are lower than this minimum. Consequently, no busi nessman will employ them uI)less he is able to sustain continuouslosses on their employment. In fact, these unfortunate people are un employable as long as the official minimum wage exceeds their indi vidual productivity in the market.

This kind of labor legislation, even when conceived in good inten tions, has bred a great variety of problems which give rise and im petus to more radical government intervention. The price theory also explains most money problems in the world. For several years after World War II, many underdevel oped countries suffered a chronic gold and dollar shortage. And in recent years, the United States it self has had serious balance-of payments problems, which are re flected in European countries as a dollar flood. No matter what the official ex planations may be, our knowledge of prices provides us with an un derstanding of these international money problems. Price theory re veals the operation of "Gresham's Law," according to which an in flated depreciated currency causes gold to leave the country. Gresh am's Law merely constitutes the monetary case of the general price theory, which teaches that a short age inevitably results whenever the government fixes an official price that is below the market price. When the official exchange ratio between gold and paper money understates the value of gold, or overstates the paper, a shortage of gold must inevitably emerge.

And finally, our knowledge of the nature of prices and of the consequences of government inter ference with prices also explains the "shortages" of goods and serv ices suffered in many countries. Whether the interference is in the 1965 THE FORMATION AND FUNCTION OF PRICES 9 form of emergency or wartime controls, international commodity agreements, price stops, wage stops, rent stops, or "usury laws" that artificially limit the yield of capital - and whether they are im posed on the people of America, Africa, Asia, or Europe - govern ment controls over prices control and impoverish the people. .And yet, omnipoten t governmen ts all over the world are bent on substi tuting threats and coercion for the laws of the market. ~ LEONARD E. READ A RENOWNED and respectable soci ologist once wrote, "The Govern ment is All of Us," and a Presi dent of the U.S.A. voiced the same idea in another of its several ver sions, "The Government is the People."

How this notion, so at odds with American concepts of limited gov ernment, ever insinuated itself in to our folklore is a mystery. It may have had its start - who knows? -with a misinterpretation of the Preamble to our Constitu tion: "We the People of the United States, in order to form a more perfect Union ..." Semantically, this is tricky: a correlation of two collective terms, "People" and "Union." Instead of being con strued as intended, namely, that All of Us should support the idea of a government of limited scope, many have misread this as saying that "the Union is the People," which is to say, that the Govern ment is All of Us. Regardless of the esteem in which we may hold the authors of a concept, we are in no way ab solved from thinking the concept through for ourselves - especially if the inferences drawn from it lead to mischief. We must never commit the present to errant ways because of a sanctimonious regard for the past. If we let our ances tors do our thinking for uS,we 10 THE FREEMAN February shall do no thinking for ourselves, nor will we ever really understand what their thinking was.

Anything That's Peaceful In an ideal free society each in dividual may do anything he pleases as long as it is peaceful. The role of government is limited to keeping the peace. There is a principled justification for All of Us to support a government thus limited; but it is absurd to con clude that this commits everyone to support everything a contempo rary Government may undertake in the name of All of Us! This perversion would virtually ac knowledge that we count for noth ing as individuals. It would iden tify Government with All of Us, and imply that the regulation of every detail of our lives is a proper function of Government - because "we are doing it to ourselves!" A comparable perversion would be to suggest that a company, having employed and given its backing to a group of company guards, there upon becomes a company of guards, and nothing else! The dictators headquartering at Moscow and Peiping are not the People - far from it. And in de mocracies where majorities have the political say-so, the Majority is not All of Us, for there is the Minority! Indeed, there is no con ceivable organization of society in which the Government is the Peo ple.

How, then, can mischief grow out of such a silly idea? An idea prevails because someone believes it. Ideas rule our lives. People are led in wrong as well as in right directions by ideas. Ideas, in turn, are sometimes clarified and some times confused by the words and phrases in which they are ex pressed; all of us are under se mantic influences. Americans, by and large, favor the idea of democ racy, that is, they would decide on the proper scope and functions of government by majority vote. Rightness and wrongness, to most citizens, turns on what the major ity decrees. If the majority ap proves social security, or sending men to the Moon or Mars, or pay ing farmers not to farm, or what ever, then such is within the proper scope of government! The majority does not fret about - or even discern - the dire conse quences of these policies, and this explains, in part, why majoritari anism is satisfactory to most Americans as a means of deciding on right and wrong. "We voted for it!" That's their shallow political way of testing morality!

How Schemes Develop It matters little that the Ameri can people, for the most part, have not initiated these schemes which 1965 "THE'GOVERNMENT IS ALL OF US" 11 take government out of bounds. It wasn't "The People" who de manded federal urban renewal or the Peace Corps or going to the Moon or social security. These the whole kaboodle of socialistic antics - were the inventions of the political Establishment or of the few who are able to maneuver the Establishment and then, after the fact, drum up majority approval for their schemes. Except in unusual circum stances, individuals in Government are bent on enlarging the Estab lishment, that is, on extending their control over the rest of us. If the point once be accepted that the Government is All of Us, it folIo~s that whatever the individ uals in Government favor - going to Mars or whatever - is the will of All of Us. This is how this cli che - an absurdity -leads toward the total state: socialism.

I am not suggesting that the trend toward all-out statism is a conscious objective of all who fur ther the trend. I am insisting that some in Government, no less than some among All of Us, can be and are being victimized by loose and erroneous concepts, one of the worst being "The Government is All of Us." Reprints available, 2 ¢ each. Double Standard IF WE HAD THE MONEY, we could get a "cease-and-desist" order against every businessman in the United States who is engaged in interstate commerce. The businessman has nothing to say. He can only hope the law of averages will keep him off the wrong end of a complaint. As an administrator of two antitrust laws diametrically op posed to each other, it was not difficult for me to accuse everybody at a trade convention with being some kind of a lawbreaker. Either they were all charging everyone the same prices, a circum stance indicating a violation of the Sherman Act, or they were not charging everyone the same price, a circumstance. indicating a violation of the Robinson-Patman Act.

LOW ELL B. MAS 0 N, Former Federal Trade Commissioner FALLACIES IN THE CURRENT FRED DEARMOND "HUMAN KNOWLEDGE has doubled in the last 12 years. It will double again in the next five years, and by 1980 it will be doubling itself every three months." This exag gerated herald of an onrushing millenni urn by a well-publicized space navigator has been widely quoted and acclaimed. Another speaker solemnly de clared that in the decade 1960-70 more scientific knowledge will be developed than in all the centuries that preceded 1960. Now, a belief exists that if only enough billions are spent on research, cancer and heart disease can be wiped out by scientific blitz. Such speculation is symptomatic of the unbalanced sta te of mind in the soaring 1960's. It exhibits a deplorably Mr. DeArmond, lecturer, writer, and business consultant on personnel training, is a contribu tor to numerous periodicals and the author of books such as The Executive at Work and How to Sell and Unsell Ideas.

12 narrow concept of what human knowledge is and how it is accum ulated. This new gospel of technology by the specialists is a result of focussing on the immediate and close-up while blurring the achievemen ts of all the thinkers who preceded our generation. It magnifies the present and minifies the tradi tional wisdom of the ages. Our contemporary wise men should be reminded that in all they discover they stand on the tall shoulders of Aristotle, Kepler, Galileo, Newton, Spencer, and all the others who did the pioneer ing. If each scientist or inventor had to start from scratch, how far would any have gotten toward such startling innovations as ir radiated foods, tranquilizing drugs, and guided missiles? It seems reasonable to ask by what standards is human knowl1965 FALLACIES IN THE CURRENT CULT OF PROGRESS 13 edge bounded by those who see its range being expanded at such fantastic rates. Are modern auto mation gadgets to weigh heavier in the scales than the centuries long and laborious study and ex perimentation by which the phys ical facts of the universe such as the laws of thermodynamics and the persistence of motion were determined? The question is like asking which is the more im portant, a child's early training when he is learning how to per ceive, to react, to reason, and to communicate, or the later develop ment when he applies to the re finements of practical living the basics of what he has learned in childhood and youth.

Rejection of Tested Values What we are witnessing is the growth of a cult of Progress. "Everything you thought you knew about marketing as long as five years ago is out of date; throw it away and go modern," a speaker said at a meeting of a Sales and Marketing Executive's club. This is simply nonsense, of course. If I could have the choice of talking for an hour with Claude Hopkins or John H. Patterson, or of interviewing the present head of a leading New York ad vertising agency, I would unhes itatingly choose the former. People have the same basic desires, aspirations, and frailties that they had five years or 500 years ago. They display the same courage, curiosity, cupidity, gen erosity, and brutality in some what changed forms as in the times of Dante and Chaucer. The capacity to learn is as great but no greater than when Plato walked and talked in his Academy. So slow is the process of evolution that the spirit and body have re mained unchanged through 50 centuries of recorded history.

Nietzsche's Superman has not ap peared. In the 1790's the French J aco bins pursued a revolutionary cult to a tragic conclusion. They at tempted a premature delivery of a perfect society based on liberty, fraternity, equality, plus a worship of the Goddess of Reason. May not the outcome of the present aber ration be an abortion, also? To anyone who makes the smallest pretense to a sense of the historic values, it is positively frightening to see so many presumably liter ate leaders hailing the millennium when they are obviously ignorant of the past and the process of societal evolution. The main tra dition of our Anglo-American race has been to make every advance on the tested foundation of the best in the past. My friend E. W. Dykes has well said that "evolution is the nearest 14 THE FREEMAN February thing to eternal purpose which man can discover." But humanity has a way of chasing the recur ring illusion that progress is a steady march toward perfection.

The illusion may be illustrated in a parable out of the experience of Peary, the polar explorer. One whole day he traveled northward, urging his sleigh dogs on at a brisk pace. But when at the close of the day he checked his bear ings, he was astonished to find that he was much farther South than he had been in the morning. He had been toiling all day toward the North on an immense iceberg being drawn southward by an ocean current. Some of our vaunted advances in civilization are a counterpart of Peary's illusion. The sum total of human satisfactions might be as close a criterion as we could establish for genuine progress. In that respect, as Alfred N. White head said in his Dialogues, "One of the happiest times in the his tory of mankind was the 30 years roughly from 1880 to 1910." That was surely about the peak of lib erty and contentment for Ameri cans. One who thinks of 1964 as a pinnacle of achievement might profit in perspective by looking back just over a century, to the year 1859. During that twelve month period these literary classics were published: Darwin's Origin of Species, George Mere dith's Ordeal of Richa,rd Feverel, Thackeray's The Virginians, Ten nyson's Idylls of the King, Dick ens' A Tale of Two Cities, Fitz gerald's Rubaiyat of Omar Khay yam. Also Wagner's opera, Tris tan and Isolde. In that year, too, the first oil well, "Drake's Folly,"

was brought in at Titusville, Pennsylvania. Could we match this score in '64? All this moved Emerson to note in his Journal that "the only prog ress ever known was of the in dividual, not the race." Overspecialized Scientists Today the scientists are erect ing a dazzling utopia on man's increasing mastery over the forces of nature. Everything is to be done by machine, and soon man will not even have to raise his hands to clothe and feed himself. Their supremacy in the world in spires Jacques Barzun to ask, "What do they know of science who only science know?" He goes on to add, ". . . if college boys and girls think that science stead ily and automatically makes for a better world - then they have wasted their time in the science lecture room." A narrowly specialized scientist is surely the most gullible babe in-the-woods for plausible eco1965 FALLACIES IN THE CURRENT CULT OF PROGRESS 15 nomic, political, and ethical fal lacies. In his own field the scien tist is inclineq to be dogmatic, doctrinaire, scornful of "laymen's"

opinions. In any other field, but especially the nonscientific, he is prone to accept almost any pro nouncement that carries authority. He will follow slavishly any line promulgated by another specialist of status. The enormous branching out of scientific specialties moved Will Durant to a comparison of our age with that of the great Greek philosophers, when science limped so far behind theory. "Our mod ern danger," he wrote, "is pre cisely opposite; industrial data fall upon us from all sides like the lava from Vesuvius; we suffo cate with uncoordinated facts; our minds are overwhelmed with sciences breeding and multiplying into specialistic chaos for want of synthetic thought and a unifying philosophy. We are all mere frag ments of what a man might be." Conventional Wisdom Ridiculed The two magic words in adver tising are "free" and "new." Both are attached like barnacles to the mores of our century. Adults with college degrees, no less than the unsophisticated, fondly swallow those all-purpose pills that prom ise something for nothing from the hucksters. "New" has become the very embodiment of the "good" word, taking precedence over such favorite adjectives as "sacred," "true," and "sound."

This passion for novelty, cou pled with an admiring worship of our time as vastly ahead of any that went before it, has given the present generation a distorted sense of values. We are being ex hOlted by tremendous forces of conformity to judge everything by its newness. A leading spokes man of the prevailing pragmatism is John K. Galbraith, professor of economics at Harvard and mentor of New Frontier presidents. In his The Affluent Society, Gal braith reserves his most withering irony for what he repeatedly calls "the conventional wisdom" in an economic society. His admired predecessor, John Maynard Keynes, likewise discarded in toto the wisdom of Adam Smith, David Ricardo, John Stuart. Mill, and others. Thus, the Western world suffers from having embraced an economic philosophy that sneers at the past. It seems that the ultimate reach of ridicule heaped upon a con servative statesman or politician is to relegate him to oblivion as an anachronism \vho belongs in the nineteenth or the eighteenth century. Then there is the pecu liar assumption that a political leader who is "ahead of his time"

16 THE FREEMAN February is per se a very great man. All the political leaders who have achieved greatly have been abreast of their times and aware of the past. That is where Abraham Lincoln always stood. William Lloyd Garrison, Wendell Phillips, and Horace Greeley marched on ahead and found themselves alone in the great slavery-secession struggle. Because Lincoln didn't isolate himself from the slowly developing public opinion in the North, he saved the Union. Lin coln knew that to turn the clock forward is quite as bad as to turn it back. And so I rest on the wise epi gram of the great Spanish think er, Jose Ortega y Gasset, "We know so much that we do not understand!" ~ Do Our Best SOME OF US are sensitive and hate to see any man compelled to work for less than he needs for a decent standard of living. Many claim they have a way out - socialism, single tax, communism, birth control, prohibition, the golden rule, cooperation. All have been tried somewhere or other. Not one has equaled the expecta tions of its advocates.

In the meantime, we have made a good deal of progress under our present system of private ownership, with individual initi ative and responsibility. The trouble is that no degree of pros perity seems to disturb the relative distinctions. The poor men of today are probably as well off as the well-to-do of a century ago. But that is no consolation to the man who is low in the scale. So we shall probably always have complaining. I don't know what we can do about it except to do our best to improve conditions, and be philosophic. WILLIAM FEATHER, The William Feather Magazine, October, 1964.

SAM H. HUSBANDS, JR. ~ JLYING SOCIALISM IT STANDS TO REASON that persons who want certain things accom plished will get the job done more promptly and efficiently than it could be done under compulsion that competitive private enterprise in a free market is more efficient than government operation and control. But this is a difficult mat ter to prove, for governments sel dom enter a business activity with out claiming a monopoly - that is, passing a law to forbid competi tion. The international airline traffic situation affords a rare opportun ity to compare private enterprise with government operation in the same competitive area. Here we may observe various privately owned and managed airlines oper ating side by side with government lines, using similar equipment, Mr. Husbands is with Dean Witter & Com pany in San Francisco. flying similar routes, and offering similar services.

Most of the airlines serving within the United States or orig inating here are privately owned and operated, whereas nearly all of the major airlines from other countries are under government ownership and control. For the most part, these major trunk lines, whether privately or governmen tally owned, use similar equipment and must be assumed to face simi lar costs for depreciation, replace ment parts, and fuel. The remain ing major cost factor, and the one that might be expected to show the greatest variation between businesses managed for profit and those under political management, would be the amount of labor used. The labor efficiency of handling passenger service, overhaul, pro motion, administration, and flying operations can readily be measured 17 18 THE FREEMAN February in terms of the number of revenue passenger miles flown per em ployee by the various airlines. Goverllmeftf Lilies vs. Private Lilies A striking contrast between two airlines operating over simi lar international routes with sim ilar equipment is afforded by Brit ish Overseas Airways Corporation (BOAC) and Pan American Air ways. Both are charaeterized by comparatively long flights per pas senger, averaging 3,200 and 1,800 miles respectively. Pan American is the larger of the operations, with slightly more than twice the number of aircraft operated by BOAC. In 1963 Pan American flew more than 2.6 times as many rev enue passenger miles (8,069,397, 000) as did BOAC (3,023,470,000), but with only 20 per cent more personnel.

A comparison between Air France and TWA shows the latter providing nearly 2V2 times the number of revenue passenger miles per employee as did Air France in 1963. KLM, operating 57 aircraft in contrast to 50 for Northwest Air lines, showed only 101,968 revenue passenger miles per employee com1963 WORLD AIRLINE STATISTICS Revenue Revenue Load Number Number Rev. Pass. Passengers Pass. Miles Factor 0/ 0/ Miles per Airline (Thousands) (Millions) (%) Aircraft Employees Employee Air France 3,483 3,266 52.6 135 25,000 130,623 TWA 6,197 7,016 51.8 144 21,730 322,883 BOAC 946 3,023 51.3 56 20,783 145,478 Pan American 4,478 8,069 57.2 116 24,851 324,711 KLM 1,466 1,591 43.6 57 15,600 101,968 Northwest 2,768 2,367 52.2 50 6,090 388,626 Lufthansa 1,992 1,621 54.0 39 12,224 132,608 National 2,167 1,726 51.5 33 4,416 390,816 Swiss air 1,802 1,160 52.7 30 8,471 136,833 Continental 1,697 1,210 50.5 23 3,081 392,861 SAS 2,377 1,592 49.7 47 11,772 135,208 Western 2,813 1,615 50.1 36 3,503 461,087 Data from American Aviation, American Aviation Publications, Inc., May, 1964, Vol. 27, No. 12.

1965 FLYING SOCIALISM 19 pared with 388,626 for Northwest. Lufthansa, Swissair, and SAS all averaged about 135,000 revenue passenger miles per employee, whereas National, Continental, and Western, with reasonably similar equipment and flight conditions, averaged from 390,000 to 461,000 r~v~nu~ p9.gg~n!!~r mil~g for ~g,eh employee. In other words, accord ing to these figures, it takes ap proximately three government em ployees to do the work of one employed privately under the prof it motive. It may be argued that wage rates are lower for foreign air lines, and that the number of em ployees is not a fair measure of the airline's efficiency, but it is noteworthy that flight crew per sonnel number about the same for privately owned airlines and gov ernment owned, and that U.S. air lines operating internationally em ploy mostly foreign nationals in their overseas ground operations.

In any case, to the extent that an airline has more personnel than needed to do the job, it is sacrific ing the standard of living, not only of those extra employees, but of all consumers in the economy. Private lines Would Reduce fares The excuse for nationalization of industry is often expressed in terms of "national interest" or "for the benefit of the people." It is ironic, but predictable, that the recent request for rate reductions of almost 30 per cent on the North Atluntie run WUg mudB by Pun American Airways and TWA. Equally predictable is that their government-owned competitors would argue to hold existing rates, as they contemplated the increased red ink they would show if these rate reductions were installed. The socialist insists that his ability to plan relieves his world of the anarchy of the free market, all to the benefit of the people. Yet, in this one area of the transporta tion industry where we can make a direct comparison, we find the government-owned airlines rela tively inefficient. Further, the in dications are that, without the competition from free enterprise, the government airlines would charge even more for their serv ices than they do now. Would that these lessons could be learned by all advocates of socialized produc tion. ~ Could Be "A REASON why the Russian communists are increasingly adopt ing free market practices in their economy," suggests Dean Russell, "is that they'd rather be fed than Red."

5. The Utopian Vision CLARENCE B. CARSON ... I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little, if any, misery, and with intelligence and happiness increased an hundredfold,. and no obstacle whatsoever intervenes at this mo ment, except ignorance, to prevent such a state of society from becoming universal.! -ROBERT OWEN, 1816 THE CONNECTION between VISIons of utopia and reformers may not be apparent to everyone. Utopians are often thought of as quaint characters who lived and wrote sometime in the past, somewhat impractical but harmless fellows. If they were literary figures in their own right, or if they had a pleasing style, excerpts from their works crop up in anthologies of literature, and whole books are sometimes reprinted. But they are not generally credited with 1 Quoted in W. H. G. Armitage, Heavens Below (London: Routledge and Kegan Paul, 1961), p. 77.

Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books. 20 having had much to do with what has happened. The matter is quite otherwise, in fact. Hardly a reform proposal has been made in the twentieth cen tury which did not have anteced ents in utopian literature of the nineteenth century or earlier. As one writer points out, in the ear lier period "utopists were antici pating the 'welfare state,' the na tionalization of industries, 'so cialized' medicine and health pro grams, unemployment insurance, old-age pensions, and numerous other such proposals .... " 2 More specifically, one historian points out that Robert Owen, an 2 Glenn Negley and J. Max Patrick, The Quest for Utopia (New York: Henry Schuman, 1952), p. 16.

1965 THE UTOPIAN VISION 21 early nineteenth century utopian, had a considerable impact upon historical development. "Owen ... was influential in bringing to pass the first labor legislation, the Brit ish Factory Acts in 1819.... The cooperative buying societies a mong the poorer folk ... are also the direct outgrowth of Owen's experiments of New Lanark. He was one of the pioneers of the trade union movement, and laid down the first plans for labor bureaus on the national scale."s This writer goes on to give similar examples for many other utopians. Utopias are articulated visions of a perfect society. They are prod ucts of the imagination of their authors, neither existing any where at the time they are de scribed nor ever having existed anywhere. They are futuristic in orientation, though there is often an admixture of a return to felici ty which man once enjoyed before corruption. Even so, their realiza tion is to come at some future time, or at least that is the im plication and hope. Even so, the "role of utopias in social thought . . . is not analogous to that of blueprint to house. Such a mis conception makes them of little importance, for as such they have hardly entered the stream of hu3 Joyce O. Hertzler, The History of Utopian Thought (New York: Macmil lan, 1923), p.282.

man history at all. Instead, utopias more nearly play the part of the idealized picture of the completed house which precedes the drawing of the blueprint. Utopias are the best societies which their authors can imagine, distant goals toward which their creators would have us move, unhampered in their con ception by gross obstacles and dif ficulties." 4 The Vision and the Means The construction of a utopia, then, is an elemental flight from reality. The author who does so must, by the nature of his task, \vithdraw from concrete reality, must envision something which does not exist. Insofar as he ne glects to take into account the nature of man and the universe, as most· modern utopians have, he is engaged in a full-fledged flight from reality. The role of utopian thought in the development of meliorist reform is this: Utopians provided the vision of the perfect society toward which meliorist re form is supposed to move. Quite often, they also described the means which might be used to achieve utopia and ways of doing things in the perfect society. Uto pia is the end; meliorist reform is the means. Utopias have served as 4 Clarence B. Carson, "Their Young Men Dream No Dreams," Spiritual Life, IX (Spring 1963), 32.

22 THE FREEMAN February the visionary and imaginary flight which has preceded the actual flight. The fact that twentieth century reformers have usually disavowed any particular utopian hopes must not be permitted to obscure the actual connection. The vagueness of the goals of contemporary re formers are not even to be pitted against any particularized version of utopia. This would tend to disci pline reformers to some limited extent, though this may not be the reason for the avoidance of embracing a utopia. Nonetheless, a vague generalized vision of utopia does impel reformers to their exertions. As I have pointed out elsewhere, this vision is of a utopia that "is altogether pleasant and enticing. It is of a place and time where suffering and privation have been banished, where the inhabitants are secure from the ravages of disease and unemployment, where all men have enough of the good things of life ... , where education and environment have banished the baser things and men have willingly and gladly turned to the finer things of life, where one may speed in a carefree manner down the highway of life with no fear of a collision along the way." 5 5 The Fateful Turn (Irvington-on Hudson, N. Y.: Foundation for Economic Education, 1963), p. 178.

Sir Thomas More and Company The content for a vision which has become progressively more vague was provided in luxuriant detail by nineteenth century utopians. Before utopian thought could enter the life stream of that social thought which is believed to have relevance to actuali ty, a trans formation had to take place. Such a transformation had taken place for many of those in intellectual circles by the early nineteenth century. It has already been de scribed as the cutting loose from reality. Uninhibited rationalism became abstract rationalism; the imagination was cut loose frum the fetters of reason; men turned their eyes away from the nature of things, from an enduring real ity, from metaphysical or eternal realms, to focus their attention upon change and development. In these circumstances, they could not only envision utopias with the utmost freedom but also actually begin to believe in them as pos sibilities.

The literary genera which we refer to as utopias was not new to the nineteenth century, of course. The name itself adorned a work of Sir Thomas More, a book which was published in the early sixteenth century. But More's book was modeled upon one of much more ancient vintage, Plato's 1965 THE UTOPIAN VISION 23 Republic. It should be noted, though, that Plato's good society differed significantly from most modern utopias. Plato did not envision the transformation of hu man nature; he took men as they are and proposed to build a good society for them. This would in volve, as he saw, a rather rigorous regimentation, and he did not shrink from these implications. Hence, the meaning of Plato's Re public for those who prefer liberty (whether he could be numbered among them or not) is clear; it is a cautionary tale, showing the consequences of trying to institute the good society. There were other utopias written in the classical period, but the genera disappeared for the Middle Ages and did not reappear until More's work.

Following More, there were a good many utopian writers from the sixteenth into the eighteenth centuries - what historians are likely to call the early modern period. They include Francis Ba con's New Atlantis, Tommaso Campanella's The City of the Sun, James Harrington's Oceana, Fene lon's Telemachus, Andrae Valenti's Christianopolis, and Robert Fil mer's Patriarcha. These utopias have mainly an academic interest. That is, they constitute an histori cal background for the utopianism which came to inform meliorist re form but they entered into the stream of social thought at the time, little, if at all. They did con tain many of the ideas which went into later utopias. Indeed, More's work contained what can now be recognized as most of the staple ingredients of utopian literature. Utopias almost invariably have two sorts of ma terials: a critique of conditions contemporary with the work being written, and a vision of the per fect society. More's book has both.

Moreover, the good society is pic tured as a communistic one. Pri vate property is an evil to be rooted out, a theme which runs the gamut of utopian literature from the sixteenth to the twentieth centuries. More said, I am persuaded, that till property is taken away there can be no equi table or just distribution of things, nor can the world be happily gov erned: for as long as that is main tained, the greatest and the far best part of mankind will be still op pressed with a load of cares and anxieties. 6 The great change that will be wrought by the abolition of prop erty is described: In all places it is visible, that while people talk of a common wealth, every man seeks his own wealth; but there, where no man has any property, all men zealously pur6 Quoted in HertZler, Ope cit., pp. 132 33.

24 THE FREEMAN February sue the good of the public: and, in deed, it is no wonder to see men act so differently; for in other common wealths every man knows that un less he provides for himself, how flourishing soever the common wealth may be, he must die of hun ger; so that he sees the necessity of preferring his own concerns to the public; but in Utopia, where every man has a right to everything, they all know that if care is taken to keep the p~blic stores full, no private man can want anything; for among them there is no unequal distribu tion, so that no man is poor, none in necessity; and though no man has anything, yet they are all rich; for what can make a man so rich as to lead a serene and cheerful life, free from anxieties. . . . 7 The chances are good that More was engaging in superb irony throughout much of this work, that at most it is only an exercise of the fancy. In any event, later writers have presented such fancies with deadly, and deaden ing, seriousness.

Most of the utopian ideas ap pear to have been suggested dur ing this early period, but we had best not stop to explore them. A considerable change had come over utopian literature by the nine teenth century. Indeed, this cen tury was the century of utopians, par excellence. Many intellectuals turned their attention to describ7 Ibid., p. 135. ing perfect societies and offering programs for realizing them. There were utopian socialists, communitarians, anarchists, "sci entific" socialists, syndicalists, and perfectionists. There was a great deal of enthusiasm for utopian projects, and men began actually to try to put them into effect. Utopian Communities The first considerable effort along this line was the communi tarian movement. In general, the idea in founding communities was for a group to separate itself from the corrupting influence of the "world" and arrive at perfection in isolation from contaminating influences. There were a great many such communities at tempted. Some were religious in orientation, for there was a great deal of religious enthusiasm in the first half of the nineteenth ceno tury. Others were secular in origin and aims. But whether religious or secular they were usually com munistic, that is, they proposed to labor for the common good and share equally, or at least accord ing to need, in the goods produced.

America was a popular place to locate such experiments, since they needed physical isolation and' considerable tolerance from politi cal authorities. Some of the more famous of the American communi ties were Brook Farm, New Har1965 THE UTOPIAN VISION 25 mony, North American Phalanx, Amana, Oneida, Nashoba, Fruit lands, Icaria, and the religious communities of the Shakers and Rappites. Two examples of such communi ties will suffice. One of the most famous was the one located on the banks of the Wabash river in Indiana; it was called New Har mony. New Harmony was the brain child, and purse child, of Robert Owen, a wealthy Scottish manufacturer. Owen's idea was to found self-"sufficient villages. As one writer describes his utopia: He saw the world made up of vil lages, rid of the capitalist and free from that private property which was completely incompatible with social .well-being, producing solely for the collective good. . . . Briefly stated, he recommended ... that colonies of workers should be formed on the cooperative principle. These colonies or villages of cooperation with a population varying from 500 to 2000 souls ... were to be engaged in both agriculture and manufactur ing; they were to be housed in great quadrangles located in the midst of each colony, containing the common dormitories, common kitchen and dining rooms, common schools, li brary, reading rooms; guest rooms, etc .... All were to work at suitable tasks according to their ability ....

These villages were to be joined together in a great federation which would replace the old world of the "capitalistic system with its poverty and misery, its injus tice and inequality, its falsehood and deception; and all were to be united in brotherly cooperative effort." 8 In Owen's most ambitious at tempt to put his ideas into effect, the community of New Harmony, he was confronted by continual difficulties for the short time that he continued the effort. Splinter groups of dissenters were continu ally forming and moving off else where. There were complaints about those who ate but did not work. Since decisions were to be made democratically, all work and other activity was frequently stopped for discussions and votes. Some. complained that Owen was profiteering from the sale of land, though he sold the land on credit or gave leases for ten thousand years. "Money had been officially abolished but in every lane and alley the Harmonists privately traded and bargained and bickered over cash."9 "There was trouble over liquor. Prohibition was de creed, but everywhere people were drunk, supplied by sly bootlegging members."lo In short, before its 8 Ibid., pp. 219-20.

9 Everett Webber, Escape to Utopia (New York: Hastings House, 1959), p. 151. 10 Ibid., p. 147.

26 THE FREEMAN February hasty demise New Harmony had witnessed some of the classic ills accompanying efforts to make over men. The Oneida Community, found ed and watched over for many years by John Humphrey Noyes, carried communal sharing to what most would probably consider its logical extreme. To be-specific, in this community they practiced what was called complex marriage. That is, each adult who was a full fledged member of the community might be considered married to every other such adult of the op posite sex. Noyes was a religious leader, and the strange beliefs of the community were a part of the religion he taught. He believed in the possibility of perfection here and now, and those who had ar rived at perfection no longer lived under the old dispensation. In anticipation of the Kingdom of Heaven - which was the name bestowed upon the first establish ment begun by Noyes - he wrote: When the will of God is done . . .

there will be no marriage .. The mar riage supper of the lamb is a feast at which every dish is free to every guest. Exclusiveness, jealousy, quar reling, have no place there, for the same reason as that which forbids the guests ata thanksgiving dinner to claim each his separate dish, and quarrel with the rest for his rights. In a holy community, there is no more reason why sexual intercourse should be restrained by law, than why eating and drinking should be.... 11 Though the community lasted for a longer period than most such undertakings, it did eventual ly break up. One writer points out that young people went away to college and came more and more "to desire the marriage customs of the world where people were al lowed to fall in love and not re quired to cultivate a specious en joyment at seeing their loved ones bandied through a wide circle of holy hands." 12 Utopian Socialism A second, and related, develop ment in utopian thought in the first half of the nineteenth cen tury was the setting forth of what has been called utopian socialism.

The theory of modern socialism was developed in this period by those whom Marx scornfully dubbed utopians. They were most ly French, and included Morelly, Babeuf, Saint-Simon, Fourier, Ca bet, and Blanc. Fourier and Cabet developed theories, and attempted to apply them in communities. Fourier's dream may serve as an example of these, though they differed con siderably one from another. "In 11 Ibid., pp. 375-76. 12 Ibid., p. 405.

1965 THE UTOPIAN VISION 27 brief, Fourier proposed to elimi nate wasteful competition, and oppressive government, by orga nizing self-sufficient and mainly agricultural units of produc tion."13 These units he called Phalansteres. They would, he thought, solve the problems of production, and each person would be guaranteed a basic standard of living. "Along with this expand ing production, will go an educa tional revolution .... It will raise mankind to perfection in body and mind. . . . Our present teachers slaves to abstractions - know how to produce Neros; we know how to turn potential Neros into men like Gods." 14 Mankind was made for perfec tion and harmony, according to Fourier, not discord and competi tion. His system would achieve the true end of man. "This economic and educational revolution, by housing the population in self supporting, autonomous and self conducted luxury hotels, in which all the occupants would work and play in ind ustrious harmony, would solve the problems of pov erty, war, and wickedness."15All that he needed to get this plan un derway, he believed, was to find 13 John BowIe, Politics and Opinion in the Nineteenth Century (New York: Oxford University Press, A Galaxy Book, 1964), p. 142.

14 Ibid. 15 Ibid., p. 143. a wealthy patron who would fi nance it, and he waited expectantly through his later years for such a benefactor. Several important changes in utopian literature occurred in the latter part of the nineteenth cen tury. For one thing, there was ap parently a great increase' in the number of such. works produc,ed. One book lists the better known ones, mainly in English or Eng lish translation, for the period 1850-1950. This indicates a great concentration of production of such literature from about 1883 to 1912. Only six works are listed from 1850 to 1883; whereas, there are seventy-four works from 1883 to 1912, seven for 1894 alone."16 The Shift from Local Groups to a Worldwide Organization Another development was the shift from the conception of utopian communities to dreams of worldwide organization. As one account has it, "it was: to become rapidly and increasingly apparent that the utopian community was so unrealistic that it could provide no more than a setting for fantasy or satire. Modern utopia must be a state, and indeed it was already beginning to be evident that mod ern utopia must be the world." By some kind of metamorphosis, "the 16 See Negley and Patrick, op. cit., pp. 19-22.

28 THE FREEMAN February economic ideal of utopia, through a kind of economic necessity, be comes the ideal of theworld."17 A third development was the organization of movements to act not in isolated communities but within societies at large, the at tempt to make utopia scientific (as in Comte and Marx), and the development of programs and plans for the realization of the good society, no longer cast in the guise of utopia. In short, men were preparing to achieve utopia in society at large. Steps were be ing taken to translate utopian visions into reformist measures in the latter part of the nineteenth century. The Ingl'J!dients of Utopia It may be well, at this point, to sum up and indicate the main strains which went into utopian thought. Utopia was concocted out of a compound of some of man's deepest longings, longings for felicity, harmony, order, peace, security, and repose. Utopian vi sions have had appeal because they embraced remnants of myth ology, relics of religious hopes (quite often transposed), immem orial prejudices, along with no tions borrowed from scientific theories. Some of the ingredients of this compound are worth dwel ling upon.

17 Ibid., pp. 582-83. The IIGo/den Age ll Myth One of the strains that has frequently been woven into the fabric of utopia, or at least evoked by it, is the myth of the Golden Age. This myth appears to have had virtually universal appeal, and even extensive and intensive in doctrination in progressivism in contemporary society does not ap pear to have completely succeeded in exorcising .it. The Golden Age myth locates the time of felicity and harmony in the past. The variations on the particular locale range from the recent past to the Garden of Eden. At its deepest, the Golden Age myth is of a time before man had lost harmony with nature, or with God. In theological terms, it could refer to the time before man be came a moral being, a time before all the travail, tension, and un palatable choices entailed in being moral. In pagan terms, it could re fer to the time when man was simply an animal, guided and liv ing by instinct rather than thought. There have, of course, been many efforts to account for the appeal of the Golden Age myth. Some see it simply as a result of the tendency to romanti cize that which lives only in mem ory, others as the· effort to return to the womb, and so forth.

At any rate, elements from the Golden Age myth crop up in much 1965 THE UTOPIAN VISION 29 of utopian literature. Utopias quite often have strenuous criti cisms of recent social and economic trends, criticisms of everything from the enclosure movement of an earlier time to industrialism in the nineteenth century. It is easy to see that the communi tarian ideas owe much to a ro manticizing of the medieval manor. Robert Owen even wanted to abolish the plow and return to the spade. "The spade," he said, "wherever there is sufficient soil, opens it to a depth that allows the water to pass freely below the bed of the seed or plant .... " Whereas, the plow is a "mere sur face implement, and extremely de fective in principle." 18 Utopians quite often want to be rid of money - the source of the hated cash nexus - and return to primi tive barter and exchange. The appeal of many of their plans is the appeal of the return to prim eval simplicity and felicity.

Heaven on Earth A second ingredient in utopia, quite often sublimated and trans posed in it, is millennialism. Chris tian eschatology places the Golden Age at the end of time rather than at the beginning (or in addition to placing it at the beginning) . Whether this Golden Age is to be for eternity in a transcendental 18 Quoted in BowIe, op. cit., pp. 148-49. Heaven or for a thousand years upon a transformed earth (or that both shall be) has long been a mat ter for controversy. Of course, utopians have used only the con ception of a heaven on earth. For some of them, the Kingdom of God became a kingdom to be made here on earth. In utopian thought, however, millennialism was divorced large ly from its religious content, hu manized, and the vision of heaven quite often became the vision of a materialistic ear,thly paradise. The dictatorship of the proletariat of Marx and Engels does not ap pear to share much in common with the Kingdom which John saw descending to earth in his vision recorded in the Book of Revelations, but Marx turned more than Hegel upside down (or right side up, as he claimed), and his is indeed an apocalyptic vision of the ushering in of the Golden Age.

In short, millennialism was quite often subsumed into utopian thought, placing the Gold en Age in the future, and subtly appealing to deep religious hopes. Progressivism By the latter part of the nine teenth century, however, millen nialism was being domesticated and secularized as progressivism. Progressivism was a third ingre30 THE FREEMAN February dient of utopianism. This state ment needs modifying; progres sivism was a late comer to the scene. Earlier utopias could not have used it. Thus, its major func tion became a mode for the achievement of utopia. Progres sivism, as it is relevant to utopian ism, was born out of technological progress by historical inevitabil ity, evolution being the midwife. The flight from reality owes much of its believability both to evolu tionary theories and technological progress. These, in turn, made the realization of utopia appear pos sible. It is not strange that any one viewing the course of inven tion and industrial development in the modern era should be struck by the great possibilities of hu man ingenuity.

At any rate, Karl Marx and Friedrich Engels described a state of earthly bliss and devised a theory to make its coming histori cally inevitable. The tools they worked with were technological change, the theory of evolution, and a theory of historical change. By so doing, they associated prog ress with the realization of utopia, and, for those who have sought utopia by way of reform, unwit tingly associated progress with re form - a wholly gratuitous con nection, one might add. Reformers in the twentieth century have got maximum mileage out of the supposed connection between reform and progress. The Static Society A fourth strain in utopianism is the implied vision of life with out tension. To put it another way, though not the way a utopian would describe it, utopia is a land where stasis or absolute stability has been achieved. This does not appear to be compatible with pro gressi vism, any more than pro gressivism is compatible with a Golden Age in the past. But these are logical objections to nonlogical flights of fancy. Consistency is a requirement of dialectical reason, and it must be remembered that Kant had already cut the ground from under such reason.

In the real world, one may be lieve that change, development, even progress, are the products of tension. But in utopia one can have the products of capital without capitalism, the products of inven tion without the incentives to invention, the advantages of free dom without the corollary dis advantages of responsibility, and so on. Why raise difficult questions about the mode of progress with out tensions, without frustrations, without incentives? At any rate, utopia will be a land without ten sions, without that which produces crime, war, and other disorders. There will be no jealousy, no self1965 THE UTOPIAN VISION 31 ishness, no competition, and no abrasiveness in relationships. Perhaps this is an overstate ment of the case. Some utopians did envisage the continued pres ence of some dissidents. Let us take a look at what one utopian Chauncey Thomas in The Crystal Button - proposed to do with such people. They are to be kept in hos pitals, of course. Why hospitals?

Because they are morally de ranged. The explanation contin ues: "Morally deranged?" "Yes, I believe you used to apply the term 'prison' to the institution used for the confinement of moral patients." "They are convicts, then? But why are these associated with your hospi tals ?" "Why not? They constitute a part, though happily a small part of the patients that come under the same management and treatment. We simply treat them as persons who are morally deformed or ailing." 19 Judging by this insight into what utopia will be like, we may be nearer to it than some have thought! Environmentalism and Anarchism A fifth ingredient of utopia has usually been environmentalism. 19 Quoted in Negley and Patrick, Ope cit., pp. 88-89. This has provided utopians with an explanation of sorts for the im perfections which they readily ob served and vigorously denounced. If man is perfect or periectible, if there is no ingrained obstacle within him that would prevent the perfect society, why, one might ask, does perfection not prevail?

One historian explains the utopian view, particularly the utopian so cialist view, in the following man ner: One and all believed that with proper environment man would be actually perfect. He was naturally good, but existing environment with its overwhelming imperfections and maladjustments destined him to evil and woe. 20 The correction of the environ ment, and the education of men, would remove these obstacles to perfection. The Rubicon for such explanations, of course, is how to make an account of why things have not always been perfect. A heady strain in much of nine teenth century utopian thought, particularly that of socialists, was anarchism. Marx proclaimed that the state would wither away. Marx was in a line extending from Godwin and Proudhon through Kropotkin and Sorel. Those utopian socialists who abominated the state and govern20 Hertzler, Ope cit., p. 222.

32 THE FREEMAN February ments apparently arrived at their position through some such rea soning, or unreasoning, as this: Pri vate property is the root of all social evil, and its existence the cause of man's "fall." (Rousseau thought as much.) Private prop erty, it has been claimed, sets one man against .another, leads men to pursue their own interest to the harm of others, promotes self ishness' and so on. The state,as they saw it, was the prime bul wark of property. The vast para phernalia of government - the courts, the police, the bulk of laws - had to do with the protection of property. Abolish property, and government would lose its reason for being. Or, as revolutionary anarchists were apt to believe, abolish government and things would revert to their natural, and perfect, condition. As one writer says: A strong line of thinking thus became absolutely hostile to the State; it considered this most im portant of all political phenomena either as infinitely elastic and com pressible ( J. S. Mill), altogether dispensable (Marx and Engels), or the supreme obstacle to total happi ness. 21 The flight from political reality 21 Thomas Molnar, The Decline of the Intellectual (Cleveland: World Pub lishing Co., A Meridian Book, 1961), p.

73. has had horrible consequences in our century. Anarchists did not succeed in abolishing the state, but they did turn thought· away from the very practical problems of how to contain the state. Eventu ally, most socialists reconciled themselves to the state, used it to their ends, but it tended to be come the uninhibited state of to talitarianism. It is worth pointing out that some contemporary lib ertarians have similar views toward government to those of nineteenth century utopians. So cialists saw the state as the bul wark of property; these libertar ians witness the state as violator of liberty and property at the hands of social reformers. Both fail to realize that government is an instrument, not a cause, of men's behavior and beliefs. There were many other strains in utopian thought. Equality and distributive justice were prom inent in many utopias. However, in the nineteenth century some thinkers expected utopias to be controlled by scientific elites. Such arrangements have been called technocracies. Scientism crops up quite often in these visions of the future. Rationalism and education were linked by thinkers as as sumption and method for arriving at utopia. The above comprise the major assumptions and beliefs of utopians.

1965 THE. UTOPIAN VISION 33 The Urge to Reform Utopia, then, contained the vi sion of earthly bliss which has drawn us into the crucible of melioristic reform. It must be made clear, though, that there is a great gulf between Robert Owen's utopian vision of a world without poverty and Presi dent Johnson's War on Poverty. To most of his contemporaries, even as for us, Owen was an im practical visionary, one to be taken advantage of by cynical joiners of his communities or to be avoided by more upstanding people. Presi dent Johnson, on the other hand, would certainly be reckoned to be a "practical" politici.an. But the difference between Owen and Johnson is not in the vision they hold forth; it is in the means to be employed. The gulf has been bridged. What was once clearly visionary is now being .pursued with all the instruments of power of centralized states, is even the stock in trade of the most corrupt politicians. Weare no nearer to utopia in our day, I think, but we are cheek by jowl with a whole panorama of compulsive devices that are billed as instruments for ushering in utopia (though the word itself is not employed).

Most of the remainder of this story will have to do with how the gulf was bridged. It was a tre mendous undertaking. It must be kept in mind that thus far we have pursued mainly the develop ment of some ideas among some intellectuals. Though utopian novels were becoming more popu 1ar in the late nineteenth century, as indicated by sales, utopian thought had even then hardly en teredthe mainstream of political thought. Apparently, it was as clear to most of our ancestors as it may be to some of us tha t utopian visions are flights from reality. Intellectuals had not yet come into the circle of power, cer tainly not utopistic intellectuals. The position of these people, and their kind, in the nineteenth cen tury is described by one writer: These people belonged to no great disciplined order; they are backed by no European authority .... When they. rebel, they become outcasts and refugees, as were Marx and Lenin, appealing away from the bourgeoisie to which they belong to the masses without. 22 In short, such people were largely loners and outcasts. We must trace them in their move to the· seats of power. Such a movement has been made, and it is rather clear that such intellec tuals would be in line for a Free dom Medal from some President today.

It is not practical, however, to follow the movement from utopia 22 BowIe, op. cit., p. 29.

34 THE FREEMAN Februa1'y to reform, from visionary to presi dential adviser, from lonely dream er to practical politician, on an in ternational scale. The perspective will now be shifted to the national scale, to the United States, so that the story can be told of how one nation was drawn into the web of ~hose engaged in a flight from reality. ~ The next a'rticle in this series will pertain to "An American Dream." BRITAIN RETURNS to MERCANTILISM GEORGE WINDER THE BRITISH GOVERNMENT took another step back toward the an cient policy of mercantilism when last October it placed a 15 per cent surcharge upon all imported manu factured goods. This was against all modern trends and against the interests of G.A.T.T., the Com mon Market, the Commonwealth, and particularly damaging to the European Free Trade Association agreement to remove all tariffs Mr. Winder, formerly a Solicitor of the Su preme Court in New Zealand, is now farming in England. He has written widely on law, agriculture, and economics.

against manufactured goods by 1966. The Labour government has an nounced that this policy is only temporary, but no definite date is given for discarding it. There doubtless will be plenty of time to build up protected industries which soon acquire a vested in terest in the tariffs that support them. The object of this return to mercantilism is to save the pound, which the. Exchange Equalization Account is sending out of the 1965 BRITAIN RETURNS TO MERCANTILISM 35 country in large quantities, thus depleting the country's reserves. The British government wishes to persuade foreigners to take her goods instead of her money. The only practical way of doing this is to keep the price of goods down so that others want to'buy them; but the British today are unable to do this, for they are pursuing the same inflationary policy which has characterized their economy since WorId War II and which caused them to devalue the pound in 1949. This policy has earned for the economy the description, "stop-go."

First the Inflationary Boom, Then the. Credit Squeeze The Chancellors of the Ex chequer who have presided over Britain's economy since the war fall into two classes: the first fails to balance the budget and experiences a boom, but soon runs into an overseas payment crisis; the second comes in to clear up his predecessor's errors. He does this by reducing the budget def icit and placing the economy un der the rigid conditions of a high Bank Rate and a credit squeeze. The subsequent high rates of in terest for all borrowing tend to stop the credit expansion, and a painful and depressing period fol lows - but for the time being the pound is saved. It is left to the next Chancellor to begin the cycle all over again. The outstanding periods of de pression since the war have been in 1947, 1949, 1952, 1957 (when the Bank Rate went to 7 per cent), 1961, and now when Britain again is in overseas payment difficulties.

The cause of trouble this time is not difficult to find. Mr. Maud ling was an expansive Chancellor who budgeted for a large deficit in 1963 and gave Britain a mild boom. At budget time in the spring of 1964, he was urged by almost every newspaper in the country to go ahead with an expansionary budget. What matter if Britain had to borrow from the Inter national Monetary Fund? Does not every business borrow sometimes? He succumbed to this pressure and unbalanced his budget by several hundred million pounds. During the summer of 1964 the pound lost more purchasing power than usual - that is to say, prices went up considerablY, and in time to be noticed by the electors. At the same time, exports began to fall and imports increased. Im ports always increase at this point of the cycle; an abundance of money to spend, and a fixed rate of exchange, result in a great de mand for imported goods.

The extent of Britain's adverse balance was announced every month to the electors, and did the 36 THE FREEMAN February Conservative cause no good. Many people thought the Conservatives were waiting until they had won the election before applying their customary remedies. But they lost the election and a chance of rec tifying the position. The Labour government com plains that the former government left a bill of £ 800 million to settle. This is the amount by which Brit ain's imports are said to have ex ceeded her exports. Since a symp tom of the trouble is high im ports, the government has decided that it will reduce them by a sur tax of 15 per cent against all im ported manufactured goods, these accounting for about one-third of Britain's total imports. Opening Pandora's Box In announcing this policy, the Labour government stirred up a hornets' nest. The European Free Trade Association complained that Britain had broken her solemn treaty to lower duties on manu factured goods until they reach zero by 1966.

G.A.T.T. .also complained and threatened retaliation, although a few members, notably the U. S., have expressed sympathy with Britain's position. Ireland says it is a body blow, because England was her best customer. Japan, France, Italy, and many other countries have protested. Even the Common wealth has not escaped. Canadian newsprint is hit, because it is con sidered a manufactured com modity. Hong Kong, the last re maining free trade area in the world, is a special sufferer. Those who suffer most, how ever, are Britain's own nationals. They were given no notice of the extra duties which took effect from midnight of the day of the announcement. This naturally caught many importers with their goods on the high seas; when those goods are landed the extra duties will have to be paid. One importer, who has sold a thousand tons of steel bars, tells me he will have to meet the extra duty out of his own pocket. Another will have to pay the surtax on hundreds of tons of aluminum sheets he is importing from Austria and the E.F.T.A. countries. Thousands of importers will have difficulty in meeting the increased tax, and some will go bankrupt. Such is the fate of the individuals when the government manages the economy.

Will It Solve the Problem? But the question remains: Will this policy of taxing imported manufactured goods really work? Is it not attacking the symptom in stead of getting at the cause of the trouble? Manufactured goods are themselves often the raw ma1965 BRITAIN RETURNS TO MERCANTILISM 37 terials of the export industries, especially in Britain which im ports large quantities of machine tools and machinery. The sale of goods is essentially an act of ex change. Who knows what trade channels will be permanently blocked when the surcharge is re moved? Mr. George Brown, the Minister of Economic Affairs, is expecting the British people to buy more British goods; yet the gov ernment says the surcharge is only temporary. It looks as if the Labour gov ernment wants it both ways. It harbors the old mercantilist sup erstition that you can export and not import. Inflation Must Be Curbed The real cause of Britain's trou ble lies .in her excess of money.

This, coupled with a fixed rate of exchange, acts like a sponge which dra ws the goods over the tariff wall in spite of the surcharge. Previously, when Britain faced such a problem, the remedy - ex cept in 1949 - was to squeeze the economy by raising the Bank Rate and making money hard to get. Even if the Labour govern ment's policy does stop imports, the excess money will still cir culate and press the price level upward. Either the Bank Rate has to be raised to bring about a credit squeeze,* or Britain will have to devalue the pound once again before she can restore equi libri um and sell her exports. Devaluation is an expedient the British government has avoided since 1949. It involves repudiation of many millions of pounds loaned in good faith to the government. But this is the only thing left for any government to do if it goes on inflating the currency. And a reversion to all the mercantilistic failures of the past will be of no avail against the eventual day of reckoning. ~ *Editor's Note: The discount rate has been raised, of course, to 7 per cent from 5 per cent since Mr. Winder submitted his analysis.

Good as Gold You HAVE TO CHOOSE as a voter between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the government. And with due respect to these gentlemen I advise yOU •••to vote for gold. Attributed to GEORGE BE'RN ARD SHAW THERE IS a growing tendency on the part of some religious organi zations and ministers of religion to lend religious sanction to left wing social and economic views and even to pass the modern equiv alent of sentences of excommuni cation on political figures who dis agree with this outlook. This came out very strongly in the recent American presidential political campaign, as the following exam ples show. Christianity and Crisis, edited by such prominent churchmen as Dr. Reinhold Niebuhr and President John C. Bennett of Union Theo logical Seminary, professed to find Mr. Chamberlin is a skilled observer and reporter of economic and political conditions at home and abroad. In addition to writing a number of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines.

38 WILLIAM HENRY CHAMBERLIN a conflict between Goldwater's "record and the judgment of the Christian churches on most of the major issues of our time." Dr. Joachim Prinz, president of the American Jewish Congress, went on record to the effect that "a Jewish vote for Goldwater is a vote for Jewish suicide." Equally strong was the statement of the Rev. William Sydnor, rector of Christ Episcopal Church in Alex andria, Virginia: When one listens to and reads Senator Goldwater, one finds that respect for God's law is shockingly absent. Never in the history of our nation have an aspirant for the pres idency and his backers espoused prin ciples and practices that so brazenly ignore God's commands dealing with love, peace, reconciliation, brother hood, care of the poor, respect for law and the constitutional authority. Many simliar declarations could be cited. And a similar attempt to extend a spiritual sanction to what would be a very grave decision of 1965 IS GOD A KEYNESIAN? 39 temporal policy recently occurred in the discussion at the Roman Catholic Ecumenical Council in Rome concerning the use of nu clear arms. Some paragraphs in a proposed declaration on problems of peace call for the total elimina tion of nuclear weapons without mentioning controls to insure that disarmament is made universal.

It is unlikely, to put it mildly, that the communist regimes in Moscow and Peiping will be re sponsive to admonitions. from the Vatican Council. A complete re nunciation of nuclear. weapons by noncommunist powers, principally the United States, would have as its consequence the confrontation of free nations with the alterna tive of surrender or annihilation, scarcely a. desirable moral objec tive. It is to be hoped that the ob jections to the proposed draft raised by American and British prelates at the Council will be heeded. An adoption by such a widely respected religious gather ing of a resolution in favor of ab solute abandonment of nuclear weapons would be another deplor able example of the harm that can be done when men of good will make hasty pronouncements on subjects outside their range of competence and in fields where hard choices are necessary and ideal perfection is not to be ex pected.

Moral Obligations upon Individuals Is there sound warrant for as.. suming the· moral superiority of a collectivist to an individualist economic system, for imparting religious sanction to Keynesian economics and welfare state poli cies ? The answer is No. All the great religious and ethi cal systems emphasize the moral obligations of compassion and charity, the virtue that accrues when an individual foregoes a part of his wealth to help someone less fortunate or to promote some de sirable cause in such fields as edu cation, health, and general well being. Incidentally, Americans, sometimes dismissed as material istic, have been more responsive to this kind of moral appeal than any people in the world .. Nowhere is there a quicker and warmer re sponse to the call for relief from distress. There is nothing in Eu rope to compare with the Rocke feller, Carnegie, and Ford Foun dations; nowhere have men of wealth shown such willingness voluntarily to give up a vast share of their wealth.

Nor is there any parallel to the number of American colleges and universities which owe their ex istence to private donations, not to state aid, or to the generosity with which such institutions are supported by their alumni and friends. Nor is American willing40 THE FREEMAN February ness to extend the boundaries of health and education restricted to the boundaries of the United States. In far-off cities which few Americans have ever seen, in Is tanbul, Beirut, Teheran, Salonika, colleges and schools founded by American initiative and supported to a considerable extent by Ameri can contributions have broadened considerably the educational op portunities in the countries where they are located. The Far East was a prominent field of American missionary ef fort, with important educational and health by-products. This is still true as regards Japan and Taiwan. China, before the com munist takeover, was dotted with American-founded colleges, schools, hospitals, research insti tutions; and the schools and col leges for many young Chinese eased the transition to study abroad in the United States and other foreign countries.

None of Great Religions Endorses Welfare State Individual prosperity does pose moral challenges and Americans have met these challenges on a much larger scale than many Eu ropean or Oriental peoples whose wealthier representatives are apt to let generosity stop at the limits of the family. But where is the moral element when the state transforms taxation from an in strument of raising revenue into an instrument for reallocating in come, for pillaging the thrifty for the benefit of the thriftless? One will find in the Bible, in the Koran, in the writings of Buddha, Confu cius, and other religious prophets, moralists, and sages many inj unc tions to practice charity and make voluntary sacrifices for the com mon good. What one does not find is any endorsement of a commu nist or collectivist form of society, anything that could reasonably be construed as a divine command ment in favor of the welfare state or Keynesian economics. On the contrary, the assumption is always that the individual enjoys enough of the fruits of his own labor to be able to share these, in one form or another, with those less fortu nate.

And a very good case can be made, on moral as well as economic grounds, for a system in which the individual is required to stand on his own feet, not to lean on the state for handouts. Character, re sourcefulness, capacity are formed and developed in struggle with obstacles, not in waiting passively for benefits from outside. Not the least of the causes of the juvenile delinquency which sometimes spills over into senseless and brutal riots is a sense of boredom, of having "nothing to do." This complaint 1965 IS GOD A KEYNESIAN? 41 could scarcely be voiced in .earlier times when young people expected and were expected to earn their livelihoods, instead of having these furnished on a silver platter. For the individual to be intelli gently generous with his own money is a meritorious and en riching side of life in a frQQ polit ical and economic system. For de signing politicians and empire building bureaucrats to be gener ous with other people's money is something quite different. The more Federal, state, and local agencies exact in taxation, the more limited is the scope of pri vate beneficence. And an individ ..

ual gift is much more likely to be well spent than a government grant. So, there is no warrant in logic or morals for trying to place the authority of religion behindmeas ures of social and economic col lectivism. Indeed, there is a much stronger case for arguing that the sense of individual responsibility - which is a key indispensable fac tor. in making it possible for the individual to distinguish between right and wrong - is best assured under a system· in which the hu man being is mainly committed to his own care and required to make his own decisions, instead of be ing shaped and molded in line with some scheme of bureaucratic plan ners. Misinterpretation of Biblical Reference to "Brother's Keeper" It has been said that the devil can quote Scripture. And a Bibli cal reference that is often used completely out of context, and for collectivist ends, is the reference in Genesis to "my brother's keep Qr." Th(!l'(!is 9. widespread attempt to twist Cain's reply, "Am I my brother's Keeper?" when Jehovah interrogates him about the where abouts of his brother Abel, as a divine inj uction on all human beings to play the role of "broth er's keepers"; that is, to assume responsibility for and, by implica tion, direction of enormous num bers of strangers, from riotous juvenile delinquents at home to feuding cannibals in the Congo.

It should be noted that the use of the phrase in Genesis carries no such implication. "Am I my brother's keeper?" is not a divine injunction for all human beings. It is the guilty Cain, taking the Fifth Amendment when charged with murder. And the whole idea of men and nations playing in re lation to each other the role of "brother's keeper" carries more than a little suggestion of con descension, even of insult. Among the dictionary definitions of the verb "keep" are "guard," "man age," "conduct," "detain," "con fine" - a rather ominous series of connotations. A "keeper" may be 42 THE FREEMAN February a warden in a prison, a supervisor of animals in a zoo. A person of spirit and inde pendence would give the rough edge of his tongue to anyone who tried to play the role of "keeper" by intruding into the concerns of his private life. And this is just as true for nations as for men. There is something naive in the surprised distress with which some Americans receive the not infrequent news that a mob in the capital of some country which has been on the handout list for for eign aid has pulled down the American flag or smashed the handsome quarters of the United States information agency.

foreign Aid Resented Behind such episodes is often an element of communist instiga tion. But this is by no means the whole story. Noma tter how poor a people may be, they have an in stinctive revulsion against the idea of being "kept" by another. Here is one psychological explana tion of why American aid has so often been met by brickbats, not bouquets. Another irritant is the large number of Americans in diplomatic and related establish ments and the visibly lavish style in which they live. The poorer and more undeveloped the country eco nomically, the more noticeable is this sort of thing. There has been much anguished discussion, with the aid of high powered psychology and opinion polls, of the question why Ameri cans are not better liked abroad. One of the reasons, beyond reas onable doubt, is America's self assumed role as "brother's keep er" for a vast number of peoples in foreign lands, many with pro foundly different traditions, cul tures, tastes, and habits. Even the most tactfully proffered advice can easily be resented as intru sion and interference; and the sudden injection of large numbers of free-spending Americans has sometimes created awkward fi nancial and trade problems.

Looking back to the far-off days when the political systems and the economies of distant lands in Asia, Africa, and Latin America were regarded as the concern of the na tives of these lands, when govern ment-to-government grants were unknown, when Americans were content to invest and do business in countries where they were wel come and to stay away from those where they were not, when the United States government consid ered its first task as protecting the security and legitimate inter: ests of its citizens abroad, one wonders whether Americans were not just as well or perhaps better liked when their government was not trying to play beneficent Big 1965 IS GOD A KEYNESIAN? 43 Brother to the rest of the world. And behind this lies still another question. Is it so important to be a win ner in an international popularity contest? In the age of Britain's greatest international power and prestige, in the nineteenth cen tury' there is no evidence that the British government or individual traveling Britons cared very much about the "national image"

or attached undue importance to the question whether they were liked or not. Perhaps respect is a more rea sonable and feasible goal than liking, which is sometimes least achieved when most pursued. No doubt many individual Americans have won esteem for themselves and, incidentally, for their country by striking out as pioneers of some new project in economic develop ment, or health, or education in a foreign country. But there is pre cious little indication that the bureaucrats who shovel out foreign aid have won a place in the hearts of the natives of the countries to which they have been assigned. The "brother's keeper" philoso phy, with. its false interpretation of Scripture, is just as inapplic able in dealings between individ uals as in relations between na tions. Meddlers in other people's affairs, however good their inten tions, seldom win much thanks for their pains. Sometimes the theory of collective responsibility is car ried to truly absurd lengths.

It was by no means uncommon, after the assassination of Presi dent Kennedy, for orators in and out of pulpits to put forward the idea that the whole American peo ple was responsible for this trag edy. This is sheer nonsense. Ac cording to all the evidence collected by painstaking search of a govern ment commission, supplemented by the private investigations of many journalists and publicists, a single unbalanced person conceived and executed the assassination, without accomplices, without instigation. How, in the name of reason and common sense, can the whole American people be regarded as participants in the demented act of this person? More Harm than Good Throughout history the efforts of religious spokesmen to take sides and pronounce judgments on secular political and economic is sues has probably wrought more harm than good. It is the primary function of religion to elevate the soul and improve the conduct of the individuals who respond to its teachings. There is no reason to assume that there is a divine sanc tion for Keynesian or other forms of collectivist economics.

And an international society of 44 THE FREEMAN February individual, self-respecting peoples and a national society of inde pendent, self-reliant individuals, who would vigorously resent the idea that anyone had the right to act as their "keepers," are far more attractive than the idea of some individuals and some nations assuming the impossible and un desirable burden of minding everyone else's business. No hu man being, no people worthy of its salt, has the slightest desire to submit to the ministrations, how ever benevolent in design, of a self-appointed "keeper." ~ $48,000 PAUL L. POIROT IT WAS a receipted bill for electri cal service rendered in 1907 by the Edison Light and Power Com pany to a customer in Wichita, Kansas. The bill was for $7.00, for a month's service - for only 14 kilowatt-hours of electricity. (Col lection must have been something ofa problem in those days, because the bill specified: "Less 20 per cent if paid before the 10th of the month.") The bill was made out on a postal card, the other side of which bore the one-cent stamp that paid for its delivery across town.

In the 58 years since 1907, the postage rate has risen to 4 cents a card - 400 per cent of what it was then; whereas, the price for electricity has steadily declined from 50 cents per kwh to 2 cents now - 4 per cent of what it was then. An average American home to day, if fully electrified with air conditioning and heating, would use about 24,000 kwh annually, costing $480. At the 1907 rate, that cost would be $12,000; and if kwh prices had behaved as has the price for delivering a post card, 1965 $48,000 ! 45 the electrical bill would be $48,000 annually. Except, that no one would use electrical appliances! One may .speculate as to what those respective rates might be today had the situations been re versed, with a government monop oly of electrical service, and a free enterprise postal service! How much profit was earned over the years by the Edison Light and Power Company and its suc cessors in Wichita is unknown to us, but we do know that within a recent period of years while the Post Office was accumulating a deficit of $10 billion, its largest competitor in the communications field, the privately owned Ameri can Telephone and Telegraph, showed $22 billion in profits - des pite the fact that the rates it could charge for phone service were regulated and controlled by the Federal Communications Com mission.

The comparative performance of governmental and private enter prise, even when both are subject to price control, is further illus trated in adjoining news items from the front page of The Wall Street Journal of November 27, 1964: In view of all the talk about protecting consumers, the record suggests that private enterprise is a better caretaker than the gov ernment. ~ (Reprints available at 2 cents each.) FROM EDEN TO PARADISE Choice versus Compulsion • DEAN BANKS OUT of the civil rights and related issues emerges that old problem 'which has haunt ed civilized man ever since his cu riosity got the upper hand in Eden. By what force, he keeps asking himself, will the desires and activities of men be governed? Must all human behavior fall under the rule of law, or can there be a functional division between "law" and "mor al duty"- between established le gal procedure, which demands compliance with basic social ideals, 1 Throughout this study, "moral-legal"

and "voluntary-compulsory" are used interchangeably. Since some philosophers delight in pointing out that man is "free" to obey or disobey law, moral or voluntary obligation will always refer to a course of action solely dependent upon the individual will and involving no penalty except that admitted by the individual. Mr. Banks has taught American history at Oklahoma State University and presently is a freelance writer. 46 and individual sense of moral obli gation, which persuades one to comply with general principles of humanity?! Apparently, the problem of vol untary-versus-compulsory social duty has been the basic issue of all the great "revolutions" of the past, whether the birth of Chris tianity, the Renaissance, Reforma tion, French Revolution of 1789, or, in its earliest stages, the Rus sian upheaval of the early twen tieth century. Always, one question headlined the tattered banner of progressive humanity: What is the ideal relationship between in dividual freedom and legal order?

A definitive answer will be pro vided only when mankind com pletes the long journey from Eden to Paradise, that beautiful land void of apples and crafty reptiles which cause so much human im perfection. Here on earth, most societies have succeeded only in establishing some kind of balance between the extremes of voluntary and compulsory activity. The "bal1965 FROM EDEN TO PARADISE 47 ancer" in this society is the Con stitution, a fundamental guideline which embodies the universal ideals of moral behavior while prescribing limitations on the le gal enforcement of those ideals. This is the Constitutional order of the "free society," a functional compromise between choice and force. Moral Responsibility and Restraint Though the word "free" is ha bitually used to describe the vol untary character of our national organization, there certainly is nothing free about maintenance of the existing Constitutional bal ance. The free society's normal ap petite for human sacrifice would stun even the old pagan gods.

Heading the list of sacrificial de mands are two essentials which members of this society must con stantly place afresh on the altar of sustenance: fulfillment - rather than evasion - of moral respon sibility, and moral restraint based on awareness of moral-legal dis tinctions. Concerning fulfillment of moral duty, it is apparent that a free society cannot exist apart from the humanitarian spirit which sustains it; the history of all civ ilization underscores this fact. Only through a sense of moral obligation can men live in har mony outside the restraint of law. As a nation's moral fiber begins to rot, men become something less than human, and this inevitably results in an ever-increasing will ingness to employ additional law as a remedy for such social "de fects." In the free society, exten sion of law is directly proportional to diminishing morality. Moral restraint, the second basic demand of Constitutional order, implies little more than recogni tion of moral limitations. Not hav ing reached Paradise, mankind still falls short of angelic perfec tion, and therefore social order remains somewhat defective - it does not live up to our moral ideals. Men may, however, over look this fact when possessed by unrestrained humani tarian fervor.

When this happens, moral dedica tion becomes just as destructive as moral laxity, for invariably pas sion obscures the vital difference between moral responsibility and moral influence for remedial legis lation. Thus, the fiber which re strains law may snap from stress as well as decay - the results are identical. Today, it seems that both stress and decay are threatening to tip the scales in favor of ever-expand ing legislation of social duty - at the expense of previous choice. On one hand are unrestrained forces which seek perfectionist reforms. "The outdated legal limitations 48 THE FREEMAN February must be removed," they seem to be saying. "Progress demands a new order capable of satisfying all hu man need. It is right; society must do it - now." These idealistic voices belong to authoritative sec ular and "religious'" equalitarians, men in positions of leadership who apparently have dedicated them selves to legislating Paradise on earth. Part of the problem before us, then, is the examination of the equalitarian leadership and its re sponse to the two basic demands of the free society, but this takes care of only half the task. The light of inquisition should be placed also on the "grass roots,"

to examine the role of the individ ual in upsetting or maintaining the moral-legal balance. Even a brief study of this sort may dis close which is the greater villain - passionate leadership or passive individual. Most likely, it will be a tossup. Secular Equalitarians Consider first the secular equal itarian, a person whose frustrated desire for human perfection finally leads him to believe that society, like a machine, may actually be regulated to assure absolute preci sion. Possessed by fervent desire to cure society of its malady, chaotic individualism, this ideal ist disowns the moral, voluntary spirit of social organization and resorts to uninhibited legislative, promiscuity. It is not difficult to understand this lack of respect toward Consti tutional order, for the equalitarian thesis clearly rests on one assump tion: outside of legal regimenta tion, there can exist only irres ponsible, inhuman individualism.

Law is the great and simple equal izer with which egoistic men and women - the gears and springs may be assigned a "human," im personal role in the great social machine. Whether intentionally or unconsciously, the secular equal itarian assumes the role of a ma terialistically divine creator who suggests, "Let us re-create man in our own image. Let us legislate Paradise on earth. Progress de mands it."2 The Church in Polities As stated previously, the secular perfectionist shares his utopian aspirations with another, vastly influential force, official represent atives of most churches. Though this is nothing new, only recently 2 The liberal-equalitarian concept of "progress" is an essential part of the moral-legal question, but cannot be dealt with in this brief study. Always, "progress," "the march of events," "the mainstream of history," and so forth are used to justify reform, but search in vain for definitions of these slogans (e.g., see J. K. Galbraith's The Affluent Society. N. Y.: Mentor Books, 1963, p.

21ff.) .

1965 FROM EDEN TO PARADISE 49 has the secular-religious romance grown so ardent that it presents an immediate threat to the free society. As one Texas preacher ex claimed to this writer last summer, "Looks as though we'll have to start asking God to protect the state from the church, since we have no antitrust laws to forbid collective church influence on so cial legislation." He referred, of course, to the decisive role of the church in pushing the Civil Rights Act through Congress. The min ister, like many others in all church bodies, was quite concerned about the "religious" tendency toward converting moral responsi bility into legal compulsion -'- some call it "legislating morality." And, to repeat the point, that is the danger of the equalitarian coali tion, a joint venture into secular religious idealism which can sweep aside existing legal limitations. Without church support, there could be no hope for success; but, the church seems eager and frighteningly able.

"Religions are many, reason one" - this observation by the well-known philosopher, George Santayana, catches the full flavor of current "religious" psychology.3 Today, religious bodies are search3 See George Santayana, The Life of Reason (N. Y.: Charles Scribner's Sons, 1953), p. 181 ff. This is the one-volume edition. ing for common ground, the most common point of identification, around which they may reason together. The camp meeting has settled down on social grounds, a nonspiritual realm void of theo logical differences, and social re form has become the cause celebre of the united religious establish ment. If such reforms were to be accomplished through increased religious-moral dedication, we could all rejoice and sing praises to a reborn church. But, regret fully, there is no reason for such elation. Secularized Religiosity or Rational Morality The church conciliatory move ment results primarily from pro gressive theological "moderniza tion," which erases fundamental spiritual differences that naturally create disunity among religious bodies. Church modernization has thus produced a secularized religi osity or,as Santayana called it, "rational morality."4 At the same time, the church retains its spirit ually derived vision of Paradise and projects it onto society. The 4 "Undoubtedly the principle of ra tional morality is utterly independent of each and all religion, and rather in imical-to any special gospel; because rational morality coordinates all inter ests •..." George Santayana, Domina tions and Powers . .. (N. Y.: Charles Scribner's Sons, 1951), p. 155.

50 THE FREEMAN February result might be called "the politi cal gospel." Emphasizing the similarity be tween religious and social ideal ism, Santayana stated that politi cal guidance is the natural role of "a systematic religion." Perfection of society, he said, "is precisely what wise legislation and good government profess to do: so that the spheres of systematic religion and of politics, far from being in dependent or incommensurable, are in principle identical."5 So, it seems almost natural that re ligion unshackled from spiritual purpose would tend to become a political force, rather than an in fluence for voluntary, moral ap plication. In any religious mind, Paradise and social perfection occupy simi lar planes of thought; absolute so cial harmony corresponds with the heavenly ideal. Therefore, the im portant distinction between spirit ually oriented religion and religion of the rational variety lies not in the desire for human perfection, but in the manner in which per fection will be attained. In secu larized religion, the earth-godly power of law replaces spiritual force as the regenerator of im perfect man. The state displaces God. The Son becomes only a source of Christian ethics accord5 Santayana, Dominations and Powers, p.163.

ing to which society is to be gov erned. The evil fruits of human individualism wither away under the influence of law, an imper sonal force which remolds disrup tive personal will. 6 Certainly no one should be too surprised to find "modern" church spokesmen col laborating with the secular equal itarian leadership; with the spirit ual quali ty removed, both stand exposed as dedicated social ideal ists. 7 6 It is difficult to ignore the similari ties between this thinking and that of Marx - the general ideas merge into one predominant thought: through com pulsion, human nature can be "per fected." In a fairly recent study, Harold J. Blackham provides an interesting summary of "theocrats" who seek to stabilize society (eradicate individual will) through impersonal law (Harold J. Blackham, Political Discipline in a Free Society. London: George Allen & Unwin Ltd., 1961). 7 In contrast to the modern church, fundamental Christianity profits from Scriptural knowledge of human nature and seeks perfection only in Paradise.

Fundamentalist churchmen quite defi nitely reject physical compulsion as an instrument of Christian attainment this has been the case ever since Chris tianity, the "law" of example and per suasion, replaced the physically compul sory Mosaic law. Dietrich Bonhoeffer (the controversial German Lutheran theolo gian executed by the Nazis at Flossenbiirg) exemplified the fundamentalist attitude by calling on the church to leave its shell and respond to the problems of this world. Throughout his writings, Bonhoeffer pleads for the church to do one thing: witness for Christ through personal example and persuasion. He specifically rejects church politics and 1965 FROM EDEN TO PARADISE 51 A Duty of Leadership In a society founded on concepts of popular government, however, leadership's primary duty is to promote a sense of reality, as well as humanitarian idealism. Its main functions are to cultivate individual moral and legal re sponsibility and to remain loyal, itself, to the fundamental law of social organization. The two tasks are equally important; both can be unbearably frustrating to men who cannot discipline themselves to acknowledge human imperfec tion. The responsible leader sup presses the urge to discharge moral responsibility through the catharsis of legislation, and thus preserves that most important vir tue of authority - moral restraint.

Through its example, leader ship testifies that Constitutional order can be maintained through moral dedication to the principles of humanity and personal applica tion to the political business of self-government. On the individ ual's voluntary assumption of both responsibilities rests the fu ture; and whether or not the in dividual meets the demand will depend largely on the example of leadership. Doctor Harold Bosley, the idea that social progress and the "Kingdom of God" are related (See the authoritative analysis of Bonhoeffer's works: Martin E. Marty, ed., The Place of BonhoefJer ... N. Y.: The Associa tion Press, 1962). former Duke Divinity School dean and now pastor of Christ Church, New York City, emphasized this point at a Methodist conference last July. Because the churches, the government, and other groups tend to "shrink back from direct involvement," Doctor Bosley said, the Civil Rights Act and the 1954 Supreme Court school decision were enacted. 8 When moral lead ership begins to ebb, expect a legislative flow.

Undisciplined Human Nature An old rule of human behavior indicates that a person will usual ly tend to abandon a duty which someone else tries to assume for him. Another ancient principle suggests that authority, secular or religious, has an intrinsic dis position toward assuming the "burdens" of others. These two fundamental truths point out the central problem of any hierarchi cal system. The desire to lift re sponsibility from the stooped shoulders of those in the lower ranks may arise from lust for power or from human compassion; but whatever its origin, it is des tructive if it enables individuals to escape basic moral and politi cal responsibilities. Undisciplined human nature seems to abide by one rule: It is 8 The Houston (Texas) Post, July 4, 1964.

52 THE FREEMAN February easier to receive than to give. So, with this reality in mind, author ity has to remain alert to the task of cultivating Constitutional dis cipline, rather than undermining it through unrestrained pater nalism. As Walter Lippmann once stated, only when men have "learned the grammar of consti tutionalism'" acquired it as "in tuitive habit" and "the normal idiom of... behavior," will the full promise of liberty be realized. 9 Though secular and religious leadership has a major role in nourishing the free society, its efforts are almost entirely depen dent on the individual's ability to sense his responsibility and act to fulfill it. It is a mistake to re gard either of these responses as natural or automa tic; neither the feeling of obligation nor the execu tion of duty is naturally conven ient or enjoyable. In a prosperous nation, moral duty can become little more than a hindrance to the pursuit of im mediate profit and pleasure -thus, as in the case of leadership, moral ity is frequently and conveniently 9 Walter Lippmann, An Inquiry into the Principles of the Good Society (Bos ton: Little, Brown & Co., 1943), p. 343.

Lippmann emphasizes throughout his work the vital importance of moral re sponsibility in social organization. The Good Society and a later work, The Public Philosophy (1955), are strongly recommended for those interested in a depth study of the problem. discharged through legislation. Santayana provides a good explan ation of this moral-legal conver sion by stating that "people al ways do as they like; but while they are believers, they must con fess that they have sinned; where as by the easy method of discard ing their faith, they can have their fun and call themselves virtu OUS."lO Taking the Easy Way Though Santayana refers to religious responsibility, the same psychology applies to the purely moral realm: a person may think that he can discharge moral duty through law, and thereby satisfy his conscience. The beauty of the method is its efficacy in relieving the individual of the physical me chanics of moral duty. The final result, as Santayana points out, will be a complete loss of con science (faith).

What a person cannot accom plish through self-discipline or moral strength, he may assuredly achieve through law. It is always easier to command than to per suade, whether the object of atten tion is oneself or another; so, to the individual of conscience living in the modern society, the end (rather than the means) becomes 10 George Santayana, Dominations and Powers, p. 153.

1965 FROM EDEN TO PARADISE 53 of utmost importance. Having satisfied conscience through law, the timesaving instrument of "ac complishment," the shirker goes about reveling in the irrespons ible freedom of being free. This attitude represents the new ma terialistic individualism of this age, a doctrine of self-service that steadily slashes away at the moral fiber binding that impatient de vourer of human freedom. What has produced this attitude? How can it be changed? These are dif ficult questions, but some answers are clear enough. Man and His Attitudes Material prosperity has often been blamed for corrupting man's moral character, but this seems quite unbelievable. To say that material objects produce human attitudes is simply to excuse men of responsibility for those atti tudes. No, the corrupting influence lies in the individual's inability or unwillingness to evaluate the pre vailing ideologies which permeate his social, economic, and political life, particularly the equalitarian ideology of "individual freedom."

The liberal-equalitarian declares that progress follows man's inner urge to free himself from the shackles of exploitation. Always, the emphasis is placed on man as a creature struggling for his "rights" - and never his responsibilities. By its unrestrained, hyp notizing chant of "Rights! Rights! Rights!" the collectivist leadership has, indeed, given im petus to the loosening of human shackles: it has helped snap those fragile chains of moral responsi bility which link individual men to civilized humanity. This is the nature of equalitarian "freedom," an ideology of rampant idealism which worships the god of imme diate satisfaction. The sole respon sibility for evaluating such short sighted doctrines belongs to the individual. If he is unable to do so, he must strive to educate him self so that he can; if he is un willing, ... Responsibility, unlike instinc tive pursuit of pleasure, proceeds from inner conflict, fought on a battleground stretching from man's brain to his soul. From this individual struggle emerges a sense of values expressed through physical activity. To the spiritual ly motivated person, the source of values is, as Bonhoeffer expressed it so well, the Christian mani festation, a timeless example of men rising above instinct and tak ing up their crosses of spiritual and earthly responsibility.

The individual lacking spiritual impulse toward moral duty must, it seems, derive his values through human reason. Only as he does this can he call himself a free man, 54 THE FREEMAN February as Spinoza emphasized a few de cades ago. "The freer we conceived man to be," the great rationalist philosopher wrote, "the more we should be forced to maintain that he must of necessity preserve his existence and be in possession of his senses . . . . And so man can by no means be called free because he is able not to exist or not to use his reason, but only in so far as he preserves the power of existing and operating according to the laws of human nature."ll General ly, Spinoza argues that freedom exists for the individual only when he strives to derive a code of hu man conduct (basic values) from the experiences of civilized man. Strangely enough, this is the proc ess by which the existing Consti tutional order was established.

Resolution Plus Action Individual responsibility, how ever, involves not only reference to the experiences of man, but also mental application in projecting future consequences of personal attitudes and activities. When the individual does this, he al ways arrives at one conclusion: Freedom of action becomes a last ing value, rather than raw enjoy ment, only as a person resolves to 11 Benedict De Spinoza, Writings on Political Philosophy, ed. A. G. Balz (N. Y.: Appleton-Century Co., Inc., 1937), p. 88. secure it and then works to do so. Mere enjoyment of freedom re quires no human intelligence even a coyote can run freely across the meadow and joyfully bark at the moon. It does, however, take the human quality to recognize that fu ture liberties rest on established order and that such order must be maintained by moral, human ap plication. The free society will thrive as its moral fiber is strengthened, and moral sensitivity will spread and intensify as the individual learns to function as a responsible social being. This requires per sonal inventory of human nature, accomplished through reference to the humanities and social sci ences. A person's concern for things outside himself seems to increase in proportion to his awareness of the world in which he exists, and this comes through knowledge. Knowledge alone, how ever, provides only a base for re sponsiveness; it never transforms an individual into a responsible human being.

A person must acquire pro ficiency in the fine art of critical thinking, he must be capable of evaluating knowledge in relation to himself. Out of centuries of human experience, the individual has to "find himself," see himself as he stands in comparison with the lasting values of civilization.

1965 FROM EDEN TO PARADISE 55 Then, he is able to determine his own values and purposes in life. Through this process, man de velops respect for himself as a hu man being, and this sense of self respect or self-approval encour ages him to display his human, moral quali ties - thus, the human "conscience" rejoices over its hu manity. "The strength of self-govern ment and the motive power of progress must be found in the characters of the individual citi zens who make up a nation."12 In 12 Elihu Root, "Experiments in Gov ernment," 1913 - a lecture delivered while Root was a Republican Senator this free society, such individual character rests on a deep sense of moral duty and a clear recogni tion of the Constitutional division between moral persuasion and le gal compulsion. Such character ac knowledges, regretfully, that there is no short cut between Eden and Paradise. ~ from New York. The great jurist and former Secretary of State under T.

Roosevelt was warning against a too rapid pace of reform. The most acces sible copy of the lecture (a partial text including the quotation above) is in cluded in the following collection of documents: Richard Hofstadter, Great Issues in American History, vol. II (N. Y.: Vintage Books, 1958), pp.283-85. DEAN RUSSELL IT IS mathematically impossible for everyone to "get his money back" under our social security program. The total group of par ticipants must necessarily get back less than they pay in. Here's why: All of the costs of administering the program are, by law, supposed to be paid by the participants. Re gardless of the amount of these administra tive costs deducted by Dr. Russell is a member of the staff of the Foundation for Economic Education. government from the "premiums" paid in, it is certain that the same money cannot be paid back to the "policy holders." That's why it is impossible for all of the partici pants to get back as many dollars as all of the participants pay in.

Various individuals will unques tionably gain, especially those who get there first. But the group as a whole must unquestionably lose, especially the young people who are now compelled to pay for the 56 THE FREEMAN February next 30 or 40 years. There just isn't any way to avoid this "group loss" when the costs of adminis tering the program can be met only from the money paid in by the group. As a contrast, this is not true in the case of retirement income pol icies sold by private insurance companies. The premiums on real insurance offered by most private companies are keyed to an expect ed return from invested funds. Since these funds can be used for productive purposes, various com panies and persons are quite will ing to pay for them. Thus, private insurance companies can (and usually do) pay back to everyone more than everyone pays in; the participants as a group can all win.

The fund a Bookkeeping Entry When our government officials tell us that our social security funds are (like private insurance premiums) also invested and earn a return of three per cent, you might laugh - or perhaps cry. For the so-called "social security fund" is strictly nominal, since it amounts to less than one per cent of today's accrued liability. Even then, this woefully inadequate fund is "invested" by government in the government's own bonds. The interest that the government "earns" from its investment necessarily comes from you and me in the form of more taxes; there is no other place it can come from. That is why the government's so cial security scheme was mathe matically and necessarily bank rupt from its inception; it was (and is) merely a political mech anism designed for persons who can be lulled into believing that the police power of government is the proper moral and financial base on which to build a sound retirement program.

The harsh reality of our finan cially and morally unsound social security program must be faced sooner or later; if not by our gen eration, then by our children and grandchildren. True. enough, in creases in premiums (up to some unknown point) can probably post pone the eventual collapse and the revolution that may follow it. In creased inflation can also be used by government to prolong the life of that unsound scheme. But our social security program must col lapse eventually, since it is found ed on continuing and automatic losses for the participants as a group. Check the Mathematics Finally, have I based my argu ment on sound mathematical rea soning ? Well, I think so, but I must admit that it was once chal lenged by a professor of econom1965 WHY SOCIAL SECURITY MUST FAIL 57 ics. He pointed out that all tax payers are compelled to pay in terest on the government's debt, including the interest on those bonds in the social security fund.

But not all of the "interest pay ers" draw social security. Further, some taxpayers pay a greater part of the interest than do other tax payers. Therefore, the professor deduced, it is theoretically and mathematically possible for the social security fund to pay back to all of the participants more dollars than they pay in. "Now what do you say to that?" he chal lenged me. Two things. First, the interest income from those bonds· amounts to no more than 4 per cent of total social security benefit payments at present. And this amount will necessarily diminish in signifi cance as the accrued liabilities further mount and the "fund" de clines. Let's arbitrarily assume that one-half of that amount (2 per cent of current payments) comes from the taxes of nonpartic ipants in the social security pro gram, and that the other half is paid by the participants them selves. Now by the same measure ment, what is the total govern mental cost for administering both the bond program and the social security program? Noone knows, including the administrators. But surely it is at least 10 per cent.

And based on the inherent inef ficiencies of governmental opera tions, it could run as high as 25 per cent, if all costs (including al ternate opportunity and such) were properly included. That would mean an automatic loss of at least 8 per cent (probably much more) to the social security par ticipants as a group. Second, let us assume for the moment (incorrectly) that it is theoretically possible to make the social security program work mathematically by seizing income from some persons and giving it to other persons. Only a depraved people could knowingly and will ingly endorse such a cynical scheme. And when a nation's peo ple sink to that low moral level, the mathematics of the situation becomes relatively unimportant. ~ Self-Insured THE GREATEST SECURITY a person can have comes from within himself, not from the outside. Nothing anyone can do for you can begin to match what you can do for yourself.

SAMUEL GOLDWYN WILLIAM H. PETERSON THE IDEA that the public sector of our economy is being "starved" while the private sector is becom ing more "affluent" is gaining popularity in the United States. Perhaps the most famous disciple of this idea is Professor John Ken neth Galbraith. In his book, The Affluent Society, 1 he stated: "The community is afHuent in privately produced goods. It is poor in public services. The ob vious solution is to tax the former and provide the latter - by mak ing private goods more expensive, public goods are made more abundant. " Yet jn 1927 the tax and other governmental revenue take of the net national product by local, state, and Federal authorities came to but 13.8 per cent, and in 1961 the 1 Houghton, Mifflin, 1958, p. 315. This article is extracted by permission from the pamphlet, "The Private Sector and the Public Sector," published May, 1964, by the Intercollegiate Society of Individualists, Inc.

At the time of the writing Dr. Peterson was professor of economics at New York University. 58 take had risen to 34.4 per cent, and today it is higher still. The following table measures the growth of the public sector in terms of the tax and other govern mental revenue take by Federal, state, and local authorities as a per cent of net national product. GOVERNMENTALREVENUES 1902·1961 Total Per cent Fiscal Revenue of Net Years (Millions) National Product 1902 $1,694 9.0 1913 2,980 8.9 1922 9,322 14.0 1927 12,191 13.8 1932 10,289 17.3 1936 13,588 19.3 1940 17,804 20.3 1944 64,778 34.0 1946 61,532 30.7 1950 66,680 27.1 1952 100,245 31.8 1956 119,651 31.8 1958 130,403 32.4 1960 153,102 33.9 1961 158,741 34.4 SOURCE: U. S. Bureau of the Census, Histor ical Summary of Governmental Fi nances in the U. S., 1957; U. S. Bu reau of the Census, Governmental Finances in 1961, 1962; Survey of Current Business. November, 1962.

1965 THE INDIVIDUAL AND THE STATE 59 But even the bare statistics of the heavy increase in the financial magnitude of the public sector, sometimes called the "starved" public sector, do not imply enough about the growing role of the state in our lives. For the public sector intervenes in a million and one otherwise private decisions. Consider, for example, the per vasiveness of the Federal income tax - or should I say loophole mentality in our day-to-day lives. Thus, coupled to the common mod ern dilemmas of how many cal ories, and where do I park, nowa days Americans also have to con front the problem: Is it deduct ible? Many Forms of Control Still, taxation is but one part of state intervention. For under state power, rents will be controlled, cof fee burned, cotton propped, for eign competition subsidized, the underdeveloped world aided in perpetuity, wages raised by fiat, tariffs erected, trade made "fair,"

currency inflated, farmers paid not to farm, prices fixed, and mergers forbidden. Little wonder then that in his Revolt of the Masses, the Spanish philosopher Ortega y Gasset wrote: 2 "This is the greatest change that today threatens civili zation: State intervention-the ab2 Norton, 1932, pp. 120-121. sorption of all spontaneous social action by the State ... Society will have to live for the State, man for the governmental machine. And as, after all, it is only a machine whose existence and maintenance depend on the vital supports around it, the State, after sucking out the very marrow of society, will be left bloodless, a skeleton, dead with that rusty death of ma chinery, more gruesome than the death of a living organism." Of course, some public officials argue the larger the public sector the better. In a Presidential talk we were asked to consider how public expenditures "help deter mine the level of activity in the entire American economy." Ac cording to this line of reasoning, the more the government spends, the more activity it creates in the economy, the richer we all become.

One rub to this line of reasoning, however, is that government has no spending money other than that which it taxes or borrows from its people. To be sure, the Keynesian economist may point to the pos sibility of deficit financing - of spending without equivalent taxa tion. This deficit finance, though, when based on a permanently ex panding bank-financed public debt, can only be maintained through the printing press - through in flation - through this hidden and highly regressive tax upon the 60 THE FREEMAN February people. Hence, either one way or the other, the people are taxed; government has no source, has no resources, other than those it ap propriates from the people. This is the irony of those ad vocates of a larger public sector; they would pile greater debt on our already debt-ridden economy. In 1958, for the first time in his tory, Congress raised the debt limit twice in one year. In 1963 Congress was forced to raise the limit again - and again. The situ ation reminds one of the drunk who asks for but one more for the road and then argues that there are still quite a few more roads to travel. Meanwhile, the Federal government distributes its welfare largesse with a free hand, in effect buying votes with the taxpayer's own money. How much money can be gauged from the fact that the Federal, state, and local govern ments cost the American people $158.7 billion in 1961, or some $900 for each American. This fig~ ure does not include indirect costs for bookkeeping, report-filing, le gal fees,. and accounting and vari ous clerical expenses. Direct bene ficiaries of this spending include some 40 million individuals regu larly receiving monthly govern ment checks. This huge bloc and their families are not likely to ap prove candidates, proposals, or philosophies calling for diminution of the public sector. But this bloc is not alone in securing gov ernment favors. Other blocs in clude beneficiaries of tariffs, de fense contracts, favorable tax rul ings, regulatory privileges, price supports, and the like.

Or as political analyst Samuel Lubell wrote in his The Future of American Politics: 3 "The expansion of government to its present scale has political ized virtually all economic life. The wages being paid most work ers today are political wages, re flecting political pressures rather than anything that might be con sidered the normal working of supply and demand. The prices farmers receive are political prices. The profits business is earning are political profits. The savings people hold have become political savings, since their real value is subject to abrupt depre ciation by political decisions." To sum up, the public sector is a necessary sector. But so too is the private sector. Each depends on the other, but as one expands at a faster rate of growth, the other necessarily shrinks in pro portion. The American dilemma seems to be that the public sector is expanding rapidly without dis cipline, without plan, without the constraint necessary to preserve the private sector - the sector of individual liberty. ~ 3 Doubleday Anchor, 1956, p. 274.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN Freeing Our Economy JOHN DAVENPORT'S The U.S. Econ omy (Regnery, $5) is a short book, but, with the possible exception of Henry Hazlitt's Economics in One Le$son, it packs more wisdom in ~ss space than can be found in any other contemporary essay on the subject. Where else, in so short a com pass, could you find something that: 1. Tells you why the free mar ket, far from being the creation of anarchists, depends on a legal and institutional framework protected by a special type of government that is itself limited by law; 2. Brings Bastiat up to date in showing why the "unplanned" market economy (which is in ac tuality the meshing of a million voluntary plans) is more efficient than any other way of coordinating the energies of men; 3. Explains what profit is, and tells why its appearance or disap pearance is a signal that is indis pensable to the efficient deploy ment of the factors of production; 4. Makes mincemeat of such recent "original" thinkers as Adolf EerIe and John Kenneth Galbraith, who have spawned a new "con ventional wisdom" that fails to make connection with what is nec essary to produce and distribute affluence; 5. Shows us where Keynes was right as well as where he went wrong - and then tells us what befell the American economy of the nineteen thirties when the dis ciples of Keynes mistook the mean ing of what the master had said about the relation of profits to wages; 6. Shows how our farm policies have made the rich farmers richer, the poor farmers poorer, and, for better or worse, have driven thous ands off the land to seek employ ment in the city; 7. Demonstrates the shortsight edness of labor leaders who seek to push wages higher than the natural growth of productivity will support; 8. Moves easily through the tangled thickets of monetary theory, foreign exchange problems, 62 THE FREEMAN February tax policy and governmental spending for the "public sector"?

The answer to the foregoing lengthy question is that nobody in recen t years has let his mind sweep over so wide a horizon and brought back so much in such a pithy manner of writing. The effect, of course, is to make a corresponding pith in a review extremely difficult, for how con dense something that is in itself 190 pages of rigorous condensa tion? One is forced to be arbitrary in picking something out of Mr. Davenport for extended discus sion. I won't attempt to talk about Mr. Davenport's description of the workings of the economy of New York City, for that would be to fracture something that is a little jewel of writing. Maybe the best thing to pull out of Mr. Daven port's pages at this moment is his outline of how the Federal budget could be cut. Some Ways to Save Mr. Davenport would not do anything to hurt our military es tablishment, for he believes that the Communists would not hesi tate to attack us if they thought they could beat us. But he would hack large gobs of expenditures from space exploration and for eign aid. He doesn't see why fami lies who are having trouble send ing children to college should be forced to contribute to "shooting the moon." And, while he would support such outposts of the free world as Formosa and Korea, he would definitely curtail aid to countries that are either inside the Communist camp or are so "neutral" against us that they think nothing of shooting our planes down, wrecking our over seas information libraries, or help ing the pro-Communist forces in Latin America or the Congo.

In agriculture, Mr. Davenport would save the taxpayer $3 to $4 billion a year by following a re sponsible policy of lowering sup ports and eliminating controls. He sees no sense in burdening the great mass of the population with a price-support system which ex tracts $5 billion a year from city folks just to pass most of it along to the top layer of farmers that could get along in an unrigged market anyway. Presumably our agricultural support policy could be changed without really hurting anybody if we would establish a cut-off point, giving aid only to farmers who are below the $5,000 a-year income mark. And this aid could be made contingent upon a willingness on the part of the poor farmer to learn some new trade, or to take part-time employment in decentralized industry. Mr. Davenport doesn't mind it when the Federal government 1965 FREEIN'G OUR ECONOMY 63 dredges the Mississippi River or interests itself in flood control.

But he thinks the budget could be slimmed down if we were to re frain from turning river develop ment into a drive to develop gov ernment-generated electric power. The TVA, which was started to bring flood control and water-gen erated power to the American southeast, is now burning coal to make much of its electricity. The ironic thing is that much of this coal comes from strip mines which rip off topsoil in the general area whose devastated lands the TVA fertilizer was supposed to improve. The elimination of the Federal bulldozer from the scene could save the government another pretty penny. As things have been going, "urban renewal" has been lifting slum populations out of one congested area only to dump them down into another. On two blocks in the center of a city close to my home, urban renewal has driven out at least twenty small busi nesses to replace them with two big department stores, one of them owned by a national chain. Thus, urban renewal abets the growth of monopoly - and the taxpayer helps finance it. Mr. Davenport would let the cities renew them selves by repealing local rent con trol laws (which penalize private builders) , and by eliminating anti quated building codes.

Precious Incentive Mr. Davenport does not try to total up the budget savings that might result from the application of his ideas. But they would surely enable the Federal government to get back into the $80-billion area, which would permit a more ra tional tax policy. The cry would go up that this would be "starv ing" the "public sector." But, as Mr. Davenport suggests, Ameri cans have always been ingenious in taking care of their needs by developing a multiplicity of volun tary means. The U.S. public al ready spends more than $20 bil lion a year for private medical care, and 80 per cent of the popu lation has some form of health in surance. In order to take care of all this, it is important that the medical profession should continue to attract good men. The compul sions involved in the "socializa tion" of medicine, even as mani fested in the proposed Medicare, are hardly likely to lure competent people into the medical schools.

Mr. Davenport was a poet be fore he was an economist, and a philosopher before he was either. He looks at economics in its wider context, as a branch of human ac tion that often competes with other activities for time and en ergy. Because he realizes that economics is shot through with value judgments, Mr. Davenport 64 THE FREEMAN February knows that it cannot be considered apart from ethics, a theory of gov ernment, and even religion. His own bias is in favor of a life de voted to the extension of freedom, but he knows that economic and political institutions are often the prey of people who love power for its own sake. His general aware ness of the whole flow of history keeps his book from being just one more sterile contribution to the sort of science that has been called dismal. ~ So, Be Discouraged! DISCOURAGEMENT is not negative per see The word, says Webster's, means the state of being deprived of courage or con fidence. A truly creative thinker wants to lose the courage to take every course except the right one. He wants to lose con fidence in former ways which are insufficient to meet present needs. He wants to be guided to right action by his failure to find success in wrong actions.

My own experience as a mechanical engineer, after I left college, is a case in point. I was involved with the design of products and equipment that for commercial reasons needed to be patentable. Whatever could be designed after past patterns was of no use. So I learned to rejoice (literally) whenever I came across an obstacle that nothing extant could overcome an obstacle that completely discouraged the use of past patterns of design. I knew if I could design around that obstacle I would in all likelihood have a patentable product. "Therefore," said Paul, "I take pleasure in infirmities, ... for when I am weak then am I strong." ROBERT DOLLING WELLS, in The New Individualist Newsletter, No. 22 The Frontier Is Freedom • A Moral Code for Rational Man . Light Brings Forth the Eye 59 62 Paul L. Poirot 3 William Henry Chamberlin 9 Karl Brandt 12 Edmund A. Opitz 22 John C. Sparks 30 Leonard E. Read 34 C/ar-ence B. Carson 40 Edward P. Coleson 54 John Chamberlain 1965MARCH Nor Oysters from the Desert Sands .

Books: I'll Respect Your Life The Failure of International Commodity Agreements. Winner Take All . The Flight from Reality 6. An American Dream liThe Great Society" Other Books .

FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Earnings for 1964 paid at 4.9% per year. MAIN OFFICE 9th & Hill, los Angeles SAVE-BY-MAIL-We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California lit' Are we expecting to reap the bless ings of freedom without understand ing the necessary procedures to earn them? p. 3 lit' When Henry Hazlitt digs at The Foundations of Morality, the result seems worthy of more than one review p. 9 lit' A world renowned student of agri cUltural affairs relates the failures of International Commodity Agreements to the disastrous domestic attempts at political management of farmers ................p. 12 ,II'" When the principles of limited gov ernment are forgotten or ignored, then majority rule quickly degenerates into a desperate game of "winner take all." p. 22 lit' From a slightly different angle, John Sparks views the same problem of departure from principle and cau tions the reader to abide by the nature of things p. 30 lit' Our mass myopia, according to Leonard Read, may have reached the sad state where a cure is to be found only as we develop new eyes - new insight and understanding of freedom ................p.34 IIfI# Dr. Carson, in this chapter, shows how The Flight from Reality reached our shores and was converted into an American dream of utopia ........p. 40 II'" To those who deplore the vanishing frontier, Professor Coleson proposes that freedom alone is a frontier worth exploring p. 54 II'" John Chamberlain examines The Great Society as projected by Graham Wallas in 1914 p. 59 II'" Robert Thornton is fascinated by The Mind and Art of Albert Jay Nock, in the new book by Robert M.

Crunden p. 63 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

MARCH 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.3 President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except "The Flight from Reality" and "A Moral Code for Rational Man." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

PAUL L. POIROT IF A PERSON were to say to you, "I'll respect your life, if you'll re spectmine," you might hastily react with, "Fair enough," and 'let it go. But the chances are that, after a moment's reflection, you'd begin to wonder what kind of a nut he is or just what he had in mind. Did he think you were about to attack him? Doesn't he trust you? Or, had he been thinking about attacking you? Perhaps he was trying to throw you off guard before launching his attack? That he would even think of offering such a proposition certainly places him under a cloud of suspicion! You might expect a child to thus bargain over whether to be good or not, but an adult ... ? What you really would be say 'ing to yourself, through such re flections, is that respect for life doesn't begin that way, as a deal between persons involved. Someone has to begin, and the begin ning consists of the unconditional, unilateral decision: "I'll respect your life, and all life." This is an act of faith, faith that others will respond in kind to one's ronduct toward them.

Respect for private property had its beginning in that same way, when someone decided; "I'll not steal." The idea never could have come to fruition had the proposition been: "If you'll not steal from me, I'll not steal from you." Someone, all by himself, had to begin not stealing, as an act of respect for his fellow man and an act of self-respect, self-confidence, self-responsibility. Yes, the personal practice of freedom begins at home, with the individual. It begins with the uni lateral, unconditional behavior of a person with a highly developed sense of moral responsibility, a 3 4 THE FREEMAN March sense of self-responsibility that grows out of self-respect. This must be the message of the admonition to love one's neighbor as oneself. A truly self-respecting individual sees the wisdom of re specting others, voluntarily and unconditionally acting toward them as he hopes they may react toward him, whether or not they have so acted in the past or agreed to act in the future.

The religious or moral case for the practice of the Golden Rule ought to be sufficient, but the practice also is sound from a strictly utilitarian point of view. It pays to respect the dignity of others and their rights to prop erty. A very wealthy businessman once expressed the wish that everyone in the world might be wealthier than he. His point was that his services would be in even greater demand in such a society so blessed with riches. And the point would stand, whether a man has accumulated vast savings of his own, or not. In any event, whether wealthy or poor, it would be to his advantage to respect the property rights of all to whom he might hope to sell his own goods and services. Their property is all they have to offer him in exchange. And unless private property rights are recognized and mutually re spected among men, there is no chance for the easy way of earning a living through specialization and voluntary exchange. It would be impossible to accumulate the sav ings that represent the tools and capital necessary to create job op portunities for workers. Unless property is respected as the foundation for voluntary· produc tion and trade, the only alterna tive is· a dog-eat-dog struggle that literally leaves each person fight ing for his life. That would be the hard way to Iive, and not many of us could hope to last very long if we tried it.

Our Daily Bread In the vast majority of our daily affairs, most of us uncon sciously follow the easy way. If we want a loaf of bread or a can of beans, we simply go to a grocer and buy them; it never occurs to us that the grocer wouldn't be there with his well-stocked shelves if we had failed to respect and uphold his rights to property. Nor will he be willing to sell to us unless he respects our right to the money (property) we offer in exchange for the bread and beans. In contrast to this simple, easy way of life, suppose that we tried taking the bread we want through force. We'd probably organize the Amalgamated Militant Breadwin ners of America in an attempt to outnumber and overpower the members of the Bakers Protective 1965 I'LL RESPECT YOUR LIFE 5 Association - with the result that very little, if any, bread would be baked, or consumed. Not every one would starve to death, of course; .many would have died in battle. That would be the hard way of life, the penalty Nature levies upon those who will not respect life and property.

Now, it's true that we may say to the baker, "I'll give you 25 cents if you'll give mea .loaf of bread." And at that stage of the bargaining or exchange process, there is a deal involved, a quid pro quo, something for something. But the point to be remembered is that prior to any contract of sale, each party must show unconditional respect for the other fellow's prop erty. Would you buy from anyone what you know is not his to sell? Your inclination, in that case, would be to take what you want, just as he did. So, property rights and trade go together, and tend to disappear together when either is threatened or jeopardized. State and Federal Aid This principle of respect for private property is not too diffi cult to understand and practice at the local level among those we know and love. But distance from home tends to becloud the issue. It is far from clear to many per sons why the state government should not be called upon to stand between those who want to pur chase schooling for their children and those who want to provide such education. And an over whelming majority of the elector ate can be mustered in favor of "state aid" for education. Thus, property rights are violated; prop erty is taken from some, without their express .approval, and des igna ted f or use by others who have not earned it. Lacking are both of the prerequisites for con tinuing peaceful exchange: (1) a quid pro quo or something-for something, and (2) .the prior uni lateral expression of self-respect and faith - "I'll not steal." The result is a chronic shortage of educational facilities - a result that can be predicted with abso lute certainty any time the gov ernment is invited or allowed to erect barriers between the willing buyers and the willing sellers of any particular commodity or ser vice. If subsidies are offered to those in need of education, their "needs"-like any other subsidized "needs" -will expand beyond any possibility of satisfaction.

Rent control affords another ex ample of the frustration of willing exchange. When the state or Fed eral government is authorized to come between landlords and ten ants, setting a price too low to balance supply and demand, the result will be a housing shortage.

6 THE FREEMAN March When rental properties are thus confiscated, landlords will tend to divert their savings and efforts to other purposes. The higher the subsidy available to tenants, the more space they will want to oc cupy; and their demand can never be satisfied by that method. The intervention at the state or Fed eral level tends to blind and cor rupt neighbors who otherwise might have respected one another and their rights to property. International Trade Finally, there are the questions of international trade, with the greatest possible distances and other barriers between buyers and sellers - where at least one gov ernment and possibly several gov ernments are involved. An Amer ican importer might be quite will ing to assure a Japanese exporter: "I'll respect your property; I'll not steaL" But by the time such an assurance can be delivered through our State Department and theirs, translated into diplomatic language, it most surely will be offered as a deal: "If you'll first agree not to discriminate against our goods, we'll not discriminate against yours." This is like threat ening a man: "If you cut off your nose to spite your face, I'll cut off mine !"-as if that would serve him right.

The simple fact, of course, is that it would be to the advantage of consumers to allow Japanese goods to enter the United States free of import taxes, whether or not the Japanese government taxes goods imported from the United States. The counter charge will be that this would deprive Amer icans of jobs. The charge is un founded when the "job" market is viewed as a whole. But, more important, since when is it the duty of any American to make work for others to do? There is no future in such a business. A busi nessman's duty is to provide goods or services customers are willing to buy. If he can do so without working, or without em ploying anyone, more power and profit to him - the millennium will have arrived. If anyone can buy goods from Japan for less than his cost of producing or buying them else where, he should be free to do so _. and no one would be inj ured as a consequence. This, like any other sound business practice, would simply free scarce factors of pro duction for other and more profit able uses. His ability to ferret out better opportunities to serve and profit is the businessman's only excuse for existence as an entre preneur. If this involves creative work for others, fine; but there never has been and never will be a market demand for work as such 1965 I'LL RESPECT YOUR LIFE 7 - the work must at least promise to yield something that workers, and customers, want.

Though the full strength of logic favors free trade interna tionally, as well as domestically, the stubborn myth prevails that especially in international affairs one should never unilaterally offer not to steal, not to kill, not to dis criminate against the products, the services, or the persons of peaceful individuals. Misdirected nationalism blinds one to the fact that, by such discrimination, the nose he cuts off is his own. Such border barriers to the free movement of goods and services (people) make tempting military targets, and thus afford dubious protection for the businesses or the lives of citizens. Yet, we hear it everywhere, every day: "If you'll first reduce your tariffs, we'll re duce ours. " "If you'll stop inflat ing your currency, we'll stop in flating ours." "If you'll ship in our merchant vessels, we'll ship in yours." "If you'll grant rights of way to our airlines, we'll ac commodate yours." "If you'll mod erate your farm support policies, we'll moderate ours." "If you'll re spect and protect pri vate property in your country, we'll do so in ours." "If you'll let us use your ca nal, you may use ours." "If you'll cancel your flight to Mars, we'll cancel ours." "If you'll stop meddUng in our business, we'll stop meddling in yours."

This is by no means the entire list, but it is sufficient to illustrate the confusion concerning proper procedure for international trade. This partial listing also may af ford a clue as to the cause of the confusion: in most of these situ ations there is no clear title of ownership; the commodity or ser vice is either owned or regulated by the government; instead of a strictly voluntary transaction be tween willing buyers and willing sellers, there has been injected an element of compulsion. This may well be the major reason why trad ing seems so complex at the inter national level. But it also may be the reason why we find complica tions arising as they often do in domestic transactions where na tional, state, or local governments have intervened with regulations and controls of one kind or another that cloud the titles of ownership and interfere with the seller's or buyer's freedom of choice.

", Corrupting Use of Power Are we saying that governments are a positive evil when they con stitute barriers between willing buyers and willing sellers and thus frustrate individuals? Yes, this is what we are saying, that governmental force or coercion is out of order when it is employed 8 THE FREEMAN March in a socialistic manner to inter fere with the creative activities and voluntary relationships among peaceful persons. This is how gov ernments behave when they are constituted or organized upon the contractual and unrealistic prin ciple of "I'll respect your life if you'll respect mine." We are not saying that this is necessarily the foundation for gov ernment or that government has to be socialistic and disruptive of peaceful human affairs. Among peaceful persons who have individ ually recognized the morality and wisdom of volunteering unilater ally not to kill, not to steal, not to injure another deliberately, there would be no need for gov ernment if everyone were capable of living according to his good intentions. Yet, within a society primarily comprised of property respecting, peaceful persons, indi vid uals make mistakes; and there is a place for an organized agency of force with sufficient power to suppress or discourage any errant threat to life or property. One may solemnly pledge not to break the peace himself and yet con sistently advocate a government police force strong enough to over come and subdue him if in a mo ment of rashness he should forget or violate his pledge. Self-control is a most difficult thing; a prop erly limited government is a form of organized self-control and may be helpful in that limited role.

But when government exceeds that very limited purpose and begins placing barriers between willing buyers and sellers, it then be comes the positive evil we know as socialism and all of its varia tions. When anyone tries to make a deal to respect your life if you'll respect his, tell him to forget it - but respect his life anyway, be cause it is the right thing to do. Good all the Way As MORAL GUIDES, the Golden Rule and the Decalogue are not evil and dangerous things, like a painkilling drug, to be taken in cautious moderation, if at all. Presuming them to be the basic guides of what is right and good for civilized man, one cannot overindulge in them. Good need not be practiced in moderation. F. A. HARPER, Morals and the Welfare State A MORAL CODE FOR MAN WILLIAM HENRY CHAMBERLIN LONG a sturdy and consistent champion of the free economy, with the free market and the profit system as its foundation stones, Henry Hazlitt in The Foundations of Morality (D. Van Nostrand, 398 pp., $9.95) brings the familiar gifts of his· felicitous writing style, lucid exposition, persuasive logic, lightened by a good sense of humor, to the sub ject of the moral rules which should govern human conduct.

What he offers is a system of prac tical ethics,. not bound to but also not excluding any specific religious commitment. Modestly admitting that it would be presumptuous for any writer to claim very much orig inality in a subject that has en gaged the earnest attention of the Mr. Chamberlin is a skilled observer and reporter of economic and political conditions at home and abroad. In addition to writing a number of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines. world's greatest minds over 25 centuries, Mr. Hazlitt takes his stand pretty definitely in the tra dition of the British utilitarian moralists, beginning with Hume and proceeding through Adam Smith, Bentham, and Mill. There is also a dash of pragmatism, sug gestive of Benjamin Franklin and William James, in his view that there is seldom a clash between morality and happiness - that, in his own words, "immoral action is almost always shortsighted action."

Mr. Hazlitt sees in generally ac~ cepted rules of moral conduct an instrument for eliminating clashes between individuals and also be tween the individual and society. Believing that the word utilitar ianism has perhaps outlived its usefulness, he calls his own eth ical system by a new term, co operatism. Rejecting extremes of egoism 9 10 THE FREEMAN March and altruism, he rejects as a false antithesis the question whether moral rules should be framed to promote the long-run happiness of the individual or the long-run happiness of society. For, as he argues, only a rule that would do the first would do the second, and vice versa. Society is the individ uals that compose it. If each achieves happiness, the happiness of society is necessarily achieved. Author's Advantages In considering public, as dis tinguished from private ethics, Mr. Hazlitt enjoys an advantage over his eighteenth and nineteenth century predecessors. Socialism and communism are no longer theories, of which the validity can be neither proved nor disproved by actual experience. Now about one-third of the world's popula tion lives under communist rule, and a considerable number of other states have introduced vary ing degrees of socialism.

In view of the author's lifelong preoccupation with economics, it is not surprising that two of the most vigorous and incisive chap ters in his book are devoted to the ethics of capitalism and the ethics of socialism, which he equates, as did Karl Marx, with communism. He comes close to the heart of the question when he remarks that the central issue between capitalism and socialism is liberty, and expands this idea with a significant quotation from Friedrich Hayek: "Free enterprise has developed the only kind of society which, while it provides us with ample material means, if that is what we mainly want, still leaves the individual free to choose between material and nonmaterial reward. . .. Surely it is unjust to blame a system as more materialistic because it leaves it to the individ ual to decide whether he prefers material gain to other kinds of excellence, instead of having this decided for him."

Five Characteristics Mr. Hazlitt lists as follows five basic characteristics of the free economy:. Private property, free market, competition, division and combination of labor, and social cooperation. And he established a close, intimate relationship be tween the free economy and the maintenance of morality and civ ilization. For free enterprise is possible only within a framework of law and order and morality. Not only does free enterprise pre suppose morality; it also helps to preserve and promote it, most of all by making possible the free dom of choice, which is a basic characteristic of any meaningful ethical system.

1965 A MORAL CODE FOR RATIONAL MAN 11 Immoralism of Communism The author emphasizes the basic immoralism of communism, the contempt for ordinary rules of decent conduct expressed in the writings of Marx, Lenin, and Stalin. It is not the least of the virtues of the free enterprise sys tem that it makes for tolerance and discourages the fanatical will ingness to sacrifice all principles of humane conduct in the name of an abstract goal to be realized at some time in the future. Mr. Hazlitt does not hesitate to grasp the nettle of the "rather Red than dead" slogan. If the alternative were submission to communist slavery or the prospect of destruction in nuclear war, many of us, as he says, would choose annihilation as the lesser evil. But the alternative is false. When President Kennedy took a firm stand against Soviet missiles in Cuba, he improved the long range prospects of peace. And, as Mr. Hazlitt says, appeasement on the part of the West, in the face of Soviet threats, merely increases the danger to the West. And he drives home this point with a little parable, "Johnny and the Tiger," which he originally pub lished in The Saturday Evening Post and which is worthy of George Orwell, in the vein of Animal Farm.

Mr. Hazli tt has composed an excellent manual of conduct for a rational and humane society. If there is a fault in the work, it is perhaps inadequate consideration of the forces in human nature which make for irrationality and inhumanity. Mystics receive scant considera tion from Mr. Hazlitt and one misses some discussion of the philosophic Roman Emperor, Mar cus Aurelius, perhaps the most inspiring of stoic thinkers. The work stands squarely in the frame work of British common-sense ra tionalism of the eighteenth and nineteenth centuries, supplement ed by such modern libertarian thinkers as Friedrich Hayek and Ludwig von Mises. For its erudition, its exposure of the fallacies .of statism and political and economic coercion, its smooth development of a sys tem of practical ethics that is closely linked with jurisprudence and economics, The Foundations of Morality deserves a high rating among the many books that have been the fruits of Mr. Hazlitt's long and distinguished career as a publicist. Its appearance is an excellent accompaniment to the author's recent celebration of his seventieth birthday. ~ Reprinted by permission from The Wall Street Journal of December 23, 1964.

The Failure of International CO:DlDlodity AgreeDlents KARL BRANDT IT IS, if I am not mistaken, the goal of all free countries with gov ernment by law to diminish pov erty, squalor, and drudgery for the greatest number of their citi zens, and to .expand opportunities to all self-respecting, responsible citizens to develop their personal potential. This goal includes the obligation of the nation to respect the dignity and integrity of all men of good will. If this national goal is accepted, the economy must have the in stitutional framework to promote the gradual improvement of the real income of the people by im proving the productivity of hu man, natural, and man-made re sources. This requires, in the pro duction of goods and services, more division of labor, specialiDr. Brandt, former Director of the Food Research Institute of Stanford University, is Senior Research Fellow and Economic Con sultant at the Hoover Institution on War, Revolution, and Peace. This is a slight con densation of the· English version of his first address as a foreign member of the Academie d'Agriculture of France, delivered in Paris in French, May 27, 1964.

12 zation, and increased efficiency from research, innovation, and better management. But in order to have some orientation for such endeavor it is essential to give the consumer the sovereign power to allocate resources to the satis faction of his needs and of his more and more refined wants. This provides the powerful incentive to all people to make the effort to earn the money to get the goods and services they want. Such an arrangement is ideally guaranteed in the market with freely moving prices by the daily plebiscite in which housewives and the con sumer in general express their preference in francs and centimes, or dollars and cents. In the modern economy, in which this allocation of resources applies to all goods, durable and nondurable, to houses and motor vehicles, and to all services - edu cational, medical, culinary, artis tic, and to entertainment, travel, insurance, recreation, and multi1965 THE_FAILURE OF INTERNATIONAL COMMODITY AGREEMENTS 13 tudes of others - economic growth is bound to accelerate and to be come all-pervasive. Such dynamic growth, to be stable and contin uous, requires a high degree of mobility of human resources, such as shifts from the production· of goods to the performance of serv ices.

Such economic growth or de velopment, which requires above all stability of the national cur rency and the discipline of mone tary and fiscal policies to keep in flation in check, calls also for an optimum of foreign trade. It is generally agreed that the promo tion of peaceful relations in this turbulent and dynamic world re quires economic development in all countries, particularly those with still predominantly rural living conditions. This develop ment in formerly colonial and other industrially retarded coun tries is definitely needed for the healthy development of the ad vanced nations, because industrial economies maintain growth and stability by a reliable flow of es sential raw materials~ The Need for Leadership Of all the conditions for in creasing the income· of the people in the world's rural countries, by far the most strategic are con tin ued healthy and stable growth of the leading industrial countries and their avoidance of prolonged economic stagnation or contrac tion. Any idea of accelerating growth in underdeveloped coun tries by sapping the strength of industrial nations belongs in the moth-eaten fabric of ideas of Marxian determinism· and the fata morgana of the dictatorially-ruled "paradise for all proletarians."

Since these grand ideas have been tried for close to 40 years in a laboratory experiment with sev eral hundred million people, they have lost their luster and gaudy colors. Today, the economies of indus trial and developing countries are mutually interdependent, as is the guardianship of peaceful cohabita tion of nations. Hence, while the industrial countries need an ade quate and growing flow of pri mary material from developing countries, they will pay for these, as well as for manufactured goods from light industries, by export ing to those countries an increas ing volume of manufactured pro ducer and consumer goods, and will also help them to industrialize gradually. If this mutually beneficial ex change is to. flourish, all nations must act in accordance with their optimal comparative advantage, Le., the opportunity to produce and sell at lower unit costs. To let this principle work requires 14 THE FREEMAN March optimal diminution or removal of hindrances to trade expansion, not only import quotas and cus toms duties but the whole arsenal of nontariff trade impediments in lieu of duties.

All the proposed solutions have one common denominator. They suggest that, by setting up inter national and regional worldwide administrative machinery to con trol and regulate prices for opti mal financial liquidity of develop ing countries, the pace of raising the income of the poorest people in the most agrarian countries can be accelerated at will, and that more perfect equity and justice in distribution among independent nations can be attained. A Dubious Device Perhaps the most persuasive and yet the most dubious proposal to remedy the instability of for eign exchange earnings of devel oping countries is the device of international commodity agree ments, abbreviated in the litera ture as leA. This form of inter vention in the international mar ket for primary commodities is an excellent example that makes clear where the generating power orig inates that drives a national econ omy, and how complex and delicate a self-adjusting system the market economy actually is. When I speak of the market economy, I do not mean a laissez-faire system with no rules, but a competitive private enterprise economy with effective enforcement by the government of regulations, quality standards, and rules for competition.

International commodity agree ments are arrangements between contracting governments, aimed at preventing precipitous price de clines of a primary commodity on the world market, in order to avoid serious balance of payment and illiquidity problems for the gov ernments of the exporting coun tries. But the attempt to forestall disastrous price declines also de mands that brakes be put on too steeply rising prices, because such increases may unduly stimulate expansion of production, with re sulting sharp price declines later. This remedy for price instabil ity consists basically of a type of market intervention that was adopted in the late twenties and early thirties on the European continent, in the United States, and in other parts of the world: farm income support through guaranteed minimum prices for specified agricultural commodi ties. These price support policies amount to a compulsory govern ment-controlled cartel, with in numerable variations in detail.

Since more than 30 years of ex perience with this policy have ac crued in the industrially advanced 1965 THE FAILURE OF INTERNATIONAL COMMODITY AGREEMENTS 15 countries and in the world market, it is relevant for our discussion to summarize the modus· operandi and the economic results of this remedial counteraction to price instability. Once the government supports the price of a commodity, the price can theoretically still move, but only above the so-called "floor" or guaranteed minimum. By political compromise this level is deliberate ly set above equilibrium, which by definition is the price that would clear the market. The polit ically set level is meant to be re munerative to the high cost or marginal producers, the low in come farmers on whose behalf price stabilization is mainly es tablished. It is therefore unavoid able that the price, and the elimi nation of any risk of its change by government guarantee, will act as a forceful incentive, especially to efficient producers, to expand the area for the specific crop. To counteract this the government imposes an area limit, the so-called "acreage allotment." Some sort of base is needed for its determina tion; usually a historical base is chosen, such as each farmer's ac tual average acreage of the crop cultivated in several base years.

However, the common experience in all countries is that the combi nation of a profitable guaranteed price with the acreage allotment acts as a still more effective in centive for increasing output per unit of land on limited acreage by more intensive farming. More fertilizer, better seed, more irri gation, better pest and weed con trol, more cultivation, and various other methods are used. Hence, the government has to buy and store more grain to keep the price at the support level. The Sorry Results Up to this point the results of this intervention are already re markable: 1. There is no longer any mobil ity of the geographical location of production. It is frozen from the moment the allotments are estab lished. 2. The unintentionally subsi dized intensification of production has created surpluses that exceed effective demand. 3. Therefore, the government has to finance and operate storage of commodity stockpiles.

4. Hence, the government at taxpayers' expense has entered the commodity business. 5. The price can no longer move upward but is tightly pinned to the "floor." Instead of a price sup port or the guarantee of a mini mum price, one has a fixed, totally inflexible price. 6. This fixed price still governs producers, processors, everybody 16 THE FREEMAN Ma,rch in the trade chain, and consumers. The price signals are set in false position for all of them. Although an excess supply exists, everybody can act only according to the price which indicates shortage, namely by consuming less, by substituting other commodities. The processors and the speculative trade reduce stock carrying because the gov ernmen t keeps the excess stocks at public expense. 7. In other words: without any intent to do so, the government has socialized stock carrying. 8. As a further result, the most effective commodity price and sup ply stabilizing institution, the com modity exchange with its trading in future delivery contracts, is made idle.

However, even those are by no means all the side effects. The Treasury has to pay for moving the commodity into and out of storage and for storing it, as well as for losses when the surplus is disposed of. Thus, there are in numerable secondary beneficiaries of stockpiling excess output, such as railroads, truckers, labor union members, and many others. All these receivers of windfalls ac quire a vested interest in main taining farm price supports. Much worse is the fact that the market in farm real estate discounts the subsidy-earning value of the acre age allotment. Hence, price stabilization of farm products boosts the value of farm land; in due time higher land prices and rents on leased land increase the costs of farming and force more intensive use. This is another unintentional side effect. Marketing Quotas Assigned When the excess production be gins to bleed the Treasury too bad ly, the next step is to tighten the cartel by efforts to control the supply in the market. In addition to the acreage allotment the gov ernment imposes on all farms a marketing quota, which is estab lished by subdividing a national quota prorated in accordance with individual acreage allotments. This national quota is fixed by a pre carious government estimate of how large the domestic consump tion and the net export may be one year later. Since the market ing quota tends to be smaller than the output, it immediately poses the problem of a black market and the necessity of suppressing it by heavy penalties. Output that ex ceeds the marketing quota can be stored, converted, or consumed by the farmer, but it cannot be mar keted legally. Even in countries with a customarily law-abiding farm population, the temptation to profit by disposing of such illegal supply by barter or other black deals is strong, and actual enforce ment is difficult.

1965 THE FAILURE OF INTERNATIONAL COMMODITY AGREEMENTS 17 The cartel price-fixing for agri cultural commodities also unin tentionally subsidizes increased production of thesame commodity in other countries. Price-fixing thus creates effective competition abroad. Since it is politically un popular and difficult to lower the guaranteed price level even when costs of production are declining, stabilization by political decision is practically identical with "sta bilizing upward." Finally, the greatest ordeal for the government agency responsible for operating the cartel is the ob ligation to dispose of the accumu lated excess stocks so as not to un dermine the fixed price. Such dis posal would be simple if it were done by destroying the supply. Grain could be burned or dumped in the ocean, although even this costs money. But powerful social, moral, and political taboos prevent this solution for any major non perishable food commodity. Only in the case of coffee in Brazil was destruction used as· a market-cor rective action. Therefore, the gov ernment must seek to release the excess of staple food commodities in foreign countries as gifts, on credit, or with lowered prices. Ex cept for the gifts, this amounts to dumping,and has a deleterious impact upon producers in the re cipient country, and secondarily on the exporting country's foreign markets and on its foreign eco nomic relations.

A Commodity in Quarantine Still Affects the Market It is a psychological fact that a commodity kept off the market by a· government, in quarantine, so to say, is still a powerful factor inffuencing both the price and the actions of all parties in the mar ket. Grain "in jail" is still grain, because if it is not destroyed it will in due time appear as market supply. National commodity markets are a remarkably effective system of communicating vessels in which millions of interested consumers, retailers, wholesalers, speculators, and farmers keep the flow going. The idea of inserting into the mar ket, via detours, major quantities of supply, under perfect quaran tine or segregated from the or dinary supply, belongs in the realm of fiction. Only private charity distribution can minimize the im pact on the market. Even the ably administrated food stamp plan of the late thirties in the United States proved that free food did not cause additional consumption of food, but actually subsidized consumption of other goods and services. To change the determined consumer's preference in his fam ily budget decisions takes far more than free distribution of 18 THE FREEMAN March goods, the more so the poorer and prouder he is.

The cartel operation produces still other undesirable side effects. In many instances, particularly for industrial raw material products in agriculture such as cotton, jute, hemp, and sisal, the raised fixed price gives the greatest incentive to producers of substitutes. This exerts pressure on consumption of the original product, say cotton, at the expense of the farmer, whose marketing quota will be cut if national consumption shrinks. The industrial temperate zone countries, which make a virtue out of the backwash of domestic polit ical necessity and subsidize ex ports of agricultural raw ma terials such as cotton, thereby slide to the next necessity of granting more subsidies. Manufacturers of cotton textiles, who have to com pete in the foreign market as well as in the domestic one, now need a subsidy to restore equal raw ma terial costs. And so there are three recipients of subsidies: the fal~m er; the exporter of the farm prod uct; and the manufacturer who uses the raw material.

However, I have not nearly ex hausted the appalling record of unforeseen and unwanted distor tions of economic processes caused by government intervention that attempts to remedy instability of commodity prices. Subsidized surplus disposal by gifts diverted to other countries can assist private charity that reaches the destitute, the sick, and helpless widows and orphans. But it cannot cure the causes of poverty. Only increased productivity on farms, in craft shops, in factories, and in the wholesale and retail trade can do that. It is here that the disposal of surpluses from abroad does its greatest harm. The majority of people in underdeveloped countries are small farmers who earn their cash income by selling farm com modities. Dumping such commodi ties in their market may be a boon to some of their customers in the cities, but the farmers resent it, and it diminishes the incentive for them to produce more.

One Control leads to Others I have yet to give the reasons why I believe that, whatever ac tion may be taken to mitigate the impact of unstable commodity prices on the balance of payments of developing countries, the In ternational Commodity Agreement method is not only inadequate and dubious but outright harmful to the best interests of the developing countries and to world trade in general. BasicallY, the sobering experience of sovereign govern ments of advanced nations with this enigmatic cartel policy in their national markets applies also 1965 THE FAILURE OF INTERNATIONAL COMMODITY AGREEMENTS 19 to the immeasurably more difficult situation in the international com modi ty market. The worst feature of all market intervention with price fixing is that, while dealing with one com modity or a few closely related commodities, this inevitably changes the relations between the price of the regulated commodity and the prices of all other com modi ties and services. The inser tion of one rigid price into a range of flexible prices for some 160 or 170 agricultural products is like a boy who knows nothing about the meaning or the effects of the different positions turning switches at the control board of an automated factory. The far reaching adjustments that farmers and all other affected parties must make to the accidental price rela tionships caused by fixing the price of one commodity are un predictable. Therefore, such iso lated treatment of the price mech anism for one country contributes more uncertainty tomorrow than there was instability prior to price fixing. The case for all such trou ble-multiplying cures rests on the assertion that the adjustment of supply and demand under the rule of flexible prices does not func tion - an assertion that contra dicts all evidence and economic experience.

The intent of stabilization is realized so long as the stabiliza tion is upward. When, however, larger stocks have been accumu lated and their disposal is unavoid able, the same consequences arise as in the case of price supports in domestic markets. Necessity com mands that besides regular com mercial sales, concessional sales be undertaken, or part of the sup ply be given away. This procedure leads to serious disorganization and corrosion of markets. The United States, with $6 billion worth of agricultural exports, dis poses of over 30 per cent in the form of concessional deals. This is not done on principle. Far from it. It is simply the accumulated backwash of an ill-chosen method of social income support. Enforcement of ICA regulations is even more difficult than is en forcement in single countries. When one begins to speak of "po licing the markets of coffee beans," I wonder how one dares suggest the feasibility of such control in vast areas where the United Na tions is faced with the problem of preventing the murder of rural people by armed bands.

Problems of the Soard Aside from the dubious state of effective government administra tion, a serious question is whether competing countries can possibly agree on export or production 20 THE FREEMAN March quotas and thus freeze the geo graphical location of production, or administer shifts in location. The board of an ICA must try to achieve principles of equity and justice for all signatory parties to the multi government cartel. Originally, commodity agreements included exporting countries only and thus represented producer in terests exclusively. They led to de fensive policies by importing coun tries and their effect was nullified. Naturally, the enthusiasm of pro ducers diminished as consumers won equal representation on ICA boards. Yet, without importing governments, such cartels are doomed. Today, all such agreements in clude major importing as well as exporting countries. This demands far more wisdom than the fairest and ablest board possesses. Sup pose one exporter earns 80 per cent of foreign exchange from the commodity, another 20 per cent.

When quota restrictions are neces sary to raise the price, will the ex ports from both countries be cut by the same percentage? If not, what principle shall determine the degree of discrimination and the number of years it shall last? If drastic changes in costs of pro duction or handling or transporta tion of the regulated commodity occur, which apply to one or more countries but not to all, shall all nevertheless recei ve the same price? If the commodity comprises a range of qualities, with lower grades produced at disproportion ately lower costs, shall quotas treat all the same? Such questions indicate that ICA's are bound to end up with all kinds of soft politi cal compromises on the main points of control over supply, and even of price arrangements. Subsidizing the Competition As soon as there is a serious contingency of substitution for the commodi ty by other natural, proc essed, or synthetic products, ICA price stabilization begins to sound the death knell for. the original commodity. I indicated earlier that in many cases price supports operate, via detours of economic processes, to the long-run detri ment of the cartelized producers.

To prove my point that ICA's may become deadly poison I have only to mention the cases of rubber, wool, linseed oil, or tungnut oil. Natural rubber was one of the commodi ties on which price sta bilization ideas were tested in a world -wide experiment under Dutch and British management. The attempted producer-exporter cartel was mainly instrumental in pushing rubber plantations into other tropical areas, in stimulating experiments with other latex-yield ing crops, and in boosting synthet1965 THE FAILURE OF INTERNATIONAL COMMODITY AGREEMENTS 21 ic production of plastomers with large government subsidies in in dustrial countries. To kill the remaining industrial use of lin seed oil, tungnut oil, or soybean oil, one need only fix the prices internationally. Five ICA's are at present in existence: on wheat, sugar, coffee, olive oil, and tin. Only four, ex cluding olive oil, are important.

The one for wheat is proclaimed by its supporters the outstanding success. It can be proved beyond discussion that the ICA's for wheat, sugar, and coffee amount to no more than· sanctimonious declarations of good intentions. They have neither stabilized the incomes of the exporting countries nor avoided the whole range of unintentional distortions of world trade that do far more harm than good. Insofar as the wheat agree ment has given some semblance of stabilizing price - though not in come - it was due to the fact that the governments of the United States and Canada shouldered the burden of carrying the gigantic excess stocks. But both govern ments have had to enter into a multitude of noncommercial dis posal arrangements that violate the principles of truly competitive international trade. There is one little defect in all plans for administering economic progress at specified growth rates, which the econometricians usually fail to mention: no genius, no power in this world, has the abil ity to forecast the future supply, the demand, or the price for any commodity, or to predict the per formance of one or of many na tional economies one, three, or five years from now. The most fabulous computers have not changed this situation one bit.

We now know much faster and more accurately what has hap pened up to today. But as to the future, we get the wrong guess timates also much faster, and with more scientistic trimming. Restrictive compulsory cartel policies that raise prices to bene fit high cost producers and arti ficially throttle output and supply to maintain such arbitrarily fixed prices, belong in the tool chest of the static society and its dirigism. Such policies are technically pos sible, but they are the antithesis of what the dynamic economy of an open and free humane society requires. I expect much sound develop ment in those primary material exporting countries that succeed in taming the monster inflation and, relying on their producers' ability to compete, pave the way for sound private investment of foreign capital, as the transfer of funds from government to govern ment diminishes. ~ THE CENSUS of 1960 turned up one hundred and ninety million souls living in these United States. Of this number, roughly one hundred and eight million qualify to regis ter as voters. This is 56 per cent of the nation, and this body of people constitutes the electorate of the United States. But, of the number of persons eligible to register, only eighty-one million have actually done so; twenty seven million have not, for rea sons ranging from indifference to intimidation. The total vote cast in the 1964 Presidential sweep stakes was roughly sixty-nine mil lion. This is 64 per cent of the electorate, but it is only 36 per cent of the population. The 1964 election was won by a candidate who garnered forty-two million votes. This figure translates into 60 per cent of the votes cast, 51 The Reverend Mr. Opitz of the Foundation staff is active as a lecturer and seminar leader.

22 EDMUND A. OPITZ per cent of the registered voters, 38 per cent of the electorate, and only 22 per cent of the population. This is "the maj ori ty" which, in the eyes of some political theor ists, confers a mandate on the victorious party to impose its pro gram on the reluctant "minority" of the nation, that is, on the other 78 per cent! This is the theory of majori tarianism, ardently espoused by some articulate intellectuals. Here, for example, is Professor James McGregor Burns of Williams Col lege. Dr. Burns declares that "... as a liberal I believe in majority rule and majority rule is a ques tion of adding up 'bodies' (or, I hope, adding up minds)." Profes sor Burns believes that men who embrace the conservative position have thereby foresworn what he calls the numbers game, this game having been staked out by liberals as their very own. "Because as 1965 WINNER TAKE ALL 23 soon as conservatives start to base their principles on numbers," he writes, "then they're playing the liberal game (what they call the liberal game; what I would call subordinating their basic values to a liberal premise, which is the premise of maj ori ty rule)."

It may be conceded that a "ma jority" has, by definition, the power to bull its way through and work its will on the nation, but does it have the right to do this? Is there not some principle or right or rule of ethics which even a "majority" ought to ac knowledge, and to which it should yield? Addressing himself to this question, Professor Burns re phrases it and then gives his answer. "What does a majority have the right to do?" he asks. "It has the right to do anything in the economic and social arena that is relevant to our national prob lems and national purposes - ex cept to change the basic rules of the game." Unqualified Majority Rule That final disclaimer sounds like an afterthought, and some political theorists support the ma jority rule idea without qualifica tion. Professor Herman Finer of the University of Chicago, for in stance, writes, "For in a democ racy right is what the majority makes it to be." In other words, the majority has the power to car ry out its will, and thus whatever it does is all right; its program is right, by definition.

If so, then the liberals, by win ning an election, have won the right to run the country as they please - including, Burns sug gests, the right to be let alone by conservatives! The liberals now have a majority of the nation be hind them, Professor Burns as serts, and "I want the liberals of the nation to have a right to rule in what I think is their day to day." Professor Burns seems not to have noticed, but in saying this he has abandoned the majority rule idea for the more exciting notion of Winner Take All! In the politics of winner-take-all - which is modern liberalism - officials be gin to treat public office as their own private property, with bene fits for them to enjoy but without the responsibilities owners assume in rightful property relationships. The national govel'"nment becomes an article of commerce whose capture is worth over a hundred billion dollars annually to those who gain possession of it. Those who win an election, even by the slimmest of margins, have a man date from the country - provided they are liberals! -to impose their program on the whole nation. It is amusing that those who begin 24 THE FREEMAN March by playing the numbers game in politics wind up with a mathe matical absurdity; a majority, 51 per cent, is - in their book - not only equal to the whole, 100 per cent, but superior to it!

This is what the idea of major ity rule boils down to. Stated baldly, it is absurd, but it is dif ficult to examine the notion of ma jority rule coldly because most of us are scared off by what majori tarians say are the alternatives to majority rule. Those who question majority rule are emphatically not thereby committed to minority rule, or one man rule, or rule by an elite - or any other kind of rule .,- meaning by "rule" the sub ordination of some to the will of of another. These are false an titheses, for all varieties of rule are on the same side of the ledger. On the other side of the ledger is the proper alternative to all spe cies of rule, namely, the system of indi.vidual liberty. The system of liberty stands in contrast to ma jority rule,minority rule, and all other forms of rule. Individual liberty within a proper spiritual, moral, and legal framework is in one category; majority rule is in another. And the two categories must not be confused. When the alternatives are spelled out, that is to say, when we understand the implications of majority rule, on the one hand, and the implications of a system of liberty on the other, some will choose the for mer, others the latter. But obvi ously we cannot make an intelli gent choice if there is confusion as to what we are choosing.

Second-Class Citizens What does majoritarianism mean? Whenever a society subor dinates every other principle to the principle of majority rule-or whatever the label authoritarian ism may assume - it winds up with a political arrangement in which winner takes all; and the politics of winner-take-all results in a society with a permanent body of second-class citizens, a servile society. If a majority of the voters, 51 per cent, controls the whole society, then the 49 per cent ,vho lose the election are prevented from exercising their full citizenship rights. I do not mean to say that the losers are completely deprived of their rights, for this is not the case; but the losers - merely by coming out second best in an election no longer have the same rights as the victors. Some rights remain, but there is no longer equality of rights, and this is the critical point. An illustration may make this clearer, an illustration from the field of religion, where the old principle of equality of rights is 1965 WINNER TAKE ALL 25 still pretty much intact. Suppose that my denomination, Congrega tionalism, were to grow and grow until, numerically, we were to constitute a majority of the elec torate. Then suppose we decided to play the game of winner-take all politics (as we once did, as a matter of fact, and kept on doing in Massachusetts, until 1833). We would win a national election and use· the fact of victory at the polls to "establish" this denomination.

Now that we are "established" we are able to levy taxes on Meth odists, Baptists, Catholics, and Holy Rollers, and force you to contribute to our support. We would not, of course, close the doors of your churches, nor for bid you to attend services when ever you chose. All we'd do is deprive you of part of your in come and property, and then we'd use your income and your prop erty to promulgate our doctrines. If 10 or 15 per cent of your in come is being spent by us to fur ther our purposes, it's obvious that you have that much less money to spend on your own pro grams. Not Religious Freedom Now, money is not everything in religion, but it is something. It takes money to build churches and keep them up; it takes money to train and support ministers; it takes money to print hymnbooks and textbooks and send out mis sionaries, and so on. And it is obvious that your religious pro gram will suffer to the extent that we force you to pay for our pro gram. There is a sense in which you are still free to practice your religion, but you are not fully free to practice it; your religious lib erty has been impaired.

Most people would say, as a matter of fact, that the society I have conjured up in my illustra tion does not have religious lib erty. And anyone who argued in defense of this arrangement-that the Methodists and Baptists shouldn't complain, but rather should work toward becoming a maj ori ty so that they too could operate a racket, would be hooted down, and properly so. The be liever in religious liberty will not settle for an ecclesiastical ar rangement which invariably puts minority religions at a disadvan tage; he wants full freedom for all. Nor will the believer in polit ical liberty settle for a theory which contemplates a permanent category of second class citizen ship as an intrinsic part of its operation. And yet this is pre .. cisely what present-day liberalism stands for; this is what it offers us as the latest thing in politics and morals! No majority had the right, un26 THE FREEMAN March del" our original system, to im pose its religion on any minority, or impair its freedom of utter ance, or deprive it of property.

But under the new dispensation "The Majority" is almighty. All it has to do is gain control of gov ernment and then it has a legal cloak behind which an actual nu merical minority of the nation uses the governmental machinery to work its will on the rest of the society. According to the theory of majority rule, the governmental machinery is always "up for grabs" for such a purpose. Neglected Questions Collectivist regimes act as if the apparatus of government were the private property of officeholders, through which these men exercise their ownership of a country, and their power over the lives of the citizenry. The excuse offered is that "we are doing it to our selves." What a misuse of lan guage this· is! If Methodists are doing it to Baptists or Congrega tionalists to Presbyterians, it is obvious that some people are do ing something to other people; "we" aren't doing it to "our selves." The "we" who are doing it aren't the same people as the "ourselves" to whom it is done!

Those who put their trust in majoritarianism proclaim that there is no other test of the goodness of a law than its ability to muster the might of the majority behind it. Any law that has ma jority support is a good law, by definition, and there is no other test. By the same token, govern ment's role is to perform what ever services a majority demands of it, and short of not killing the goose, the majority is entitled to all the golden eggs it can get. I have analyzed and condemned this doctrine; it deviates from earlier American practices, as well as from sound principles of polit ical philosophy. Majoritarianism gives wrong answers to questions about the proper role of govern ment in society, and it neglects questions about the attributes of good law. The Prescribed Limits Noone can read our Constitu tion without concluding that the people who wrote it wanted their government severely limited; the words "no" and "not" employed in restraint of governmental power occur 24 times in the first seven articles of the Constitution and 22 more times in the Bill of Rights. Why this distrust, and what was their intention? These men understood the necessity of the police power in a society. But they recognized its potential dan ger, as well, and so they designed the machinery for keeping their 1965 WINNER TAKE ALL 27 government limited to the per formance of policing functions.

The police power is, ideally, com petent to maintain the peace and order of the community, which is what the policing of a society means. If the police power - gov ernment - is limited to policing, then the society is free; the public sector is small and well defined, the private sector is large enough to give peaceful people plenty of elbow room. The Constitution designed a federal republic with both ter ritorial and numerical representa tion. It is improper to refer to the government in Washington as "the federal government"; it· is the na tional government. The federal structure is comprised of the na tional government plus the gov ernments of the sovereign states. Government is the power struc ture of society, and federalism limits power by dividing it be tween nation and states. Power is divided still further by separat ing functions within the several governments. The federal struc ture deals with the problem of power in much the same way as a Gothic cathedral handles archi tectural stresses. The enormous weight of the roof of one of these medieval structures presses out ward against the walls and would level them, except for the flying buttresses which exert an equal pressure inward to maintain the building in a dynamic equilibrium.

A national government tends to extend its sway over a whole na tion unless its centrifugal force is countered by the centripetal force exerted by the states and the congressional districts. The Philosopher-King The structural complexity of the American system of government makes sense if we understand the premises of those who created it. They were concerned to limit and cramp the style of government in order to hamstring the proven capacity of men in power to do evil. The rather awkward ma chinery they put together may offend against elegance, but it serves admirably the purpose for which it was designed. It is not, however, an efficient, streamlined political mechanism, such as would be erected by those who believe government should be unfettered and strengthened in order to give the wise men who wield this power increased opportunity for doing good. This idea goes back to Plato's Philosopher King.

The Philosopher-King idea is first to create elaborate and pow erful governmen tal machinery, capable of running society and do ing wonderful things for The Peo ple, and then to put the wisest and best men in control. This ap28 THE FREEMAN March proach was repudiated in the Con stitution, by the most sophisticat ed political thinking on record. This thought is premised on the understanding that human nature is such that if power situations are deliberately created, the worst men will gra vitate toward them, and such good men as are given arbitrary power will be corrupted by it. At stake here are two con trasting estimates of man. Two Views of Man What is your reading of human nature and the consequences of power? Optimists and utopians tend to think in terms of erecting large and powerful structures of government with wise and good men in charge. Overlooking the corruption in human nature they dream of the benefits which might flow from such an arrangement.

Realists, on the other hand, will try to limit the power of govern ment in order to forestall evil men from snatching control of it and doing great harm. A federal re public along the lines of the Amer ican model is the product of this outlook. "When it comes to ques tions of power," wrote Jefferson, "let no more be heard of the good ness of man, but bind him down from mischief by the chains of the Constitution." The very structure of constitu tional government, then, reflects a philosophy of man; the political machinery itself disperses power and thus limits it. Then, those in the old-fashioned Whig and Class ical Liberal tradition placed fur ther controls on power by laying down the earmarks of good law. They may be briefly summarized. In the first place, a good law makes no pretensions to perfection. No human laws are in fact perfect, and the attempts of some to apply their "perfect" laws to imperfect hu man beings have been disastrous.

A good la\v will take human short comings into account; it will re flect our limited understanding and sinful nature. In the second place, a good law will be written so as to correspond to what the eighteenth century referred to as the Higher Law. A good law, in other words, will not violate our ethical code; it will not supplant morality with mere legality. Equality before the Law Generality is a feature of a good law. Everyone should be equal be fore the bar of justice, and so a good law is one which applies to all men alike and without excep tion. Men are different in several important ways; some are bright and some dull; some are rich, others are poor. There are dif ferences of nationality, color, and religion; there are employers and 1965 WINNER TAKE ALL 29 employees, and so on. These are important distinctions and clas sifications - but not to the law! The law should be blind to such differences,and any law which is general, applying to one man as to all cannot have much wrong with it. Fairness in application coupled with proper enforcement induces respect for law and makes for a high level of law observance.

Besides being imperfect, moral, and general, a good law is condi tional; it has an "iffy" quality about it. It says, if you steal, or if you defraud, or if you drive on the left side of the road, you will be punished. A good law takes the side of the negative, saying "Don't," or "Thou shalt not." This means that it is theoretically pos sible for a man to negotiate life w'ithout encountering the law, pro vided he sticks to the positive. The fifth and final point in this abbrevi ated list is something like the first; a good law reflects the customs and habits of a people - otherwise it is an attempt to reform them by law, and reformist lawis bad law. When a man thinks he's Napo leon, and acts on that assumption, the rest of us lock him up out of harm's way. Things aren't so sim ple when a whole society is smit ten by ideas of grandeur. When a society projects its Napoleonic fantasies onto government, the picture unfolds much as we have observed it during recent history.

Current history has given many sensitive people the jitters, as any one can confirm for himself who will inspect the present offerings of our poets, playwrights, and artists. They testify to an epi demic sense of alienation and con flict. Man, they say, is at war with his own creations; he can't get along with his fellows, and he's at odds with himself. The modern malaise is not, of course, primarily political, but if it disposes us to retrace our steps to the point where we'd seriously overhaul our understanding of man's nature and his destiny, important polit ical consequences would follow. Appraise man realistically and governments would lose their Na poleonic pretensions. Limit gov ernments to policing functions and, although that alone wouldn't solve social problems, these would then challenge rather than threaten us. And challenge is just what we need to grow on! ~ N or Oysters from The Desert Sands JOHN C. SPARKS COMMUNITY LEADERS, striving "to get their share" of Federal funds for local projects to alleviate slum conditions and improve the city, are doomed to disappointment. For it is a law of nature that evil be gets evil, regardless of good in tentions, and no matter how often the mistake is repeated.

Recent comprehensive studies of the results of government urban renewal programs reveal that slum dwellers displaced from their homes are likely to find even worse housing accommodations else where, and frequently at higher cost than they paid before.! 1 "The federal urban renewal program has made it more difficult for low and middle-income groups to obtain housing because of the amount of low-rent hous ing destroyed. Many of the families that are required to move go into housing as bad as or worse than their original homes Mr. Sparks is a business executive of Canton, Ohio. 30 From Barron's of July 27, 1964, comes this editorial summation: "In short, the most striking achievement of urban renewal, whether in Stamford or San Fran cisco, Kansas City or Brooklyn, has been the wholesale· bulldozing of human and property rights .... Under urban renewal more specu lative profits than slums have been cleared .... Far from reducing the number of slum dwellers, it has swelled their number."

Not only are residents of low income homes being pushed around without regard to their rights, but also the small businessmen who adequately serve these and other similar neighborhoods have found in neighborhoods that are as bad or worse than "their original neighborhoods. And they often pay higher rents at the new location." The Federal Bulldozer by Mar tin Anderson (The M.I:r. Press, Massa chusetts Institute of Technology, Cam bridge, Mass., 1964), p. 220.

1965 NOR OYSTERS FROM THE DESERT SANDS 31 it impossible to continue in busi ness under urban renewal. Peter H. Prugh reports in The Wall Street Journal of November 18, 1964 ".... the difficulties of the Hyde Park - Kenwood urban renewal neighborhood are typical. It is almost axiomatic that, when rubble makes its inevitable ap pearance in urban renewal proj ects, small businessmen as inevit ably begin to disappear." One could go on and on with examples of the urban renewal in justice forced upon those persons already in the lower economic strata of society. There is no doubt that urban renewal, as a means to improve housing conditions for these people, has been a dismal disappointment - though it is to be expected whenever ownership rights are violated, whenever self reliance and self-responsibility are discouraged, whenever the volun tary choices of free people in a free market are frustrated.

The Chaotic Consequences The chaotic result is that peo ple are displaced from the best homes they could or would afford. The dispersal of old neighborhoods means broken friendships, removal of familiar faces and places, and the expiration of local church and social centers. Small neighborhood businesses simply disappear. How such chaos affects the lives of these persons, aside from the eco nomic losses involved, is next to impossible to measure. Leonard Read put it this way: "Damage cannot be done to the free market without an equal dam age to man's nature. When men are compelled to look to a one source decision instead of to the individuul deeigiong of men, man is robbed of his wholeness. Self responsibility .... the wellspring of man's growth, gives way to cheap politics, mass plunder .... and members of that society will tend more to rot than to hatch."::? During a recent seminar dis cussion on urban rene\\~al, a ques tion was asked typifying both the sincerity and the gullibility of the proponent who allows glitter ing goals to blind him to the wrong methods proposed.

Although the questioner had heard telling arguments and un impeachable testimony of the fail ure of the government renewal program to bring better living conditions, he could not bring him self to face the truth of the situ ation. Surely, the cause of failure in communities everywhere over the nation must be due to inept leadership or lack of administra tive ability, he rationalized. Con fident of these reasons for the failures, and equally confident that 2 "On Freedom and Order," Freeman, January, 1965.

32 THE FREEMAN March neither of these faults would be repeated in his city, he was sure of the program's success, if only his city would participate - eco nomic and moral facts of life be hanged! His anxiety to help his fellow man toward better living conditions clouded his reason. As an analogy, let us suppose that numerous municipalities all over the country had recently de cided to run their police cars on wa ter rather than gasoline. Due to the national publicity and claims of success by municipal officials, the local city council considers switching its patrol cars from gasoline to water also. In reply to protests, the advocates suggest that the automotive maintenance engineers in the other communi ties, where failures have been ru mored, surely must have been in competent and unfit; but the mem bers of the local city council, being men of wisdom, will find a quali fied automotive engineer who, with their help, will make no mis takes. Will the switch succeed?

No answer is required. The out come of the scheme is clearly foreseen and one could not but wonder at the foolishness of its supporters. Yet, is not an artificial, unnat ural substitution of government urban renewal for the operation of free enterprise in a free market just as clearly unworkable? A Rational Universeand Our Lives Depend on It Man exists in a rational uni verse, and doubtless would perish if it were not rational. Apple trees grow apples and can be counted on to produce apples, rather than grapes or blackberries, next harvest season. Oysters come from waters of the sea, not from the sands of the desert. The seasons of the year occur in never-ending rotation; never yet has winter followed spring. There is a steady certainty about mathematics. Even romantic musical tones are of certain quality and can be defined by the number of vibrations per second. Over the centuries we have come to know that not all kinds of ac tion will bring desired results in a rational universe. Only those causative actions consistent with the final results will succeed in producing them. Thus, the proper design of an airship will enable it to fly in the manner conceived by its creators. However, if a de signer were inept, and an attempt were made to fly his creation, one could reasonably expect a fright ening crash at the end of the run way. Noma tter that the de signer was enthusiastic and ar dently wished his airships to fly.

No matter that this intent was good. Desire alone will not over come the inconsistency of his 1965 NOR OYSTERS FROM THE DESERT SANDS 33 design with the natural laws of the universe - nor will the sin cerity of his intent prevent the shattering devastation of airplane metal and human bodies. Historian Clarence B. Carson, noting that industry, thrift, and frugality lead to independence, re wards, increased possessions, and savings, explains that "these ac tions are not good because they have good consequences; they have good consequences because they are good - i.e., that they are in keeping with the moral order. Self respect begets respect for others; honor begets honesty; fidelity be gets faithfulness."3 And the con verse holds equally true: sincere, well-intended ignorance in the selection of a fallacious means begets nothing but despair and disappointment - evil begets evil! 3 The American Tradition. (Irvington on-Hudson, New York: The Foundation for Economic Education, Inc., 1964), p.

238. Expropriation of private prop erty, without the owner's consent, falls squarely within the definition of stealing - certainly an immoral action. Yet, that is the standard procedure in Federal urban re newal programs, and the results are consistent with the immoral nature of the action, notwith standing the good intentions of civic leaders seeking to provide better living conditions for resi dents of slum housing via govern ment aid. An improper means, consequently and logically, must yield unhappy results. One cannot run a gasoline en gine on water. One cannot put an airship in flight with malformed wings. Elberta peaches will not grow from a clump of thistles, nor oysters from the desert sands. Nor can well-functioning communities be expected to sprout from the government-planned frustration of the lives of individuals. ~ State Medication THE WORST THING that can happen to a working man is to work for a company that isn't making money. Such a company, not growing, can never provide individuals with the security and opportunities they would like to have. The liberal who cries out for broad welfare measures and state control lacks inherent faith in people and in our free society. He treats them as though they were some type of chronic disease. As a result his approach has been one of continuous medication by the state.

L. c. MICHELON, Republic Steel, to NAM Institute on Industrial Relations, 1964 BRINGS FORTH THE EYE LEONARD E. READ THE LONGEST way round may sometimes be the shortest way home, even when "home" is the free market economy and its ideo logical running mate, individual liberty. My thesis is that most devotees of freedom have been at tempting an illusory short cut, following a mirage so to speak; whereas the right way to the free society is both long and difficult but possible. First, a word of background about "home," that is, the goal or where it is we want to go. Our economic world is being torn asunder, but so pronounced is popular opinion to the contrary that one must insert, "in my opinion," to qualify the j udg mente But this is, indeed, my opin ion. Simply observe: The Ameri can people are turning away from the free market; they are looking more and more to government for their security, welfare, and pros perity, and calmly accepting the 34 controls incidental thereto. Such abandonment of self-control in favor of state domination means economic regression over the long pull.!

In view of this unmistakable and continuing trend, it behooves citizens interested in freedom to reflect seriously on an effective way - regardless of how long the ,vay may be - as an alterna ti ve to the illusory and futile short cuts most of them have been at tempting. Let us concede that the Ameri can people are sharply divided on the question at issue. On the one side are the millions who give enthusiastic approval to govern mental responsibility for security, welfare, and prosperity. On the other side are the very few who see only ruin in the current drift, 1 For a further development of thif point, see "Freedom Follows the FreE Market," by Dean Russell, The Freeman January, 1963.

1965 LIGHT BRINGS FORTH THE EYE 35 who have a profound faith in free market processes and rely exclu sively upon them for eeonomic progress. What's Wrong with Them, or with Ourselves? Being one of the latter few, my purpose is to discover why the millions do not understand what we understand, or what ails us who would bring understand ing. Are they not educable and, if not, why not? Is there something out of kilter with our educational methods and, if so, what is it? What of these millions, the en thusiasts for statism? Could it be that they have really lost heart for an economy richer in its ma terial outpourings than any other ever known? Ortega suggested this possibility: Weare now beginning to realize that these centuries, so self-satisfie'd, so perfectly rounded-off, are dead within. Genuine vital integrity does not consist in satisfaction, in attain ment, arrival. Cervantes said long since: "The road is always better than the inn." When a period has satisfied its desires, its ideal, this means that it desires nothing more; that the wells of desire have been dried up. This is to say, our famous plenitude is in reality coming to an end. There are centuries which die of self-satisfaction through not know ing how to renew their desires, just as the happy drone dies after nuptial flight. 2 If Ortega was correct, then we live in a period which has satis fied its most urgent "desires, its ideal." In order to weigh prop erly the nature of this "ideal,"

we need to contrast it with the general poverty of less than 200 years ago. According to Adam Smith, there were mothers who had to bear 20 children to assure two reaching adulthood. Life ex pectancy at birth was less than 39 years, as against today's 70! Then came the Industrial Revo lution followed by the flowering of specialization and freedom in transactions: the free market econ omy more fully realized than ever before. Reckoned in terms of ev olutionary time, we witness in only a moment millions upon millions of people rising from abject pov erty to a state of unprecedented affluence - millionaires galore and an enormous upper middle class with the power to acquire luxur ies of every sort - our "famous plenitude." Indeed, so fantastical ly has this approximation of the free market performed that count less people - with little ability and little effort - have acquired great wealth. Because of a free dom they know nothing about, 2 From Revolt of the Masses by Ortega y Gasset (N. Y.: W. W. Norton & Co., 1932).

36 THE FREEMAN March many have in real life approxi mated the fantasy of something for nothing. 3 No Place to Go This emerging from abject pov erty to a state of great affluence has been a fascinating experience for Western man; wealth became his desire, his ideal, his aim in life. Millions fulfilled their desires and the rest came to believe that fulfillment was just around the corner. Political opportunists with their something-for-nothing schemes assure them of this. But reaching a goal dries up the desire for it. The road is al ways better than the inn. Ever so many of those with materialism as their god are now at the inn. There is no more road for them no place to go - and no happines~ at the inn! Millions of affluent Americans are less satisfied than Russian peasants still on the road struggling in vain for the sam~ 3 The gaining of wealth without ability or exertion must not, from the econo mist's standpoint, be condemned. The value of a good or service is not deter mined by either ability or effort exerted but, instead, by what others will give willingly in exchange. The making of a funny face on TV may have more value than the labored efforts of a college pro fessor. For a brief study of this all-im portant subjective theory of value, see Value and Price, by Eugen von Bohm Bawerk, 160 pp. Obtainable from the Foundation for Economic Education Inc., Irvington-on-Hudson, N. Y. Paper: $2.00.

false god but unaware of the hopelessness of their struggle. In this sense, "ignorance is bliss." An ideal is the conception of something in its perfect form and, thus, it is beyond the reach of imperfect men. Anything that is attainable loses its ideal qualities. If becoming wealthy is held as an ideal, what remains after wealth's attainment? The ideal vanishes the moment the inn is reached; the situation is "rounded-off, dead within." The reason for this catastrophe appears simple enough: Western man has confused means and ends. There is a moral purpose in a good economy. The aim is not to finance luxury, opulence, retirement from the road, a fancy suite at the inn. Wealth used thus proves to be an empty end or ob jective of earthly existence. Wealth, if its moral purpose is to be achieved, is but a means of freeing oneself from the ensla ve ment which poverty imposes. Wealth consists of all the tools that make possible the refinement of those aptitudes and faculties for which each individual is best fit ted; it permits everyone to freely exchange the product of the re sultant specialization. Wealth-the services of many others in ex change for one's own contribution - affords each man a better op portunity for getting more ef1965 LIGHT BRINGS FORTH THE EYE 37 fectively into life. But wealth can be quite as enslaving as poverty if used to escape from life, which is the case when wealth is re garded as an end in itself. Wealth should not be considered an ulti mate desire or ideal but, rather, a means for the more efficient pursuit of something that can qualify as the ideal.

Persons who desire wealth for wealth's sake, as their ultimate desire, are in trouble if they at tain their ideal. Ortega concluded that they die of self-satisfaction through not knowing how to re new their desires. Assessing the Obstacles Let us now consider the ob stacles that confront the few who would, if they could, halt the drift into statism and turn toward the free market economy and individ ual liberty. It is a fatal error to underassess the difficulty: • Wealth or materialism as an ultimate desire has proved to be a dead-end road, and the millions who have concentrated exclusively on it as an ideal cannot, by themselves, find any thing else for which to yearn and strive, anything that can qualify as an ideal. Persons who have been able to obtain so much for so little are in clined to mistake their opulence for a personal wisdom and, thus, are not easily teachable. They lack an eye with which to perceive the principles of freedom.

• The millions who haven't yet become affluent, the ones who envy the affluence they see about them, as well as the ease with which it came, and who can be taken in by something for-nothing schemes, are not easily teachable. They also lack an eye. • The millions with a hankering for power and who see appeals to mass gullibility as a means to attain it - those folks who specialize in contriving some thing-for-nothing schemes are far from teachable. They especially lack an eye for the free market philosophy. Even though the above refer ences encompass many millions of people, they hardly "scratch the surf ace." I am merely trying to establish the point that we are confronted with a blindness prob lem; that is, there isn't much in the way of an eye to pereei ve the free market and its miraculous workings. It is appropriate, however, that we first assess our own faults. Can it be that we, also, are afflict ed with blindness? Unquestion ably, yes, for many of us insist on trying to take nonexistent short cuts, and 'we learn nothing from 38 THE FREEMAN March our experiences. In a word, many of us refuse to concede that the longest way round may be the shortest way home.

An abbreviated self-portrayal, a sort of montage of us few: We have no trouble at all in seeing through the sham of the attrac ti ve nicknames and the loftily worded preambles of political pow er schemes. There is no distrac tion to us by reason of these wordy adornments. A very good eye here! Nor are we blind as to their essence. We clearly see that all of them, without exception TVA, Post Office, Farm Allotment Program, Urban Renewal, or whatever - are no more than something-for-nothing concoc tions. 4 We see that these grandi ose political plans are founded on something being given in retu rn for nothing, and given by a gov ernment which has nothing of its own to give. An excellent eye up to this point! But beyond this comes the blindness: Too many of us wish to correct the thinking of these millions who approve false meas4 Some of the millions will counter that people pay for TV A power and light, for postal service, for money borrowed from government, and so on. They do, in part. But the feature of these socializa tions is below-cost and below-market pricing. It is the uncollected part which has to be met by taxpayer subsidy that is the something the "beneficiaries" will receive in return for nothing.

ures by "telling 'em off"; to spread the true word by pounding into their heads that there's no such thing as a free lunch, and that these schemes are a fraud and delusion; to elect the "right" people to public office. And more: to give them economics in cap sules; to put the gist of our wis dom in parables; to get our mes sage across to the masses; to con vince the man in the street. As the sales manager puts it, "Get out there and sell! sell! sell!" Education is a drawing forth process, induced by an attraction to light. These attempted short cuts, on the other hand, are push ing thrusts, and if they have any effect at all, it is to repel. They do not serve to educate. The re cord is clear on this. Better noth ing than these. The Pursuit of Excellence Not only is the longest way round the shortest way home, it is the only way home! The form ula, as old as thinking man, is simple in pronouncement but as rare and difficult of achievement as any of life's disciplines. It is the road that has no earthly inn, the ideal unattainable, the renew al of desires that knows no sa tiety; it is, as Hanford Henderson phrased it, "the passionate pur suit of excellence in everything."

This he termed "a religion."

1965 LIGHT BRINGS FORTH THE EYE 39 Relating this longest way round to the problem at issue, it is plain that millions of citizens, at least in their present state, cannot per ceive free market processes. For these they have no eye. What brings forth the eye? Why the light itself brings forth the eye! We see that animal species com mitted to the depths of the sea or to subterranean existence lose or never develop sight, and from this conclude that where there is no light there is no eye for seeing. Nor need we confine these ob servations to the kind of light that can be precisely measured in candle power. The same principle is applicable to that inner light enlightenment - which we know not how to measure. In societies where there are no enlightened individuals we also note that there is neither light nor eyes developed to perceive it. Where the eye is blind or un derdeveloped, disaster to a once great economy cannot be avoided.

Thus, any person concerned about the environment in which it is his lot to live, is warranted - yes, selfishly justified - in doing what he can to bring forth the eye. But analysis reveals that one's in fluence in this respect is limited to self-perfection, that is, to in creasing one's own candle power; approximating, as nearly as pos sible, one's creative potentialities; acquiring the ability not merely to perceive but to conceive ideas; in a word, it is the art of becom ing human. 5 It is this long way round, the continual emphasis on personal emergence in consciousness and awareness, along with ever-im proving expository qualities-self generated enlightenment - that should be what we mean by in dividualism. It is, of course, as unindivid ualistic as it is futile to urge this form of individualism on anyone. Individualism, in this highest sense, is a product of the Creative Light and of self-urging. But of one thing I am certain: Regard less of any pretensions to the con trary, no one but an individual dedicated to and having success with his own upgrading has any influence whatsoever on better ing the perception of others, on improving society or the free mar ket or whatever. Can one develop light enough to open eyes? That's the question. For light, and light only, brings forth the eye!

If this longest way round has the "fault" of being difficult, it at least has the virtue of being realistic - and possible - in my opinion. + 5 For a further exploration of this idea, read Lecomte du N ouy's commen taries on the evolution of man, especially Chapter XI in his Human Destiny. Now available in paperback. A Mentor Book.

6. An American Dream CLARENCE B. CARSON No man any more has any care for the morrow, either for himself or his children, for the nation guarantees the nurture, education, and comfortable maintenance of every citizen from the cradle to the grave.t - EDWARD BELLAMY, 1888 THE ATTRACTION of ameliorative reform is· the promise of a better world in which to live. There may be some exceptions to this rule, notably for those who find in re formist activity the means of ex ercising power over people. But for the generality of people improve ment, not power, has been the lure. They have been drawn into the labyrinth of reform programs by visions of what the world would be like when the reformers had insti tuted their reforms. Utopian vi sions have been the magnets pull ing peoples into the orbits of reformers. Yet, so far as we know, most people have rejected and do reject Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books.

40 the possibility of utopia. "Uto pian" is a term of derision for describing impractical dreamers. The more practical minded per ceive the fallacies in the utopian blueprint. Those with keener imaginations foresee the empti ness of utopia, even if it were possible. Man was meant to strive, some will say; contentment is for cows. Even so, it may be that the argument against utopia that has the broadest appeal is the mani fest impossibility of achieving it. In short, man and the universe are not so constructed as to make utopia possible. But the reformist bent has tri umphed in America, and in many other places, in our day. And 1 Edward Bellamy, Looking Backward -2000-1887 (Boston: Houghton Mifflin, 1888), p. 90.

1965 AN AMERICAN DREAM 41 ameliorative reform has as its implicit goal the. achievement of utopia. How can this state of affairs have come about? How can men have rejected utopia and em braced reforms which have as their end the achievement of uto pia? From Reality to Utopia Two developments made such a contradiction appear not to be one. First, there was the cutting loose and flight from reality. This did not make utopia appear possible to most sane people, but it did help to render programs and plans drawn from utopian visions ap parently feasible. Second, a par ticularization of utopia took place, and social reformers advanced what appeared to be limited pro grams which they hoped would move them to their ultimate goal. At the same time, though; that the means were particularized in spe cific programs, the goal was gen eralized into such hazy rhetorical phrases as peace, prosperity, and progress. Thus, a reversal of the utopian mode occurred as the at tempts were made to actualize utopia. In utopian literature, the goal - the good society - is often pictured in luxuriant detail; while the means to the arrival at this goal are not usually specified. Note that the utopian could thus avoid the odium that would be associated with the coercion and revolu tion by which his goal has to be pursued, and the reformer could avoid the disrepute attached to utopianism.

It is hazardous, however, to fol low a general analysis of these developments any further. These generalizations do not do full jus tice to the complexity of the phe nomena. Moreover, the above for mulations may be interpreted as implying that utopians and re formers have intentionally played down or remained silent about certain facets of their programs. This may not have been the case. On the contrary, utopians did not envision the force and violence which would accompany efforts to arrive at their goals. By a similar myopia, reformers need not know that they are utopians. It must be kept clear that intellectuals have not only drawn others into an il lusory mental realm; they are quite often victims of the same delusions. This was made possible by the flight from reality. But the point at hand is that the impetus to the flight from reality which has eventuated in the triumph of melioristic reform was provided by utopian visions, though these have long since receded beyond the horizon from whence today they emit the colors that are identified by believers as peace, prosperity, and progress.

42 THE FREEMAN March The American IILag ll Those advancing the flight from reality had great difficulty in launching America. The fact has not been sufficiently appreciated. When writers note that Americans did not rush to adopt ameliorative reforms as avidly as Europeans, the matter is often treated as the "social lag" of Americans. Ameri cans "lagged" more than fifty years behind Germans in provid ing certain kinds of "insurance" programs for workers. Americans "lagged" many years behind Eng land in providing old-age pensions, and some several years in empow ering labor unions. Contrariwise, France is far ahead of the United States in rent controls (and in housing shortages), and England is much further along the road to completely socialized medicine. The matter can and should be described in quite different terms. Americans held out against the lure of utopia, the promises of re formers, the blandishments of rev olutionaries much longer than many Europeans. Reform, when it came to America,. was more mod erate and mild than in most Euro pean countries, and did not so drastically alter the existing situa tion. Still, it has come, and the gradualness of the movement has obscured for many Americans the import of it.

There were tremendous obstacles to the triumph of reformism in America. The institutions, tra ditions, habits, and beliefs of Americans ran counter to the out look and practices associated with ameliorative reform. But, the cas ual observer might object, on these grounds reformism should have come much more readily to Ameri ca than to Europe. No country was more deeply locked in age-old ways than Russia. The British tradition was hoary with age before Amer ica was an adolescent. Surely, America was more. flexible than bureaucrat-ridden France, the American more amenable to re form than the Slavic peasant. Be sides, the governments in America were generally more responsive to the populace than in Europe. The greatest weakness in these objections is a misunderstanding of how reformism has been ad vanced, and by whom. If the "peo ple" had originated and advanced ameliorative reform, it should have come very early to America.

Traditions and customs in Amer ica were not so firmly fixed as in many countries. On the other hand, popular government was much better provided for in Amer ica than in most countries. To blame governmental intervention and security programs upon de mocracy, however, is to confuse effect with cause. Undoubtedly, there are now many people who 1965 AN AMERICAN DREAM 43 have vested interests in certain governmental programs, and there are many others who have accepted the notion that their prosperity is due to the efforts of politicians. But these are effects, not causes, though they do contribute to the continued feasibility of politicians advancing ameliorative reform. Reforms were and are advanced by intellectuals (and their satraps among the bureaucracy). In any country where there was a mod erately enlightened electorate, it has taken many years of vigorous activity to get a majority for re forms of any great dimensions.

The experience of reformers in England and America should give ample evidence for this statement. 2 Drastic social reforms were in troduced most readily in Russia, Germany, and Italy. It was the work of intellectuals, or pseudo intellectuals. These were countries without a lengthy experience in popular governments, but coun tries within which tradition waR strong. But the intellectuals were - as they have tended to be in creasingly everywhere - disaffect2 There is, of course, a demonstrable corollary between universal suffrage and the triumph of reformism in many coun tries. And reformers have been eager proponents of universal suffrage. The significance of this is not far to seek: the illiterate, un propertied, and politically inexperienced succumb more readily than does a limited electorate to the promises of reformers. ed from the tradition. Not only was tradition without effective spokesmen quite often, but also the populace was inexperienced in defending it.

Stabilizing Influences In America, things were quite different. The United States Con stitution had been formed by the leading thinkers in America. Much of the political tradition had taken shape in the historical memory of much of the populace. The tradi tions had been freely formed, for the most part, and had the sup port of intellectuals for most of the nineteenth century. Americans revered their institutions, took pride in them, were accustomed to thinking of them as the best in the world. Equally important as an obsta cle to reform was the character of American institutions. The United States Constitution - and proba bly most state constitutions - is a conservative document. That is, the government which it provides for makes change difficult to ac complish. Fora bill to become law it must be passed by a majority of the House of Representatives, a maj ori ty of the Senate, and signed by the President. Even then, it may be nullified by the courts as being unconstitutional. The Con stitution can, of course, be amended, but amendments must 44 THE FREEMAN March be approved by conventions or legislatures in three-fourths of the states to become a part of the Constitution. Yet there can be no legitimate occasion for violent rev olution on majoritarian grounds, for the Constitution can and has been amended, and laws can be and have been passed. (It should be noted here that reformers have managed to advance their uncon stitutional programs in the twen tieth century without getting the Constitution amended. How they have done this will be taken up later.) The Constitution was the bed rock of political reality to Ameri cans for most of their history, too.

There was good reason for this be lief. It was written and approved by men deeply immersed in his torical experience and accustomed to attending to the enduring na ture of things. It is often alleged that the endurance of the Consti tution can be ascribed to its elas ticity. The fact that it has lasted so long might better be attributed to its foundation in enduring reali ties, in realities about the nature and purpose of government, about the nature of man, about the dan gers of concentrated power, and about the importance of limited action. The principles derived from these realities were the bases of the checks and balances insti tuted. These latter were mighty buttresses to liberty just as they were formidable obstacles to re form. A Multiplicity of Dreams It was with some trepidation that I decided to call this piece "An American Dream." It is mainly about a utopian vision, and utopia was not the American dream. Indeed, there was no Amer ican dream, and this becomes ap parent when the situation is viewed historically. There were many American dreams. From the earliest colonial days the diversity and multiplicity of American dreams are obvious. The Puritan leaders in New England had one kind of vision, the settlers of Vir ginia another. The society envi sioned by Quakers in Pennsylvania was different from that of those who planted North Carolina. The dream of Roger Williams in Rhode Island differed dramatically from that of the L.ords Calvert for Maryland.

Nor when a united body had been wrought out of these diverse elements did the multiplicity of dreams disappear. The American agreement, as I have pointed out elsewhere, was an agreement to disagree. American unity was not fashioned by the crushing of di versity but by providing a frame work in which each man could have his own vision, dream his 1965 AN AMERICAN DREAM 45 own dream, make his own way. If a man had visions of utopia, and some did, he was free to pursue it alone or in the company of others, so long as the others joined him voluntarily and could leave when they were ready. The American way was the voluntary way. It was, in essence, individualistic. Religious and Political Liberty Still, there were· dreams shared by a sufficient number of Ameri cans tha t they could be called American dreams. One of the ear liest and deepest of these was the desire of men to practice their re ligious beliefs freely. For most, this was not yet a vision of reli gious liberty when the earliest set tlements in English America were made. The Pilgrims only wanted a place to practice their own version of Christianity; so it was, too, with that larger group· of people known as Puritans. They drove out dissenters from among them, pro claiming that those who disagreed with them were free - free to go!

Even the enlarged view of reli gious freedom in Maryland after 1649 encompassed only those who prescribed to certain tenets· of re ligious orthodoxy. Some of the Anglican colonies - notably Vir ginia - permitted no other reli gious practices. But by the time of the American revolt from England many· Americans had come to accept a new vision, a VISIon of a land in which each man might freely choose and practice his reli gion without let or hindrance. Within a few decades, this had be come the established practice throughout America. There was another shared dream, too. It is aptly described in a phrase used by Dumas Malone and Basil Rauch as the title of a textbook for American history. Americans hoped to create an Em pire for Liberty.3 The word "em pire" had not been loaded with pejorative connotations at the time of the founding of the Republic. It was still a descriptive word. It meant the presence of diverse peo ples - diverse in origin, in reli gion, in language, and so on - un der one system of government and one flag. The dream of an empire for liberty in America, then, was the dream of many peoples united by a single constitution, one which protected them in their diversity and provided for individual lib erty. This was the American po Iitical dream, and it came very close to realization in the course of the nineteenth century.

Many individuals shared a dream, too, each for himself. The essence of the vision is captured in the phrase, personal inde pendence. Americans used more 3 (New York: Appleton-Century Crofts, 1960,2 volumes).

46 THE FREEMAN March earthy phrases to describe the vi sion: "to be one's own man," "to be beholden to no man," "to be free, white, and twenty-one." The articulation of this vision ranged from Thomas Jefferson's prized yeoman farmer to Horatio Alger's youth who made good in the big city. The dream was realized (and still is) by many Americans, though not all went from bobbin boy to industrial magnate as did Andrew Carnegie or from obscu rity to great influence as did Dwight L. Moody. But affluence and influence were the further reaches of the dream, for it could be both modestly envisioned and fulfilled. For most, it involved such things as a home of one's own, a shop or store with a dependable clientele, a farm free of debt, and so on through the variation of goals which free men· may set for themselves. These were not visions of uto pia, nor of euphoria. They in volved hard work, careful husban dry, continued striving, and per chance the f aith that if one had shown himself a worthy steward of his possessions, there would await him at the end of life the inimitable praise, "Well done ... ,"

promised in religious teachings. The utopian dream is the opposite of the American dreams. It is a vision of earthly bliss, not of struggle and accomplishment. It is a collective vision, not an individ ualistic one. The vision is one for society, and everyone in society must be drawn into it, whether he will or no. It is monolithic; diver sity must yield to uniformity and conformity for it to be realized (if it could be). Utopians have, of course, pictured release and "free dom" for individuals in their uto pias, but such evidence as we have from attempts to create utopias indicates that no importance need be attached to these claims. liThe Dream" Emerges In the course of time, though, American dreams have begun to be subsumed into An American Dream. Even in our day, individ uals still dream and work for the fulfillment of their dreams - with considerable success as measured by the homes, farms, vacation cot tages, and businesses that they own. But the Dream is swallowing up the dreams, as property is cir cumscribed by restrictions, as taxes increase at all levels, as gov ernment guarantees of security replace individual provisions for security, as inflation destroys the utility of money as a means of saving, and as people are bom barded on every hand by products of thought carried on at the level of social units rather than individ uals. In short, a transformation has taken place in the type of 1965 AN AMERICAN DREAM 47 dreams that are approved by so ciety, and a long term effort has gone on to draw men into the men tal context of a single dream or vision.

In political terms, the Dream has had a variety of names: the Square Deal, the New Freedom, the New Deal, the Fair Deal, the New Frontier, and, most recently, the Great Society. In the latter two phrases the character of the Dream is made manifest with greater clarity: it is a collective vision to be arrived at collectively by the use of government to recon struct men and society. The terms may be new, but the Dream is an old one. It is a uto pian vision for America. The struggle to implant the vision in the minds of Americans has been a long one (and will require con siderable verbiage in the telling of it), for the vision was set forth in a manner that began to appeal to some Americans in the last years of the nineteenth century. Uto pian novels poured forth in great number-and variety from about 1885 to 1911. As one book points out, "the 1890's. in the United States [w Jas the most productive single period in the history of utopian thought."4 Some of the more important utopias, mainly by 4 .Glenn Negley and J. Max Patrick, The Quest for Utopia (New York: Henry Schuman, 1952), p. 138.

American writers, were: Ignatius Donnelly, Caesar's Column (1890) ; William Morris, News from N 0 where (1890) ; Thomas Chauncey, The Crystal Button (1891) ; Igna ti us Donnelly, The Golden Bottle (1892); William D. Howells, A Traveler from Altruria (1894); H. G. Wells, The Time Machine (1895); and Edward Bellamy, Equality (1897).;' "Loo1<ing Back.ward" One book, however, may have been more important than all the others combined in awakening the vision in America. It certainly gave great impetus to the produc tion of utopias by its success. This was Edward Bellamy's Looking Backward, published in 1888. By 1890 the book had sold 200,000 copies, and was in that year sell ing at the rate of 10,000 every week. 6 It is, even today, available in an inexpensive paperback edi tion. Within two years after the publication of the book, 162 clubs located in 27 states were holding meetings. They were called Na tionalist clubs. Bellamy .did not use the word socialist to describe his obviously socialist system, and his early followers took a more neutral word also. A magazine, 5 See ibid., pp. 19-20.

6 Daniel Aaron, Men of Good Hope (New York: Oxford University Press, 1951), p. 104.

48 THE FREEMAN March called The Nationalist, was found ed by friends of Bellamy to spread the ideas. The book had an impact upon such well-known figures as William Dean Howells, Mark Twain, and Thorstein Veblen. The Populist Party was influenced by Bellamy, for an observer at the Convention in 1892 declared that Bellamy's readers "were the brains of the convention. They were col lege professors, editors, artists, and authors. . . ."7 Bellamy was friendly with all sorts of reform ers and intimate with some of the professed socialists. Henry Dema rest Lloyd wrote him in 1896, "The movement we are in is Interna tional Socialism .... Why not rec ognize it and say so !"8 Bellamy, however, made socialism palatable as a dream to many people without calling it by that name. What was there about this book that occasioned its great impact? An examination of Looking Back ward is in order. It is a novel, a romance, a fantasy. It is set in the city of Boston in the year 2000. It has its hero (Julian West) and its heroine (Edith Leete) who give the story its "love" interest. The very clever device for unfolding the story is that the hero was mes merized in 1887 and slept unbe knownst to anyone until 2000.

This device allows the reader to 7 Quoted in ibid., p. 130. 8 Quoted in ibid., p. 132. identify with West as he encount ers the surprising changes that have occurred during his long sleep. Boston has been trans formed. His first view of the city convinces him of this: At my feet lay a great city. Miles of broad streets, shaded by trees and lined with fine buildings, for the most part not in continuous blocks but set in larger or smaller inclosures, stretched in every direction. Every quarter contained large open squares filled with trees, among which statues glistened and fountains flashed in the late afternoon sun. Public buildings of a colossal size and an architectural grandeur unparalleled in my day raised their stately piles on every side. Surely I had never seen this city nor one comparable to it before. 9 It was Boston all right; the fa miliar pattern of the Charles River assured him of that. But it was a New City he beheld, located on aNew Earth. In short order he was to learn that not only had the change occurred in Boston but also throughout the United States. Be yond that, Europe had been trans formed as well, and the· rest of the world was in the process of a similar change. Utopia had been achieved.

In this New Age, war has been banished from the face of the earth; universal peace reigns su preme. There is no longer any 9 Bellamy, Ope cit., p. 38.

1965 AN AMERICAN DREAM 49 crime to speak of, only something called atavism - vestigial remains of the criminal mind from another era - which produces occasional antisocial acts. There is no longer any corruption or demagoguery in politics - in fact, there is very lit tle politics. There are no labor problems, nor any other class or group problems. All destructive activities have been banished, and a vast surge of constructiveness and creativeness has emerged. As Dr. Leete, the interlocutor of the story, describes the situation: "It has been an era of unexampled intellectual splendor. Probably hu manity never before passed through a moral and material evolution, at once so vast in its scope and brief in its time of accomplishment, as that from the old order to the new in the early part of this century. When men came to realize the greatness of the felicity which had befallen them, and that the change through which they had passed was not merely an im provement in details of their condi tion, but the rise of the race to a new plane of existence with an illimitable vista of progress, their minds were affected in all their faculties with a stimulus, of which the outburst of the mediaeval renaissance offers a sug gestion but faint indeed. There en sued an era of mechanical invention, scientific discovery, art, musical and literary productiveness to which no previous age of the world offers any thing comparable."10 10 Ibid., p. 161.

The Planned Economy What had wrought all these marvelous changes? It all came about very simply, or so Bellamy would have us believe. All private production of ·goods and provision of services was taken over by the governmen t. The economy was ra tionally organized - i. e., planned, money abolished, income equalized, production scientifically planned, competition eliminated, and men bountifully supplied with goods and services. Labor was provided by an industrial army, to which every male was subject from 21 to 45. The industrial forces were organized in great guilds, and the President of the country chosen from these. Professionals had their own organizations. One might suppose that this drastic alteration in ways of doing things had been accomplished by revolution. Not at all; instead, it came about by peaceful evolution. Let Dr. Leete describe the process once more: "Early in the last century the evo lution was completed by the final con solidation of the entire capital of the nation. The industry and commerce of the country, ceasing to be con ducted by a set of irresponsible corpo rations and syndicates of private per sons at their caprice and for their profit, were intrusted to a single syn dicate representing the people, to be conducted in the common interest for 50 THE FREEMAN March the common profit. The nation, that is to say, organized as the one great business corpora tion in which all other corporations were absorbed; it became the one capitalist in place of all other capitalists, the sole employ er, the final monopoly in which all previous and lesser monopolies were swallowed up, a monopoly in the prof its and economies of which all citizens shared. The epoch of trusts had ended in The Great Trust. In a word, the people of the United States concluded to assume the conduct of their own business, just as one hundred odd years before they had assumed the conduct of their own government, organizing now for industrial pur poses on precisely the same grounds that they had then organized for po litical purposes."ll In the accomplishment of this, " 'there was absolutely no violence.

The change had been long fore seen. Public opinion had become fully ripe for it, and the whole mass of the people was behind it.' "12 Neither violence, discord, nor compulsion ushered in the new age, nor characterized relation ships within it. Instead, as Dr. Leete explains to Julian West, "'If I were to give you in one sentence, a key to what may seem the mysteries of our civilization ... , I should say that it is the fact that the solidarity of the race and the brotherhood of man . . . are 11 Ibid., p. 56. 12 Ibid., p. 67 ... ties as real and vital as phys ical fraternity.' "13 J ulian West poses the obvious question at an earlier point in the book: "Human nature itself must have changed very much," I said. "Not at all," was Dr. Leete's reply, "but the conditions of human life have changed, and with them the mo tives of human action."14 A minister takes up the explana tion: " ... Soon was fully revealed, what the divines and philosophers of the old world never would have believed, that human nature in its essential qualities is good, not bad, that men by their natural intention and structure are generous, not selfish, pitiful [full of pity], not cruel, sympathetic, not arrogant, godlike in aspirations, in stinct with divinest impulses and self sacrifice, images of God indeed, not the travesties upon Him they had seemed. The constant pressure, through numberless generations, of conditions of life which might have perverted angels, had not been able to essentially alter the natural nobil ity of the stock, and these conditions once removed, like a bent tree, it had sprung back to its normal upright ness."15 The mode of the transition from the old to the new society is vague 13 Ibid., p. 137 14 Ibid., pp. 60-61 15 Ibid., pp. 287-88.

1965 AN AMERICAN DREAM 51 and inexplici t. Unlike Khrushchev - and Marx before him - Bellamy believed that it was possible to make omelets without breaking eggs. But no such vagueness at tends the descriptions of the good society which has emerged in 2000 A. D. It is described in lov ing detail. Julian West visits the department stores from which goods are obtained, and the dis tribution system from central warehouses is amply described. The system of state issued credit which replaces money is pictured minutely. How men are got to perform the various services for society are spelled out in intricate detail. Blueprint for Tomorrow It does not require a great deal of imagination, either, to see that many things which Bellamy en visioned have begun to emerge in many tendencies of our day - if one ignores the compulsion, the thrust to power of politicians, the unpleasantness, and the dreary uniformity of state produced things, that is, if one removes the utopian elements. Bellamy made it clear, in a letter appended to Looking Backward, that he intend ed the book as predicting things to come: Looking Backwa'rd, although in form a fanciful romance, is intended, in all seriousness, as a forecast, in accordance with the principles of evo lution, of the next stage in the indus trial and social development of hu manity, especially in this country .... 16 A few examples of some "fore casts" will reveal Bellamy's pre science. Saving is no longer a virtue in this socialist heaven. Dr.

Leete explains why this is so: "The nation is rich, and does not wish the people to deprive themselves of any good thing. In your day, men were bound to lay up goods and money against coming failure of sup port and for their children. This ne cessity made parsimony a virtue. But now it would have no such laudable object, and having lost its utility, it has ceased to be regarded as a vir tue."17 The explanations that are cur rently offered for the phenomenon differ somewhat from this, but saving is no longer generally rec ognized as a virtue among us. Nor in the good society pictured for us is there any longer any con nection between amount of work and rewards for it. Dr. Leete is again the narrator: "Desert is a moral question, and the amount of the product a material quantity. It would be an extraordi nary sort of logic which should try to determine a moral question by a ma terial standard .... All men who do their best, do the same. A man's en16 Ibid., p. 334.

17 Ibid., pp. 89-90.

52 THE FREEMAN March dowments, however godlike, merely fix the measure of his duty."18 In short, each person receives the same income, regardless of his contribution. Greater ability only denotes greater responsibility to contribute to the general well-be ing. We have developed a variety of devices, notably the progres sive income tax, for achieving this ideal. Many other similar examples are given. There is no longer any thing which could be called char ity. Each person receives an in come by virtue of his being a person, and this income is con ceived of as his by right. They spend their surplus on public works, "'pleasures in which all share, upon public halls and build ings, art galleries, bridges, statu ary, means of transit, and the conveniences of our cities, great musical and theatrical exhibi tions, and in providing on a vast scale for the recreations of the people.' "19 (It could be that John Kenneth Galbraith's recommenda tions for spending on the "public sector" were not as original as has been supposed.) Children are no longer dependent upon parents for their livelihood, and the only family bonds are affectional. State governments have disappeared, 18 Ibid., p. 94.

19 Ibid., p. 243. and such power as remains has been centralized in Washington. World peace is maintained by " 'a loose form of federal union of worldwide extent. An interna tional council regulates the mu tual intercourse and commerce of the members of the union, and their joint policy toward the more backward races, which are grad ually being educated up to civil ized institutions.' "20 Of course, Bellamy was not forecasting; he was dreaming. He was dreaming a dream which evoked or reinforced a VISIon which had already begun to take shape in the minds of many re formist intellectuals. He made so cialism so vague as to how it was to be achieved and so bright as to the future it would bring that many began to lose their misgiv20 Ibid., p. 140. Bellamy provided some thing else, too, a distorted version of his tory in the latter part of the nineteenth century, which many a history textbook still carries. Note this description of com petition. " 'The next of the great wastes was that from competition. The field of industry was a battlefield as wide as the world, in which the workers wasted in assailing one another, energies which, if expended in concerted effort .••would have enriched all. As for mercy or quar ter in this warfare, there was absolutely no suggestion of it. To deliberately enter a field of business and destroy the en ter prises of those who had occupied it previ ously ... was an achievemEm t which never failed to command popular admiration.

Nor is there any stretch of fancy in com paring this •.. with actual warfare.'" Ibid., pp. 230-31.

1965 AN· AMERICAN DREAM 53 ings about it. Above all, he do mesticated and "Americanized" socialism and contributed greatly to sowing the seeds which have produced a plant that comes nearer and nearer to being An American Dream. By 1964, Democrats in convention could evoke many of the attributes of Bellamy's utopia as recent accomplishments or things ·to come in the future un abashedly. They could do this, just as Bellamy could, without reference to the compulsion, inter vention, loss of vitality in human relations, power in the hands of politicians, spreading deliquency, international disorder, and terror and violence let loose in the world. In short, many people have now flown far enough from reality that they no longer distinguish. be.. tween utopian fancies and the realities of the world in which they live. This did not come about over night, however. Some intellectuals, artists, politicians, and unwary readers may have taken up Bel lamy's dream as their own in the 1890's, but most Americans did not. The indications are that a great preponderance of Ameri cans who thought about it in those years would have agreed with Andrew Carnegie, who wrote in 1889: ... To those who propose to substi tute Communism for ... Individual ism the answer, therefore, is: The race has tried that. All progress from that barbarous day to the present time has resulted from its displace ment .... It necessitates the changing of human nature itself .... We might as well urge the destruction of the highest existing type of man because he failed to reach our ideal as to favor the destruction of Individualism, Pri vate Property, the Law of Accumula tion of Wealth, and the Law of Com petition; for these are the highest results of human experience .... 21 At any rate, American voters turned back populism at the polls, rejected Bryan and his more mod erate reformism, turned down the Socialist Party in election after election, and would accept only bits and pieces of reformism for many years.

Before Americans would be drawn into the orbit of the vision, their eyes had to be drawn away from viewing human nature, laws in the universe, absolutes and principles, and the record of his tory. A new outlook had to pre cede the general acceptance of the dream. The flight from reality had to be extended. ~ 21 Andrew Carnegie, "Wealth," Democ racy and the Gospel of Wealth, Gail Ken nedy, ed. (Boston: D. C. Heath, 1949), p.S. The ne~t article in this series will concern "The Pragmatic Sanction of Flux."

The Frontier Is FaBBDDM EnwARD P. COLESON IN the report of the Superintend ent of the Census for 1890 appeared the remark that at long last the frontier was gone, that while there were still pockets of unsettled terri tory, there could hardly be said to be a frontier line anymore. Thus closed an epoch in American history, an heroic and often tragic story of the win ning of a continent. But the passing of the actual frontier was not the end of the story, just the beginning: appar ently the energies once expended on the Oregon Trail or clearing a plot of land about the cabin door were now to be released on a new fictional frontier where countless millions of cowboys and Indians would perish on movie and TV Dr. Coleson is Professor of Economics at Spring Arbor College in Michigan. 54 screens. The battle for the West had just begun. Furthermore, the preoccupation with the American frontier is more than an obsession of "pulp"

magazine writers and their fans. Serious scholars have attributed all sorts of virtues to the Ameri can people, clearly the consequence of the pioneer experience, or so they think. Others were sure that such calamities as the Great De pression were in fact the con sequences of the passing of the frontier: we just couldn't live without one! And, finally, when politicians run out of slogans New Deals, Fair Deals, and the like - there is always the New Frontier to catch votes. Just what was this "frontier effect," which has such a hold on the American imagination, and 1965 THE FRONTIER IS FREEDOM 55 how has it shaped our country for good or ill? What the frontier Didn't Do The opening up of the New World by Columbus, Cabot, Drake, and a host of others was a tre mendous event to a Europe which had been stewing in its own juice for centuries. Here were boundless horizons and new frontiers with out limit. Surely, our contempor aries reason, liberty was the nat ural outgrowth of such an expan sive situation in a world of un spoiled abundance. It is inevitable also, according to the same logic, for us to find ourselves in quite a different situation today with our empty lands long since filled and our resource base already seriously depleted. The freedom of the frontier is no longer pos sible; and anyone who insists we could and should operate our econ omies and governments according to the principles of the "Gay Nineties" is completely out of contact with reality, or so we are told.

Now, as a matter of fact, the latter part of the nineteenth cen tury and the early years of the twentieth, up until about World War I, was one of the outstanding eras of human liberty in world history. John Maynard Keynes extols this period in the most complimentary terms. But we must not assume, as people tend to do, that if life in the 1890's was rel atively simple and unfettered that the 1790's must have been freer and the 1690's still more so. This just isn't the truth. The world of three or four centuries ago, with the machine age still well in the future and vast areas yet unex plored, was as complicated and repressive in its way as our own and for the same reason. Freedom is the consequence of a philosophy of life, a Weltanschauung or "world view" as the Germans would say, a modus operandi, the outworking of a deliberate choice, and not the spontaneous result of Iiving at a special time in his tory or in some favored natural environment.

The notion that freedom is as natural as breathing for those hardy souls who dwell on the pioneer fringe is not supported by the facts. If the English settlers in America absorbed the love of freedom by osmosis from the air or water of the New World, then why didn't the French and Span ish catch it, too? New France was born in chains and never prospered; that is one of the rea sons why the English finally won out. Spain's regulations of her Amer ican colonies were, if anything, even more stupidly repressive. In fact the only legal outlet for an 56 THE FREEMAN March Argentine cow, about the only likely export of the fertile pampas back then, was westward across the continent, up over the Andes (the second highest range in the world), by ship from Peru to Panama, then across the fever-in fested Isthmus, and finally once a year to Spain, when the royal convoy sailed. All of this man made complexity and confusion, when a child could see that the obvious and practical route was out the front door through Buenos Aires by direct sea route to Eu rope!

The colony would have lan guished utterly but for an active smuggling trade carried on in spite of terrible penalties. Had one remonstrated with the royal bureaucracy about this or a multi tude of other equally inane pro hibitions, he would have been told that there was already a "surplus" and, but for these benign restric tions which like a dam held back this ruinous wave of potential abundance, the markets of the world would be in unda ted with such a glut that every tradesman, merchant, and farmer would be bankrupt. This pleniphobia, or fear of abundance, was as much of an obsession to the seventeenth cen tury mercantilists as it is to our contemporaries who are sure auto mation will be our ruin. It is hard for us to see how they ever got the notion that their meager little was too much; yet, so many fail to see that there are still vast unmet needs even today. Frontier Abundance and Reality Not only is freedom far from a spontaneous development on the frontiers of the world, but the familiar notion of the fabulous wealth of a bounteous nature needs some qualification. Many a "modern" who prates endlessly about the departed glories of ear lier days would return by jet plane, the next flight, should any one exile him to some pioneer settlement of today. Trees on the stump and ore in the ground are indeed assets, but they take some fixing before they are very useful.

One might starve or perish from exposure in the midst of such nat ural abundance, as indeed many have, simply because most of na ture's gifts must be processed to be of any use to mankind. Of the many broad and rich frontiers of George Washington's day - and the world was mostly "new frontier" from pole to pole back then - only a few conspicu ous areas have developed phenom enally. The rest are still back ward, probably now the benefi ciaries of some development pro gram. They haven't advanced and won't, not because resources are 1965 THE FRONTIER IS FREEDOM 57 lacking but because the conditions necessary for progress are lacking. While such people need modern machinery, education, sanitation, and about everything else imagin able, these tools and techniques still won't get them started down the road of progress in any per manent way unless they change their minds fundamentally. The philosophy of freedom, liberty under law, could accomplish for them what multiplied billions in foreign aid has not done and can not do.

When the Industrial Age started somewhat more than two hundred years ago, the Western world suffered from the same health and nutritional problems that plague the backward areas even today. There was the same desperate problem of poverty and want that casts its shadow over many a land today. In England two centuries ago, a bushel of wheat cost nearly a full week's wages for a common laborer. The diet was meager and monotonous, and famine stalked the land when the scanty crops failed due to natural calamities. Epidemics swept away large frac tions of the population on occa sion. Infant and childhood mortal ity was appallingly high: Adam Smith remarked that it was not un common to find a peasant mother in the Highlands of Scotland who had borne twenty children but had not even two yet survIvIng. In short, we find the same heart rending conditions that can be found· in the backward areas of the world even today. What hap pened to change all this for a few favored people like you and me in the midst of a world of ignorance and want, where the typical individual goes to bed hun gry every night?

Frontiers or Freedom? While some were seeking New Frontiers, other Englishmen be gan to tinker with textile machin ery in the early years of the eighteenth century. Somewhat later Watt produced a practical steam engine that got industrial production off to a vigorous start. While it is never possible to know all the conditions which went into making a given situation develop as it did, one thing is certain. This movement for the· betterment of mankind came close to dying in its infancy. Watt was not per mitted to set up a shop in Glas gow, and might never have gotten his chance at aIIif the University had not taken him in as the offi cial instrument maker. Savage mobs attacked the new textile mills and destroyed them. The sewing machine was invented in France before it was known in America, but was destroyed by French tailors who feared auto58 THE FREEMAN March mation. A mowing machine was devised in England before Mc Cormick invented the reaper, but again it was throttled in its in fancy. Ingenious people no doubt invented many a contrivance again and again across the ages, only to have them stillborn because of the difficulties of machining without the lathes and other ma chine tools we take for granted and more particularly because the neighbors simply would not allow the new labor-saving device to come into being.

There is little reason to believe that the frontier held the magic that a lot of people ascribe to it. Astounding progress has exploded in old settled lands such as the England of George III or West Germany after World War II. Frontier lands have remained primitive for generations. Nations with great natural resources have stagnated while tiny countries like Switzerland have forged ahead without much of anything to go on. The mysterious ingredient of industrial progress is simply the freedom to try and the assurance that creative effort will be re warded. The stagnation of the Great Depression was the con sequence of massive governmental interventions in the economic process, not the passing of the frontier. Certainly, the backwardness of many an underdeveloped nation today is related to the fact that the enterprising individual is stig matized and ruined by his neigh bors and the local officials. To have lived in some remote "native" vil lage long enough to know how their social curbs on progress oper ate is to understand why the best laid plans of economic develop ment schemes have a way of failing utterly.Without freedom to achieve and without a measure of security for life and property, aid is use less; and with freedom, it is un necessary. Any enterprising in vestor is happy to put his money into a going concern and nothing succeeds like success. But the rigidities of a managed economy stifle initiative and scare off ven ture capital, keeping the depressed area stagnant and backward. Only a rich country can afford the eco nomic interventions of socialism - and they can't afford it for long.

Freedom is not a luxury for a few wealthy nations, as many of our liberal pundits try to tell us, but a necessity for the poor and hungry as Erhard's Germany so eloquently demonstrated after her crushing defeat in World War II. ~ A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN "TheGreatSociety" NOT so LONG AGO one would have sworn that collectivist and inter ventionist thinking was losing its appeal. The economists were re volting against Lord Keynes, at least to the extent of becoming "neo-Keynesians" or "post-Keynes ians." Students were becoming Young Americans for Freedom, or joining the Intercollegiate Society of Individualists. The conservative movement was gaining many new adherents. Now, suddenly, everything seems to be reversed. The Left has come back with a rush. A socialist book, The Other America - Poverty in the United States, by Michael Harrington, becomes the Bible of those who are pushing an anti poverty campaign that depends on self-defeating state action. The ancient League for Industrial Democracy, an outgrowth of the Intercollegiate Socialist Society, does not seem to be stirring, but the W.E.B. DuBois Clubs, which proclaim an unaffiliated Marxism, have started to snowball, particu larly on the West Coast. The young who were looking to a revival of conservatism yesterday have been followed by an even younger set who are going in for "personalist"

commitment to nonlibertarian causes. In the middle of it all President L.yndon B. Johnson has become en amoured of a phrase, "the Great Society." Whether he plucked the phrase out of his own memory, or whether it was fed to him by one of the task force papers which Professor Eric Goldman of Prince ton has been in the course of as sembling, is immaterial. The point is that the phrase comes from the title page of a pre-World War I book, The Great Society, by a Fabian socialist Englishman named Graham WaHas. Thus the movement started by Bernard Shaw, H. G. Wells, Mr. and Mrs. Sidney Webb, and the other mem bers of the English Fabian So ciety in the eighties and nineties of the last century is still bearing fruit. Since I have long been inter ested in the relations between ideologues and politicians, I took Graham Wallas's book off the 59 60 THE FREEMAN March dusty shelves the other day and started reading it for the first time in some forty years. As Wallas used the phrase, "the Grea t Society" was merely descriptive of the increasing urbanized con dition of life imposed on the Western world by the spread of the Industrial Revolution. Wallas spoke of the steam engine and the rise of the Manchester cotton mills as imposing an "extension of the social scale" upon the hu man species. The argument is now so familiar as to be platitudinous: the villager in northern Michigan or the Orkney Islands cannot es cape the implications of the in ternational division of labor and the coming of the population ex plosion.

Wallas was not advocating any thing tendentious by his use of the term "the Grea t Society" as a description of an historical trend. But when he came to pro posing means of adaptation to this society ,he could think of nothing better than Fabian pene tration of the economic system by collectivist bureaucrats and collectivist methods. He wanted a Mixed Economy, even though that term had not yet come into general usage in 1914. Modern Variations Lyndon Johnson's use of Gra ham Wallas's book title twists things around a bit. To LBJ's way of thinking, we have not yet arrived at "the Great Society." What the President has in mind when he uses the phrase is not "the extension of social scale" imposed by jet aircraft, or com puters, or automated .factories. The Great Society of Lyndon Johnson's dreams won't be here until we have used modern scien tific developments to eradicate poverty, to give every child a good education, and to make all our communities healthy, happy, and beautiful.

Nobody, of course, can make a brief for poverty, ignorance, and ugliness. But the disturbing thing about the current belated romance with Graham Wallas's Fabian tract of 1914 (which, incidentally, was dedicated to Walter Lipp mann) is that the 1965 program for reaching "the Great Society" has a distinctly Fabian flavor of its own. Those now in the political driver's seat want their own grad ualist approach to federally-sup ported medicine and to Washing ton-directed programs for wiping out pockets of poverty in the Ap palachians and bringing school books and remedial reading teach ers to Harlem and back-of-the yards Chicago. Back in the early nineteen twen ties, when I first read Graham Wallas, I could have been for the 1965 "THE GREAT SOCIETY" 61 current program. But since then the Britain which Wallas hoped to reform by a Fabian "organiza tion of happiness" has given a rather thorough trial to the schemes now being proposed. The result has not been the attain ment of the sort of "Great Society"

which our officeholders want. On the contrary, Britain in 1965 is floundering in a 'most unhappy way. Socialized Medicine Britain has its compulsory med ical insurance program. But it has not been building new hospi .. tals, and doctor friends of mine who are by no means "reactionary" insist that medicine in the Britain of today is in a period of decline. The Bri tish have had to recruit nurses from overseas. Young doc tors have been emigrating to Can ada and Australia. "It's poor med icine for everybody today in Brit ain, and good medicine only for the rich who can pay for private service," says a New Haven, Con necticut, gynecologist, Dr. Vir ginia Stuermer. Using Fabian techniques, Brit ain has been trying to modernize its industry to the point of wiping out poverty. But its steel mill owners frightened by the prob ability of a final nationalization of basic steel-making facilities, have had no incentive to make their plants as efficient as some in the German Ruhr or in Gary, Indiana. The British pound is to day in trouble because Fabian "planning" has kept the British industrial machine from making itself competitive with continental Europe, the United States, and Japan in world markets. Wages in Britain have outpaced pro ductivity increases. Prices are still rising. And the response of the Harold Wilson government to this state of affairs. has been to try to insulate the British economy from that of the outer world by putting a 15 per cent tax on im ports.

The Fabian way is to impose controls from the top in order to "socialize" individual income. The 1965 approach is admittedly a bit different: subsidizing new schemes of production in the mountain backwaters of Kentucky and pay ing for schoolbooks in Manhattan is not all-out socialist "central planning." But the impact on the budget can hurt the currency in which the entire nation does its business. The adoption of the Fabian "inevitability of gradual ism" to the solution of our prob lems necessarily aggrandizes the power of the central state. The Voluntary Way The shame of it is that the present program for attaining the 62 THE FREEMAN March "Great Society" will be imposed from Washington on a nation that has given every indication of solv ing its problems by a combination of voluntary individual action and local, state, and municipal meas ures. I think of Richard Cor nuelle's success in establishing a private reinsurance program for banks which have been lending money to deserving college stu dents. I think of the Western Stu dent Movement, which has been recruiting high-stand university undergraduates to help cut down on school dropouts by offering free tutoring services to slum children in the Los Angeles, San Francisco, and San Diego areas.

Anything that's peaceful and vol untary, as Leonard Read says, is a proper means of getting to the Great Society. Instead, Graham Wallas is being heeded, though his 1914 ideas have already failed wherever they have been tried. ~ ~ THE MIND AND ART OF AL BERT JAY NOCK by Robert M. Crunden (Chicago: Henry Reg nery Company, 1964). 230 pp., $4.95. Reviewed by Robert M. Thornton THIS IS the first full-length study of Albert Jay Nock, and happily for admirers of that "superfluous man" Mr. Crunden's primary in terest is not the personal life of his subject but rather what the man thought and how he came to think it. In a scholarly fashion Crunden tells of Nock's public career as a man of letters and discusses sys tematically the men who exerted the greatest intellectual influence on him - Matthew Arnold, Her bert Spencer, Henry George, and Franz Oppenheimer. He also ex plains Nock's fondness for such diverse personalities as the little appreciated "humorist" of Civil War days, Artemus Ward; the often misunderstood French writer of the sixteenth century, Francis Rabelais; and the can tankerous Mayor of New York in the early 1900's, William Jay Gaynor.

Crunden fully realizes that Nock cannot be neatly pigeon holed. With some justification he might be called a nineteenth cen tury liberal (he was in favor of repealing laws and reducing gov ernment interference to a mini mum) , or a conservative (he wished to preserve everything worth saving and refused to enter tain the illusion that society can and should be made over at the whim of reformers), or a radical (he sought true reforms and scoffed at the superficial changes that usually leave things worse 1965 OTHER BOOKS 63 than before). But Crunden is no doubt right in tagging AlbertJ ay Nock a Jeffersonian, for Nock, like our third President, instinctively championed the cause of individ ual liberty against government intervention, even when the lat ter came disguised as benevo lence. Crunden not only discusses Nock's ideas and the books he read, but he also evaluates the ideas in the air during the man's lifetime. Crunden regards Nock as one of the early challengers of the collectivist ideology that be gan to enj oy popular acceptance during the first half of the twen tieth century; as such, Nock was one of the founding fathers of the present-day libertarian-conserva tive movement.

Nock was one of the few intel lectuals of his day not guilty of what has been called "the treason of the clerks." He never lost his faith in the power of ideas, and thus stood apart from those around him who rushed out to "do something." He knew that right thinking must precede right action and that you change the world only by changing individ uals - a job not to be accom plished by any sort of "machinery" such as world government, dis armament, or welfare legislation. Another thing separating Nock from many "intellectuals" was the essential Christianity behind so many of his views. He opposed government doles, for instance, on the grounds that if it is truly "more blessed to give than to re ceive," then government take over of charity deprives us of one of the great joys of life. He dis trusted many government activ ities, not simply because they were questionable politically and eco nomically but because the totali tarian state encourages a slave mentality among its citizens and discourages the sense of individual responsibility to one's God. It may be argued that Nock was a highly religious man (but not in the conventional sense) although many would class him as a heretic.

Likely, he would have concurred with their opinion! Nock was not especially interested in "organ ized Christianity" for his religion was that of the first century Christians, a religion that was "a temper, a frame of mind . . . ." "Religion," he wrote, "is the high est effort of the human spirit to wards perfection; it is an enthusi astic inward motion towards what St. Paul called 'the fruits of the spirit.' " It must be emphasized that Crunden offers us, not indiscrim inate acclaim of his subject but a disinterested work, the fruit of diligent research and serious study.

64 THE FREEMAN March A. J. Nock's great value, says Crunden, is that whether you agree with him or not, he will ir ritate you into thought. As a crit ic of high order Nock is "abra sive, insistent, and immovable." And, continues Mr. Crunden, "it is as critic and not as political thinker, of whatever label, that Nock should be remembered. He was far more a gadfly than an ex pounder of a fixed position. If, as should be obvious by now, he was often wrong, misguided, or sim ply eccentric, he was unfailingly his own man - incorruptible, un shakably honest. If he was also superfluous, it was both the fault of, and a loss to, the country which uncomprehendingly brought his ire and his intellect to life .... No matter where he stood, he did not seem to belong. He could only spatter ink on the most outra geous of the world's blemishes, and return to his own garden." ~ The Cost of Eating A NATION'S STANDARD OF LIVING can be thought of as being in versely proportional to the percentage of its labor force required to produce food. Compare the United States' 7 per cent on the farm with Canada's 10 per cent, West Germany's 13 per cent, Japan's 33 per cent, Russia's 39 per cent, India's 70 per cent, and Communist China's 87 per cent.

ELLISON L. HAZARD, President, Continental Can Company, from an address, "The Real Danger in Automation," October 9, 1964.

William Henry Chamberlin 3 Frederic Bastiat 10 Glenn L. Pearson 18 Melvin D. Barger 27 Leonard E. Read 30 Paul L. Poirot 32 Dean Russell 35 John Maynard Keynes 36 Clarence B. Carson 40 Rebecca West 55 Mallory Cross 56 APRIL 1965 The Wisdom of Bastiat . The State . Religion and liThe Law" . The Freedom of Maturity . No Special Privilege·for Anyone . IIFocus on Consumer Needs ll • Freedom of the Press . Inflation The Flight from Reality: 7. The Pragmatic Sanction of Flux. Gerda/s Empire . Self-Discipline: Free Choice: Responsibility . Books: "Contracting Out ll of Socialism . Other Books . John Chamberlain 60 63 aUJ5'.N.INGAp"AN'''IIP~IOI COAST FEDERAL SAVERS FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Earnings for 1964 paid at 4.9% per year.

MAIN OFFICE 9th & Hill, Los Angeles SAVE·BY·MAIL-We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California This might be called the Dastiat special edition of THE FREEMAN: .v' First, there is William Henry Chamberlin's review of new translations of three of Bastiat's major works p. 3 v' Chamberlin called special attention to an essay on "The State," so it seemed appropriate to carry the full text p. 10 l1li' Finally, there is a report of student reactions to Bastiat's The Law, which a professor had assigned as a special class project... .. p. 18 l1li' Melvin Barger explains how free dom comes with the maturity of the individual p. 27 l1li' Ask not what government can do for you, but what you should be free to do for yourself and others of your choice p. 30 ~ Instead of a new governmental bu reau to "focus on consumer needs,"

why not leave it to those who earn their living at it - businessmen? ..... p. 32 ~ Dean Russell throws a new beam of light on the old issue of freedom of the press p. 35 l1li' Believe it or not, John Maynard Keynes once knew precisely why in flation is a disastrous policy ....p. 36 ~ In this chapter of The Flight from Reality, Dr. Carson shows how change came to be worshipped for its own sake p. 40 ~ Rebecca West here captures the essence of the authoritarian complex that rules so many lives p. 55 l1li' Freedom, explains Miss Cross, is the fruit of self-discipline and responsible choice and action p. 56 l1li' John Chamberlain ponders whether the people of Britain, or any nation so submerged in socialism, can find their way out p. 60 l1li' Whittaker Chambers' Cold Friday finds the approval of reviewer Robert Thornton. . p. 63 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

APRil 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.4 Pr'esident, Foundation for Economic Education Manag'ing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 -as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except "Inflation," "The Flight from Reality," and "Gerda's Empire." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

THE WISDOM OF BAS TIAT WILLIAM HENRY CHAMBERLIN AMONG the intellectual champions of the free economy, none surpass es in brilliance, clarity, wit, and humor the French economic writer, Frederic Bastiat, whose life coincided with the first half of the nineteenth century. Thor oughly consistent in outlook, he fought socialism, protectionism, and every form of state interven tion .in the economic field with a powerful arsenal of weapons, con vincing logic, parable, humorous hyperbole. His definition of the state - never more topical than at the present time when its powers Mr. Chamberlin is a skilled observer and re porter of economic and political conditions at home and abroad. In addition to writing a number of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines. in the economic field have swelled far beyond Bastia t's wildest dreams or nightmares - should of itself insure him immortality: tiThe state is the great fictitious entity by which everyone seeks to live at the expense of everyone else."

And this is only the high point of a superb essay on the state which is a masterpiece of realistic exposition, brushing aside cant and illusion and making clear, one would think, even to the dullest mind, the illusory fallacy that the state can give without stint or limit, and not, in some way or other, take back the equivalent of its gifts, plus the cost of its own bureaucratic administration, 3 4 THE FREEMAN April from the supposed beneficiaries. The two paragraphs of elabora tion that follow the designation of the state as the supreme fiction are as prophetic an indictment of the welfare state as one could find: Each of us, more or less, would like to profit from the labor of others. One does not dare to proclaim this feeling publicly, one conceals it from oneself, and then what does one do? One imagines an intermedi ary; one addresses the state, and each class proceeds in turn to say to it: "You, who can take fairly and honorably, take from the public and share with us!" Alas, the state is only too ready to follow such diabol ical advice: for it is composed of cabinet ministers, of bureaucrats, of men, in short, who, like all men, carry in their hearts the desire, and always enthusiastically seize the op portunity, to see their wealth and in fluence grow. The state understands, then, very quickly the use it can make of the role the public entrusts to it. It will be the aTbiter, the mas ter, of all destinies. It will take a great deal,. hence, a great deal will remain for itself. It will multiply the number of its agents,. it will en large the scope of its prerogatives,.

it will end by acquiring overwhelm ing proportions. But what is most noteworthy is the astonishing blindness of the pub lic to all this. When victorious sol diers reduced the vanquished to slav ery they were barbarous, but they were not absurd. Their object was, as ours is, to live at the expense of others; but, unlike us, they attained it. What are we to think of a people who apparently do not suspect that reciprocal pillage is no less pillage because it is reciprocal, that it is no less criminal because it is carried out legally and in an orderly man ner; that it adds nothing to the pub lic welfare; that, on the contrary, it diminishes it by all that this spend thrift intermediary that we call the state costs. (Italics supplied). Tocqueville's Foresight This prediction of the expand ing role of the state recalls an other vision of the perceptive French political scientist and tra veler in America, Alexis de Tocqueville, expressed in some what more poetic terms: Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is abso lute, minute, regular, provident and mild. It would be like the authority of a parent, if, like that authority, its object were to prepare men for manhood; but it seeks, on the con trary, to keep them in perpetual childhood; it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness. It provides for 1965 THE WISDOM OF BASTIAT 5 their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, reg ulates the descent of property and subdivides their inheritances. What remains but to spare them all the care of tkinking and all the trouble of living? ...

The "Will of man is not shattered, but softened, bent and guided. Men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not de stroy, but it prevents existence. It does not tyrannize, but it compresses, enervates, extinguishes and stupifies a people, till each nation is reduced to be nothing better than a flock of timid and industrious animals, of which the government is the shep herd. I have always thought that servitude of the regular, quiet and gentle kind which I have just de scribed might be combined more easily than is commonly believed with some of the outward forms of freedom; and that it might even es tablish itself under the wing of the sovereignty of the people. (Italics supplied.) Bastiat's Distinctive Service Bastiat's works, quite extensive despite the fact that he died com paratively young, are not as well known to American readers as they should be. So it is a distinct public service of the publishers, the Van Nostrand Company, with the aid of the Volker Foundation, to issue English translations of three of his works under the titles Selected Essays on Political Econ omy (352 pp., $7.50), Economic Sophisms (291 pp., $6.75), and Economic Harmonies (596 pp., $11.50) .

Unlike economists who put their ideRs in forbiddingly Rb.. struse and difficult terms, Bastiat operated with humor and satire, understandable to all. He was a master of the device known as re ductio ad absurdum, making an unsound idea ridiculous by carry ing it to extreme conclusions. Two examples of this method are his proposal for "a negative railway" and, best of all, his imaginary petition of candlemakers against the unfair competition of the sun. Some eager beaver, intent on the local interests of Bordeaux, had proposed that a new railway from Madrid to Paris should have an artifical break, with change of trains at Bordeaux. This would benefit local hotels, carriers, port ers, and others standing to gain employment from such a break. An excellent idea, comments Bas tiat. But why. stop with Bor dea ux? Why not break the rail way at half a dozen other way stations, for the same supposedly beneficial results? Better yet, why not construct a railway line that is all breaks, a "negative rail way"?

6 THE FREEMAN April The Cand/emakers and the Sun Even better is the Gargantuan joke of the petitioning candle makers, protesting to parliament against "the ruinous competition of a foreign rival who apparently works under conditions so far superior to our own for the pro duction of light that he is flooding the domestic market with it at an incredibly low price." The rival, of course, is the sun, and in a su perb parody of protectionist argu ments the candlemakers suggest that the sun is an agent of Eng land, where it is less frequently visible than in France, and urge, as a remedy, the passing of a law forbidding windows and other means of access to the sun. Such a law, they argue, would benefit immeasurably the whole French economy. If France con sumes more tallow for a larger output of candles, there will have to be more cattle and sheep. So there will be an increase in cleared fields, meat, wool, leather, and es pecially manure, the basis of all agricultural wealth. As more oil is required for light, there will be an expansion in the cultivation of olives and poppies. Thousands of vessels will be required for wha) ing; the need for chandeliers and other appurtenances for lighting will grow; there is not one French man, from the wealthy stockhold er to the humble seller of matches, whose prosperity will not be en hanced. As the final clinching argu ment the petitioners point out that customs barriers serve the pur pose of keeping cheaper products out of France and they end their appeal: "Make your choice; but be log ical. So long as you ban, as you do, foreign coal, iron, wheat, and textiles, in proportion as their price approaches zero, how incon sistent it would be to admit the light of the sun, of which the price is zero all day long."

As Henry Hazli tt, who writes the introduction to this volume, Economic Sophisms, says: "The petition of the candle makers is devastating. It is a flash of pure genius, a reductio ad ab surdum that can never be exceed ed, sufficient in itself to assure Bastiat immortal fame among economists." When he dispenses with humor and resorts to pure reason, Bas tiat can be a formidable debater. Consider this. passage from one of the sophisms entitled, "Abun dance and Scarcity": There is a fundamental antago nism between the seller and the buyer. The former wants the goods on the market to be scarce, in short supply, and expensive. The latter wants them abundant, in plentiful supply, and cheap.

1965 THE WISDOM OF BASTIAT 7 Our laws, which should at least be neutral, take the side of the seller against the buyer, of the producer against the consumer, of high prices against low prices, of scarcity against abundance. They operate,. if not in tentionally, at least logically on the assumption that a nation is rich when it is lacking in everything. One wishes Bastiat had been alive in the twentieth century to observe the operation of the United States farm subsidy legis lation, under which all consumers and taxpayers are required to sub sidize a few producers for pro ducing as little as possible. One suspects that his normal flow of ridicule and invective would have dried up; he would have felt that it was enough to state the facts without further comment. A Gifted Pamphleteer Bastiat is not so much an orig inal, seminal thinker in econom ics as a highly gifted pamph leteer, prepared to break a lance any day for the propositions that the best service government can render to business, industrial or agricultural, large or small, is to let it alone; that the free market is a far better, more reliable, and painless adjuster of economic dif ficulties than a variety of state interventions; that the state is incapable of creating wealth and can only give to some by taking from others; that no service or benefit is given free. His message is well· summarized in the opening sentences of Arthur Goddard's preface to the English Language Edition of his works: Ever since the advent of repre sentative government placed the ulti mate power to direct the administra tion of public affairs in the hands of the people, the primary instrument by which the few have managed to plunder the many has been the soph istry that persuades the victims that they are being robbed for their own benefit. The public has been despoiled of a great part of its wealth and has been induced to give up more and more of its freedom of choice because it is unable to detect the error in the delusive sophisms by which protec tionist demagogues, national social ists and proponents of government planning exploit its gullibility and its ignorance of economics.

Many of Bastiat's essays are comparatively short and, natural ly, there are a number of ref erences to individuals and events of his country and time, although the editors, along with indices and notes, have supplied useful ex planations where these seem re quired. One of his longest and most fruitful essays, entitled "What Is Seen and What Is Not Seen," composed· shortly before his death, is a searching examina tion of the invisible as well as the 8 THE FREEMAN April visible effects of economic meas ures. This is a very important subject, because almost every in stance of state intervention may seem justified in terms of an im mediate favorable effect. It is the long range consequences, invisible at first sight, that are less desir able. As is often his custom, Bastiat illustrates this point with a home ly illustration. Suppose a careless boy breaks a window pane. His father pays six francs for a new pane. Here, it would seem, is a small subsidy and stimulus for the glass industry. In the view of some economists the broken pane is a blessing in disguise. But suppose the pane had not been broken. The six francs would have been spent for a new pair of shoes. The gain of the glass industry is the shoe industry's loss. Bastiat is continu ally in arms against the fallacy that the government can improve employment by "making" work out of public funds. For what is spent on promoting one kind of job is withdrawn from the support of another.

He exposes this fallacy with one simple example after another. Sup pose a farmer wants to drain his land. But the money which he pro posed to employ for this purpose is taken away by the tax collector and transferred to the entertain ment allowance of the Ministry of the Interior. The Minister may offer a more lavish state dinner; but the farmer loses the advantage of having his land drained. What one group of workers gains is withheld from another. The author sums up his proposition as fol lows: In noting what the state is going to do with the millions of francs voted, do not neglect to note also what the taxpayers would have done, and can no longer do, with these same mil lions. You see, then, that a public en terprise is a coin with two sides. On one the figure of a busy worker, with this device: What Is Seen; on the other, an unemployed worker, with this device: What Is Not Seen .... The state opens a road, builds a palace, re pairs a street, digs a canal; with these projects it gives jobs to certain workers. That is what is seen. But it deprives certain other laborers of em ployment. That is what is not seen.

Refutation of Ricardo's Law In one of his more ambitious works, Economic Harmonies, Bas tiat lights on an important truth, which, incidentally, refutes Ri cardo's "iron law" of wages. This Ricardian concept, so influential on Marx in formulating his the ory, and now knocked into a cocked hat by experience in all leading noncommunist industrial nations, held that the poor would grow poorer and more numerous and the rich fewer and richer.

1965 THE WISDOM OF BASTIAT 9 The truth Bastiat discovered is that, as the amount of capital em ployed in a nation increases, the share of the resulting production going to the workers grows, both in percentage and in total amount. This is exactly what has. happened in the United States and other countries as capital accumulates under the conditions of a market economy. It is fashionable in some circles to regard capitalism as a luxury that wealthy countri~s can afford, whereas the underdeveloped areas of the world are supposed to be under some compulsion to adopt socialism. This is one of the least feasible of dogmatic theories. In the first place, how did the capi talist countries invariably become \vealthier, if not by permitting the benefits of the market economy under free competition and se curity of private property? In the second place, why do the "under developed" countries, with their assorted socialist experiments, be come steadily poorer, notwith standing foreign aid on an un precedented scale? Is it not highly probable that these socialist ex periments, with their expropriation of domestic capital and their discouragement of foreign invest ment, lead inevitably to impover ishment, no matter how much of the accumulated savings of the more well-to-do lands is poured down the drain of subsidization?

The United States and other free countries could well use more Bastiats today to direct a drum fire of reasoned argument and witty ridicule against the current fallacies of the all-powerful state and the supposed curative virtues of state planned economies. To be sure, one of the principal dangers of our age was not a reality in Bastiat's time, when no finance minister would have advocated a planned deficit as a sure recipe for continuing prosperity. Much of his reasoning is based on the as sumption that a state expenditure must be balanced by a state-im posed tax. What Bastiat would have said if confronted with a proposal for higher state expenditures, lower taxes, and budget deficits indefi nitely prolonged would defy the imagination. Perhaps his comment would scarcely have been print able. ~ NOTE: The three volumes of the new translation of these works of Bastiat, published by Van Nostrand, may be ordered from the Founda tion for Economic Education, Irvington-on-Hudson, New York 10533.

THE STATE FREDERIC BASTIAT I WISH SOMEONE would offer a prize - not of a hundred francs but of a million, with crowns, medals, and ribbons - for a good, simple, intelligible definition of the term, The State. What an immense service such a definition would render to society! The State! What is it? Where is it? What does it do? What should it do? We only know that it is a mysterious being; and, it is certainly the most petitioned, the most harassed, the most bus tling, the most advised, the most reproached, the most invoked, and the most challenged of any being in the world. Translated and condensed by Mallory Cross, formerly of the Foundation staff, from "L'Etat" in Sophismes Economiques, Volume 1. Paris: Guillaumin, 1878. See also Miss Cross's article on page 56 of this issue. 10 I have not the honor of knowing my reader, but I would stake ten to one that sometime in the last six months you have designed Uto pias, and if so, that you are look ing to The State for the realiza tion of them.

But alas! That poor unfortunate being, like Figaro, knows not which plea to hear nor where to turn. The hundred thousand mouths of the press and of the platform cry out all at onceOrganize work and the workmen. Cover the country with railways. Irrigate the plains. Reforest the hills. Establish model farms. Colonize Algeria. Educate the youth. Assist the aged. Equalize the profits of all trades.

1965 THE STATE 11 Lend money without interest to all who wish to borrow. Emancipate Italy, Poland, and Hungary. Encourage the arts, and train· mu sicians and dancers for us. Restrict commerce, and at the same time create a merchant marine. Discover truth, and put a bit of sense into our heads. The mission of The State is to enlighten, to develop, to ennoble, to strengthen, and to sanctify the soul of the people. "Wait, Gentlemen! A little pa tience," says The State beseech ingly. "I will try to satisfy you, but for that I must have some re sources. I have prepared plans for five or six entirely new taxes, the mildest in the world. You will see how gladly people will pay them." But then a great hue and cry arises : "No ! No! A fine thing doing something with resources! This is hardly worthy of The State! Instead of loading us with new taxes, we call upon you to re peal the old ones. Decrease the salt tax, the liquor tax,. the stamp tax, customhouse duties, monopoly li cense fees, and tolls."

In the midst of this tumult, the people have changed their govern ment two or three times for fail ing to satisfy all their demands. To date, everything presenting it self under the name of The State is soon overthrown by the people, precisely because it fails to fulfill the somewhat contradictory fea tures of its platform. I fear we are, in this respect, the dupes of one of the strangest illusions which has ever taken possession of the human mind. The Origin of Plunder Man recoils from effort, from suffering. Yet, he is condemned by nature to the suffering of pri vation if he does not make the effort to work. He has only a choice then, between these two: privation, and work. How can he manage to avoid both? He always has and always will find, only one means: to enjoy the labor of others,. to arrange it so that the effort and the satisfaction do not fall upon each in their natural proportion, but that some would bear all the effort while all the satisfaction .would go to others.

This is the origin of slavery and plunder, whatever form it takes - whether wars, impositions, vi olences, restrictions, frauds, etc., monstrous abuses, but in accord with the idea which has given them birth. Slavery is subsiding, thank heaven, and our disposition to de fend our property prevents direct and open plunder from being easy. However, there remains the un fortunate, primitive inclination in all men to divide the lot of life in12 THE FREEMAN April to two parts, throwing the trouble upon others and keeping the satis faction for themselves. Let us ex amine a current manifestation of this sad tendency. The Intermediary The oppressor no longer uses his own force directly upon his victim. No, our conscience has be come too sensitive for that. There is still the tyrant and his victim, but between them is an intermedi ary which is The State - the L.aw itself. What could be better de signed to silence our scruples and - more important - to overcome all resistance? Thus do all of us, by various claims and under one pretext or another, appeal to The State: "I am dissatisfied with the ratio between my labor and my pleas ures. In order to establish the de sired balance, I should like to take part of the possessions of others.

But that is a dangerous thing. Couldn't you facilitate it for me? Couldn't you give me a good post? Or restrain my competitors' busi ness? Or perhaps lend me some in terest-free capital, which you will have taken from its rightful own ers? Or bring up my children at the taxpayers' expense? Or grant me a subsidy? Or assure me a pen sion when I reach my fiftieth year? By this means I shall achieve my goal with an easy conscience, for the law will have acted for me. Thus I shall have all the advantages of plunder, without the risk or the disgrace!" All of us are petitioning The State in this manner, yet it has been proven that The State has no means of granting privileges to some without adding to the labor of others. T he State is the great fic,tion throug h which everybody endea,v ors to live at the expense of every body. Today, as in the past, nearly everyone would like to profit by the labor of others. Noone dares admit such a feeling; he even hides it from himself. So what does he do? He imagines an in termediary ; he appeals to The State, and every class in its turn comes and says to it: "You, who can do so justifiably and honestly, take from the public; and we will partake of the proceeds."

Alas! The State is only too much disposed to follow this dia bolical advice; for it is composed of ministers and officials - of men, in short - who, like all other men, desire in their hearts and eagerly seize every opportunity to increase their wealth and influence. The State quickly perceives the advan tages it can derive from the role entrusted to it by the public. It will be the judge, the master of the destinies of all. It will take a 1965 THE STATE 13 lot: then much will remain for it self. It will multiply the number of its agents, and increase its functions, until it finally acquires crushing proportions. The Great Illusion But the most remarkable thing is the astonishing blindness of the public while all this takes place. In the past, when victorious sol diers reduced the vanquished to slavery they were barbarous, but they were not foolish. Their ob ject, like ours, was to live at the expense of others; but they suc ceeded, where we fail. What are we to think of a people who never seem to realize that reciprocal plunder is no less plunder because it is reciprocal; that it is no less criminal, because it is carried out legally and peacefully; that it adds nothing to the public good, but rather diminishes it by the amount of the cost of that ex pensive intermediary we call The State?

And this great illusion we have placed, for the edification of the people, as a frontispiece to the Constitution. Here are the first words of the preamble: "France has constituted itself a Republic to ... raise all the citi zens to an ever-increasing degree of morality, enlightenment, and well-being." Thus it is France - an abstraction - which is to raise the French - or realities - to morality, well being, and so on. Isn't it our blind attachment to this strange delusion that leads us to expect everything from a power not our own? Isn't it suggesting that there is, apart from the French people, a virtuous, enlightened, rich being who can and should bestow its favors upon them? The American Ideal The Americans develop a dif ferent idea of the relationship of the citizens with The State, when they placed these simple words at the beginning of their Constitu tion: "We, the people of the United States, in order to form a more perfect Union, establfsh Justice, insure domestic Tranquility, pro vide for the common defence, pro mote the general Welfare, and se cure the Blessings of Liberty to ourselves and our Posterity, do ordain .... "

Here is no shadowy creation, no abstraction, from which the citi zens may demand everything. They expect nothing except from themselves and their own energy. I contend that the personifica tion of The State has been in the past and will be in the future, a fertile source of calamities and revolutions. There is the public on one side, The State on the other, 14 THE FREEMAN April considered as two distinct beings; the latter obligated to bestow upon the former, the former hav ing the right to claim from the latter a flood of human benefits. What must happen? The State has two hands, one for receiving and the other for gi ving - a rough hand and a smooth one. The activity of the second is necessarily subordinate to the activity of the first. Strictly speaking, The State can take and not give back. This can be seen and can be explained by the porous, absorbing nature of its hands, which always retain part and sometimes all of what it touches.

But that which is never seen, which never will be seen, and which cannot even be imagined, is that The State can return more to the people than it has taken from them. Therefore it is ridic ulous for us to appear before The State in the humble attitude of beggars. It is utterly impossible for it to confer a specific benefit upon some of the individuals who make up the community, without inflicting a greater injury upon the community as a whole. A Great Dilemma: Many Benefits and No Taxes Our demands, therefore, place The State in an obvious dilemma! If it refuses to grant the requested benefit, it is accused of weak ness, ill-will, and incapacity. If it tries to grant their requests, it is obliged to load the people with in creased taxes - to do more harm than good - and to bring upon it self general displeasure from an other quarter. So, the public has two hopes, and The State makes two prom ises: many benefits and no taxes hopes and promises, which, being contradictory, can never be real ized.

Is not this the cause of all our revolutions? For between The State, which lavishly promises the impossible, and the public, whose hopes can never be realized, there come to interpose two types of men: the ambitious and the Uto pians. The circumstances give them their cue. These officeseekers need only cry out to the people: "The authorities are deceiving you. If we were in their place, we would load you with benefits and exempt you from taxes." And the people believe, and the people hope, and the people substi tute a new government for the old. No sooner are their friends in charge of things, than they are called upon to redeem their pledge. "Give us work, bread, assistance, credit, instruction, colonies," say the people, "and meanwhile deliver us, as you promised, from the clutches of the tax gatherer."

1965 THE STATE 15 The Problem Persists The new government is no less embarrassed than the former one, for it is easier to promise the im possible than to do it. It tries to gain time which it needs for ma~ turing its vast projects. First it makes a few timid attempts: On one hand, it slightly expands pri mary education; on the other, it makes a small reduction in the liquor tax. But the contradiction always confronts the administra tion: If it would be philanthropic, it must attend to its treasury; if it neglects the treasury, it must give up being philanthropic. These two promises are always and inevitably clashing with one another. To live upon credit, that is, to exhaust the future, is cer tainly a temporary method of rec onciling them - an attempt to do a little good now, at the expense of a great deal of harm in the fu ture. But this procedure calls forth the specter of bankruptcy, which puts an end to credit. What is to be done then? Why then, the new government defends itself boldly.

It unites its forces to maintain it self: It smothers opinion, has re course to arbitrary measures, ridi cules its former slogans, declares that it is impossible to govern ex cept at the risk of being unpopu lar; in short, it proclaims itself governmental. And this is what other candidates for office are waiting for. They exploit the same illusion, fol low the same course, obtain the same success, and are soon swal lowed up in the same abyss. The Great Society! The latest manifesto of the Montagnards, which they issued at the time of the presidential elec tion, concludes with these words: -"The State ought to give a great deal to the people, and take little from them." It is always the same tactics, or rather, the same mis take. The State must: Give free instruction and educa tion to all the citizens. Give a general and professional education, as much as possible adapted to the needs, talents, and capacities of each citizen.

Teach every citizen his duty to God, to man, and to himself; develop his perceptions, his aptitudes, and his faculties; teach him, in short, the skill of his trade; make him un derstand his own interests, and give him a knowledge of his rights. Place within the reach of all lit erature and the arts, the heritage of thought, the treasures of the mind, and all those intellectual possessions which elevate and strengthen the soul. Give compensation for every dis aster, fire, flood, etc., experienced by a citizen. (The et cetera means more than it says.) Act as mediator in the relations 16 THE FREEMAN April between capital and labor, and be come the regulator of credit. Give substantial encouragement and effectual support to agriculture. Purchase railroads, canals, and mines - and doubtless administer them with its characteristic indus trial ability! Encourage useful experiments, promote and assist them by every means likely to make them success ful. As a regulator of credit, it will have extensive control over indus trial and agricultural associations in order to assure their success.

The State must do all this, in addition to the services to which it· is already pledged! For instance, it is always to maintain a menac ing attitude towards foreigners. The signers of the manifesto say that: "Bound together by this holy union, and by the precedents of the French Republic, we carry our wishes and hopes beyond the bar riers which despotism has raised between nations. The rights which we desire for ourselves, we desire for all those who are oppressed by the yoke of tyranny; we desire that our glorious army should, if necessary, again be the army of liberty." You see that the gentle hand of The State - that good hand which gives and distributes - will be very busy under the direction of these reformers. You think per haps it will be the same with the rough hand - that hand which penetrates and takes from our pockets? Political Promises Do not deceive yourselves. The politicians would not know their trade, if they had not the art, when showing the gentle hand, to conceal the rough one. Their reign will assuredly be the jubilee of the taxpayers!

"It is luxuries, not necessaries," they say, "which ought to be taxed." Won't it be wonderful that the treasury, in overwhelming us with favors, will content itself with curtailing our luxuries! This is not all. This party of re formers intends that "taxation shall lose its oppressive character, and be only an act of brother hood." Good heavens! I know it is the fashion to thrust brotherhood in everywhere, but I did not im agine it would ever be put into the proclamations of the tax gatherer. Well, I ask the impartial reader, is this not childishness, and more than that, dangerous childishness? Is it not inevitable that we shall have revolution after revolution, if it is once decided never to stop till this contradiction is realized: "Give nothing to The State and receive much from it"? Citizens! At all times, two polit1965 THE STATE 17 ical systems have been in existence, and each can justify itself with good reasons. According to one of them, The State should do a lot, but then it should take a lot. Ac cording to the other, this twofold activity ought to be limited. 'We have to choose between these two gygb~mg.

But the third system, which partakes of both the others, and consists in exacting everything from The State without giving it anything, is chimerical, absurd, childish, contradictory, and dan gerous. Those who advocate such a system are only flattering and deceiving you, or at least are de ceiving themselves. As· for us, we consider that The State is and ought to be nothing whatever but community force or ~Rniz~d, not to b~ Rn ingtl"um~nt of oppression and mutual plunder among citizens, but, on the con trary, to guarantee to each his own, and to cause justice and se curity to reign. ~ Reprints available, 10 cents each. Government's First Duty SUCH A LAWLESS SEIZURE of property no government worthy of the name will tolerate or condone. . . . When any individual or organization under whatsoever name attempts to use force to gain his or its ends, they are attempting to usurp governmental functions. This attempt unless promptly and effectively re strained by legally constituted authority leads to lawlessness, disorder, and anarchy, which is the very negation of all gov ernment. The law cannot temporize with lawlessness. The first duty of government is to govern, that is, to maintain law and order at all hazards and regardless of expense; only by doing this does it fulfill its legitimate function, which is the protec tion of life, liberty, and property.

CH IEF JUSTICE MAX EY, Supreme Court of Pennsylvania Carnegie Illinois Steel Corp. vs. United Steelworkers of America. [353 Pa. 420, 45 A. 2d 857 (1946)] RELIGION AND HTHE LAW" GLENN L. PEARSON My STUDENTS come from all walks of life, nearly every state of the Union, and many foreign lands. They are the product mainly of public schools. They believe the Founding Fathers established a democracy. In most cases, the U.N., not Christ, is their hope for peace. They believe the truth can be established by ballot. They probably never have met anyone who comprehended the free mar ket idea. To them, free enterprise is a conspiracy between rich men and crooked politicians. They are not raw material; they are the half-finished product of a machine that was confused about what it was supposed to be making. They are my challenge - the reason why 18 I go on teaching despite the lure of greener pastures.

Teachers of the freedom phi losophy have to be "as wise as serpents and as harmless as doves" - wise enough to induce students to listen to ideas they have been conditioned to reject. My latest plan to stimulate thinking was to require a book report on The Law, by Frederic Bastiat, from all students seeking a top mark in my course on reli gion. There were 413 students in volved in this experiment. One hundred five accepted the chal lenge, though not all of them earned A's in the course. None objected to the project, and sev eral stated that they read the book 1965 RELIGION AND "THE LAW" 19 even though they did not report on it. Statement of the Premise In presenting the project to the students, I capitalized on the fact that they were voluntarily enrolled in a private university. They had prior knowledge of the univer sity's policies and requirements. So they were in the class· by vol untary contract. Early in the se mester I discussed the relationship of the students to the school, to me, and to the project. This is the essence of what I said: "This is a private university. It is not operated by public servants nor supported by taxes. Your tui tion and fees pay for about one fourth of the immediate costs of the education you receive here.

The rest is paid out of the volun tary contributions of the members of the Church to which most of you belong. "You came here voluntarily as far as we know. Therefore, you are taking this course by volun tary contract, not by compulsion. "When two parties enter into a contract, they do so because each hopes to benefit by the contract. You hope to be spiritually and ma terially benefited by your educa tion here. We who pay most of the bill hope to see you saved from the misery of a life without princi ple or spiritual direction, which we suppose is more apt to be the case without religious education. Ours is an intangible benefit, but it is just as real to us as anything you hope to gain. If you are not a willing party to the contract, you have no business being here. "You also have an implicit per sonal contract with me. At regis tration you chose my class for some reason or other. You all know your reasons. In each case you hoped to gain something by making the choice.

"Now that you are here, I owe you something and you owe me something. I owe you my sincere effort to offer you what I believe is true and good for you, and still respect your right to reject it. You owe me the respect to try to un derstand me. You do not have to believe me, and you will not be graded on whether or not you be lieve me. Your grade will depend in part on how well you under stand me. I do not pretend to sit in judgment on your beliefs, your convictions, or your characters. There is no way I could do that successfully even if I wanted to. But I will try to discover how well you understand me. "I want you to know that I be lieve that government should be limited to the protection of life, libertY,and property. I believe in a free market economy and a re publican form of government such 20 THE FREEMAN April as our Founding Fathers attempt ed to establish when they met in Philadelphia to write the Consti tution. I believe that liberty is in great jeopardy in America, that the Constitution is 'hanging by a thread,' and that the American people are, in large measure, liv ing by legal pIunder. I believe all of these ideas are religious in na ture to any man who claims to be lieve in God. Indeed, I believe religion and liberty are as in separable as life and blood. And I believe that the solution to America's problems is a reawak ened respect for God and right eousness.

"You no doubt have heard the welfare state defended on the grounds that it is our duty to be our 'brother's keeper.' To hear the other side of a matter is to be made free to decide which side is right. One of the best books I have read on 'the other side' of the welfare state is The Law by Fred eric Bastiat. This book was writ ten in 1850. As you read it, you will wonder how anyone who lived that long ago could know our times so well. "I strongly recommend that all of you read The La1v. I will not make it a requirement to pass the course. But I will expect all who are trying to demonstrate that they are A students to read it and wri te a report on it. "I urge you to read The Law with an open mind. I consider it one of the dozen books that have had the most profound effect on my life. I do not ask you to be lieve it; but I do ask you to un derstand it. In your report I want you to demonstrate that you un derstood the book and that you see why I consider it a fit supple ment for this course in religion."

The Students Respond Four of the 105 who reported on The Law wrote adverse crit icisms. Three said they believed Bastiat was right but that his ideas wouldn't work. About twenty confined their remarks to an ac curate, knowledgeable report of the contents of the book. But the vast majority were enthusiastic in their praise. Following are some typical statements: ~ "Evidently I am one of many individuals who has been duped into believing that, without the law to instigate and enforce public education, charity, civil rights, etc., the general population would be too lackadaisical and stupid to initiate these and similar needs on their own... He has stirred my imagination enough that I want to continue my reading and find an swers to my questions. I believe in his theory, but now I need more information to rearrange my pres ent thinking."

1965 RELIGION AND "THE LAW" 21 J1IIW "The Law, written by the nine teenth century economist and statesman, Frederic Bastiat, is a short and powerful pamphlet that serves as a yardstick for the validity of any government that has existed or ever will exist. . . . "The one most important thing that this book declares is that truth and righteousness in gov ernment are as simple as truth in anything else no matter. what the time or the circumstances. If the law is perverted, justice no longer exists." J1IIW "The Law by Frederic Bastiat is a very outstanding book. It opened my eyes to the real aim of legislators and government. It also brought to my realization the true meaning of liberty, and that it is the most precious thing to everyone. We should guard our liberty as a priceless possession; therefore, we should learn what true liberty is. The Law helps one to really understand liberty, law, and government so that we may know the good and the bad of the society in which we live.

"I can see from reading this book why Mr. Pearson has said so much about the government, the United Nations, education, and politics." J1IIW "Just as The Law was a book for the people of France in 1850, it is a book for the people of America in 1965. As I read The Law, I realized more than ever that men create their own prob lems. Because of this, problems usually are the same, even over a long period of years. In 1850 Fred eric Bastiat mentioned what he termed legal plunder. Unknowing ly, Americans engage in this very thing almost daily. . . . Often we hear politicians say, "I'll look after you. " We need to fear these words now, just as Bastiat did in his day. Passiveness leads to dic tatorship." J1IIW This forceful thesis gives a very thought provoking and pen etrating message .... I believe that every citizen should read this book and become seriously ac quainted with all it advocates."

J1IIW "One cannot help but look a round and see the many evidences of legal plunder in the United States. People seem to have the attitude that government should do what one cannot do for him self, yet they have let it go many steps farther than that. Through their greed, they are anxious and willing that the government should do the many things for them that they are unwilling to do for them selves. As the daughter of a farm er, I am well aware of the protec tive tariffs and subsidies that the farmer receives from the govern ment. But, because they do benefit 22 THE FREEMAN April us, we justify them. The people themselves are their own enemy, the enemy of freedom .... "The material presented in this book can serve as a warning to us that we can destroy ourselves as the civilizations of old did through their greed." ,."", "Unless we return to the orig inal purpose for which govern ments have been established, we will be pushed further into the socialistic state. Mr. Bastiat has prophetically warned us of the dangers and the road to political and moral destruction. Those that think we have nothing to fear should listen to the words of our President : 'We are going to try to take all of the money tha t we think is unnecessarily being spent and take it from the haves and give it to the have nots that need it so much.' "

,."", "We can see throughout the United States the effects of com placency toward the law. We seem to care not what it does as long as it seems to be aiding us - and therein is the fallacy of social ism." ,."", "Little did I suspect when I sat down to read The Law the en joyment and enlightenment which I would receive .... Never before had I stopped to seriously consider the misuse of the 'law' here within our own United States. "Having recently read the book entitled Animal Farm, having spent a year living in a socialistic country [Norway], and having just completed a research paper for economics on capitalism vs. so cialism, The Law had a deeper meaning for me. The greatest hatred I have ever found develop within me has been against so cialism in watching it in action. [I know this boy well and am sure he is devoid of real hatred. He is one of the most loving and kindly souls I have ever known.] And I agree completely with Mr. Bastiat that 'protectionism, socialism, and communism are basically the same plant in three stages of its growth.' "

Many of the best comments were too deeply involved in the personal religion of the students to make them quotable. The lives of these students will never be the same for having read The Law. Even the four students who rejected the general thesis of the book praised it in part and said it had spurred them on to greater thought. four Critics-Six Points Three of the critics agreed that Bastiat was right, but thought his ideas wouldn't work. This is to say that the truth either won't work, 1965 RELIGION AND "THE LAW" 23 or that it isn't right after all. It denies the validity of Jesus' state ment that "Ye shall know the truth and the truth shall make you free." It denies the idea that the human race can improve its standards and conditions or work toward the perfection enjoined by the Sermon on the Mount. This damning of the truth "with faint praise" is, in essence, the argument of expediency. Some people believe in principle wha t ever the consequences. Others are what a colleague of mine calls "card players." They make their decisions on the basis of what they think is best for themselves at the moment. This is living by policy instead of principle.

In dealing with this attitude, I find that it pays to get the stu dent to think through an extreme prototype of the expediency argu ment.What prototype you choose will have to be determined by your convictions and those of your stu dents. One that has never failed me goes like this: Teacher: Do you believe it is good for women to. bear children? Student: Yes. Teacher: Suppose all women conspired to stop bearing chil dren; would you then advocate the use of rape as a means of solv ing the problem? Usually the point is seen with out elaboration: resorting to violence is never justified no matter what good you think you can ac complish by it. Most people see this .when it is graphically ex plained to them. Freedom does not demand that all think alike, only that all are protected from plunder alike; we can afford to let the few who do not see the point go on in their darkness. The Cry of Anarchy Another common adverse criti cism was that The Law advocated a lawless or anarchic society. One of the students who made this accusation was rather vague. His paper was mostly a matter-of-fact review of the book. Then, in his concluding paragraph, he stated, "This book has given me an ap preciation of the so-called 'con servative position' of our present day. I can correlate many of the teachings of religion with Mr.

Bastiat's .... I do not agree fully, however, in all of Mr. Bastiat's postulations. I think he shows, at times, signs of anarchism. Again, I state that my appreciation and understanding of the conservative position is greatly enhanced." There was no hint as to what other "postulations" he disagreed with. Of course, Bastiat does not "postulate" anarchy; but the cry of anarchy is a common complaint against those who believe in the free market.

24 THE FREEMAN April It isn't the quantity of law and regulation which determines whether a state of anarchy exists. It is the quality of the law. If there were no law but this, I will not rob another man of his pr'op erty nor control what he does with it - and if that law were written on all men's hearts, it wouldn't have to be in a book, and we would need very little else as a legal framework on which to build a truly "great society." No, Bastia t cannot be called an anarchist - either of the so-called far left or the so-called far right. He believed in strong govern mental protection of life, liberty, and property. He believed in strong voluntary adherence to God's law and natural law. And he believed in strong protection of the natural rights of all men when those rights were endangered by the lawless who sought to live by plunder - legal or illegal. Let's Be Constructive A third adverse criticism of The Law followed a common cliche of our times: "He is good at criti cism; but he offers no solution to the problem." Many think that, if they can label a man as one who has offered no solution, they have destroyed the value of his criti cism. They demand that .there be some kind of a state plan for agriculture, education, and so on.

In economic matters, the best plan is to have no master plan. Leonard Read has explained this in Any thing That's Peaceful, chapter twelve, "The Most Important Dis covery in Economics/' He sums it up in a sentence: "Let the pay ment for each individual's con tribution be determined by what others will offer in willing ex change."l In essence, this is the plan that Bastiat offered. It not only is a brave idea, but it is so foreign to the thinking of those who deem the state the instigator of all good action and the provider of all goods and services that they may miss the point entirely. From one young man's paper, I got the impression that he visual ized the government as a sort of flexible undergirding, an air mat tress under the body-politic. But unlike the usual air mattress, in this case instead of the air depart ing to areas of less pressure when you walk on it, it would rush to the spot where you place your foot and hold you on an even plane with the rest of the mattress.Thus, when some part of society fails to 1 Leonard E. Read, Anything That's Peaceful (lrvington-on-Hudson, N. Y.: Foundation for Economic Education, 1964), p. 154. I consider this book a logical sequel to The Law. It answers all objections to The Law raised by my students and gives a more complete and up-tO-date rationale for the principles of liberty.

1965 RELIGION AND "THE LAW" 25 produce the contribution expected, the government will step in and take care of the deficit. The stu dent applied this principle especial ly in schooling. He was sure that if the government were not there to keep things going, there would be no education. He agreed that it would be well if this could be done without the government, but thought there must. be a powerful governmen t waiting to rush in to prevent civilization from crumb ling when "society" fails. fixing the Responsibility A fourth criticism of The Law was a variant of the third. One student said that Bastiat failed to make anyone responsible for edu cation. This presumes that educa tion is something that is given, not received or sought for, and that it must be formal to be effec tive. It also presumes that you can educate someone against his will, that you can educate the un educable, and that passing from one grade to another is education.

There is a natural responsibility for education. The responsibility lies in part with the man and wife who brought the child into the world. They can enter into volun tary relationships with like-mind ed people to take care of part of this responsibility. Since all edu cation is religious education no matter what the field or what you try to do with it, it follows that religious societies are a natural focal point for parents to unite in the education of their children. The greatest responsibility for education lies with the individual himself. As he emerges into more and more of an independent per sonality and agent, he must as sume this responsibility. In fact, he does assume it no matter what the state or his parents may try to do to prevent it. All they ac complish is a wasteful frustration of his will and productive capacity when they try to force their will upon him. Only one student of 105 be wailed Bastiat's failure to fix the responsibility for education, while scores noticed that he had the ideal solution to the problem. Es pecially did they quote and en large upon his statement to the effect that the socialists accuse us of being against education simply because we are opposed to educa tion based upon legal plunder.

Propaganda A fifth adverse comment criti cized The Law as being propa ganda. This boy defined propagan da as something which is written to generate action. If one agrees with that definition and with the student's further assumption that all propaganda is evil, then The Law is what he concluded it was, 26 THE FREEMAN April an evil book. In that case, so is the Bible. Anyone who knows much about the methods of propaganda will recognize this as a clumsy attempt to use propaganda meth ods to discredit The Law. Propaganda is a big subject. Obviously it isn't necessary to say much about it here. But there is .one idea that I will attempt to impart to this young man if I get another chance: The use of propaganda becomes increasingly dangerous and sinister as it be comes increasingly the tool of the most powerful agency in any given community. Or, put another way, the potential danger in prop aganda methods is proportionate to the potential power of the agency using it. The Law' has no coercive power behind it. But who can say how dangerous it is? The truth has destroyed empires and caused the schemes of wicked men to come to nought.

The sixth objection to The Law was highly personal and tied up in the student's religious views. It was more of a total rejection of his teacher's religious philoso phy than of Bastiat's views on economics and morality. In summation, I have no evi dence that the reading of The Law did anyone any harm. All but the propagandist seemed to profit greatly from it. The high percent age of warm acceptance is a trib ute to the power of truth to win out over error when it has a chance to be heard. The experi ment will be continued. ~ The Law and Education You SAY: "There are persons who lack education," and you turn to the law. But the law is not, in itself, a torch of learning which shines its light abroad. The law extends over a society where some persons have knowledge and others do not; where soine citizens need to learn, and others can teach. In this matter of education, the law has only two alternatives: It can permit this transaction of teaching-and-Iearning to operate freely and with out the use of force, or it can force human wills in this matter by taking from some of them enough to pay the teachers who are appointed by government to instruct others, without charge.

But in this second case, the law commits legal plunder by violat ing liberty and property. FREDERIC BASTIAT, The Law (1850) THE FREEDOM OF MELVIN D. BARGER The truly unfettered life is that marked by order and responsibility. NOT TOO MANY years ago it was considered an exercise of personal freedom when great-grandfather drove strangers off his land at gunpoint or solved the problem of bothersome neighbors by pulling up stakes and heading west. This freedom to act as our hardy an cestor did is, in most cases, denied the members of today's compli cated society. But now our increased knowl edge of human behavior suggests that, for all this freedom of action, great-grandfather might not have been free where it really counted -in his own mind. He may have been the slave of his own emo tional immaturity. And his actions, though bold and daring on the surface, may have been a cover for fears that he never dared to face.

From the January 1965 issue of The Flying A, a publication of the Aeroquip Corporation of Jackson, Michigan, of which Mr. Barger is Editor. The need to develop personal maturity, to face the problems that our forebears sometimes ig nored, is getting increased atten tion these days in the social sciences, in religious organizations, and in business. Typical of the growing concern in this area of study is a recent paper entitled, "A Look at Emotional Maturity," issued by a college in southern Michigan. 1 The authors of the paper define maturity as effective or adequate adaptation to inner and outer stress and strain. The lack of suf ficient maturity, they say, is most commonly revealed in stress situ ations by reactions which they term "fear," "flight," and "fight." As an illustration of an imma ture reaction which involves both 1 The Hillsdale College Leadership Letter, Hillsdale, Michigan" October, 1964. Issued by the Leadership Workshop and edited by Laurence J. Taylor, Vice President for Leadership Development.

27 28 THE FREEMAN April "fear" and flight," they cite the case of a store manager who ar rived at work on a Monday morn ing to discover that his failure to adjust the refrigeration at Satur day's closing had caused the spoil age of frozen foods. His reaction? He simply relocked the store and fled, not to be found until that afternoon. Meanwhile an assistant arrived at work and solved the problem. In another case studied, an ex ecutive would blow up on the job and fly into temper tantrums. For several days afterward he would sneak into his own office by a pri vate entrance, seeing only his sec retary. And in still another case of personal immaturity-one which might be termed the "fight" meth od of reacting - a machine shop foreman would throw things and shout obscenities at a workman who had made a mistake. These cases could be multiplied by thousands, and they all add up to a heavy toll in personal wear and-tear on the individuals in volved as well as considerable fi nancial cost to business.

Of course these victims of im maturity usually lead troubled lives and, in actual practice, have far less freedom to control their affairs than do emotionally stable people. The immature person's way of life, the authors of the paper say, is the way of the slave and the automaton. It is the way of failure, disappointment, misery, and strife. What to do about it? The an swer, of course, lies in the direc tion of self-improvement, of achiev ing personal growth and maturity. The paper does not outline a route or offer an easy short cut to such growth. It does, however, suggest several qualities of character which seem to be present in ma ture persons. The individual's job is to face himself as he really is and to seek more of these qualities in himself, thus becoming mature or "growing up." Principles to Grow By Not surprisingly, one condition for growth seems to be the devel opment of definite principles as well as purpose. The paper says, "Whatever one calls it, a balanced life calls for goals, beliefs, and baselines which act as a guide for the thought and action of an indi vidual. He can think through the what and why before he moves to the how of his conduct."

Such a person "responds" to situations, he doesn't react to them. An insult does not throw him into rage, mistakes or threats do not cause him to lose control. He remains in charge of himself. "Why should I let this other per son decide what my conduct should be?" replied a man, when asked 1965 THE FREEDOM OF MATURITY 29 why he hadn't struck back at an insult. A second characteristic of the mature person is flexibility, the ability to "roll with the punch." This is not indifference or resigna tion. The authors insist that the individual must keep at his best. But he should have the capacity to yield gracefully and with no great sense of personal loss when the occasion calls for it. The mature man recognizes the need for change and for accommodating himself at times to the views and wishes of others. He does not waste his time and energy in a rigid defensive effort to have his own way all the time.

Self-acceptance seems to be the third quality of mature personal ity. The grown-up person has learned to accept himself as he is and does not lose himself in vain fantasy or a futile yearning for perfection. He knows that he is a creature of mistakes and he Iives with that reaIi ty . At the same time, however, he perceives his own possibility for improvement and growth. He may never become perfect, but if he continues to try, he will get better. That knowledge alone is enough to lift today's efforts and problems to a higher plane in his attitude toward them. The last quality named is cour age, indispensable in the freedom of maturity. Without courage, no person could face himself in the first place, or go through the enor mous personal effort and heart ache that usually accompany growth. But it is courage that gives the individual his forward motion. Courage sometimes has a dra matic sound, as if it's something that is exercised only on the bat tlefield or in time of great dan ger. But the best examples of courage are constantly unfolding all around us. The person who faces a problem in himself and overcomes it has demonstra ted courage. So has the individual who tries something new and daring a business venture, a different line of work, a change of view point. And it takes considerable courage for a person to admit that he's been wrong.

But the individual who finds the courage to face problems ar rives at his goal; he becomes ma ture by facing problems - the seeking becomes its own reward. He also discovers that many prob lems can be solved before they ever occur if they're faced real istically. In any case, he begins to live as he learns to face and to affirm life. And learning to control himself, he gains a certain degree of control over his life. He has found the freedom that comes with emotional maturity. ~ 30 THOSE WHO SEEK to promote lib erty by limiting the power of gov ernment often are "floored" with a tricky question, "Very well! Just what would you eliminate?" It would take a lifetime to an swer that question in detail. But it can be answered on principle, leaving some of the difficult details to the questioner. For example: "I would favor the rescinding of all governmental action - Federal, state, or local - which would inter fere with any individual's free dom: · . . to pursue his peaceful am bition to the full extent of his abilities, regardless of race or creed or family background,.

· .. to associate peaceably with whom he pleases for any reason he pleases, even if someone else thinks it's a stupid reason,. · .. to worship God in his own way, even if it isn't "orthodox",. · .. to choose his own trade and to apply for any job he wants and to quit his job if he doesn't like it or if he gets a better offer,.

· .. to go into business for him self, be his own boss, and set his own hours of work - even if it's only three hours a week; · .. to use his honestly acquired property in his own way - spend it foolishly, invest it wisely, or even give it away. Beyond what is required as one's fair share to an agency of society limited to keep ing the peace, the fruits of one's labor are one's .own; · .. to offer his serv·ices or prod ucts for sale on his own terms, even if he loses money on the deal; to buy or not to buy any service or product offered for sale, even if refusal displeases the sel ler; · . . to agree or disagree with any other person, whether or not the majority is on the side of the other person; · .. to study and learn whatever strikes his fancy, as long as it seems to him worth the cost and effort of studying and learning it; . . . to do as he pleases in gen eral, as long as he doesn't infringe the equal right and opportunity of every other person to do as he pleases."

Unless a devotee of statism specifies which of the above lib erties he would deny the individ ual, he implicitly approves the free market, private property, lim ited government way of life. If, on the other hand, he insists that the individual should be de prived of one or more of the above liberties, then let him defend his position. Trying to present his case will more surely convince him of his error than any reform talk a Iibertarian can contri vee Let him talk himself out of his own illib erality! In short, instead of attempting to explain the thousands upon thousands of governmental activi ties you would eliminate, let the author of the tricky question ex plain just one peaceful activity he would deny to the individual. Isn't this putting the burden of proof where it belongs? ~ Reprints available, 2¢ each. 31 THE CONSEQUENCE of the Federal government's latest atte.mpt to carry out a program of consumer protection on a major scale was that housewives couldn't get meat or butter or sugar to satisfy their family needs, except as they might find a butcher or grocer or some one willing to practice bootleg ging. The time was a generation ago during World War II; and the Office of Price Administration was the intervening agency responsible f or those barriers between willing buyers and sellers.

Many Americans, however, had gained some practice and skill in "black marketing" during the years of Prohibition from 1920 32 through 1933. So, aside from the petty annoyances and inconven iences of price control and ration ing, the government's program for protecting consumers during World War II was not the national calam ity it might have been if rigid enforcement had prevailed. It didn't result in famine as similar "protections" have done in India, or cause the United States to lose the war as happened when Ant werp tried price control to pro tect its citizens under siege in 1585.1 By and large, the attempted intercession on behalf of consum ers during World War II simply did not succeed; American con sumers managed to protect them selves. GQvernments, however, are prone to repeat mistakes, for the resources squandered in such ven tures by government officials are rarely their own. Hence, as a tactical maneuver in the War on Poverty, the President has ap pointed a Committee on Consum er Interests which is charged with the responsibility, among other things, to "focus on consumer needs which can appropriately be met through Federal action, whether under existing laws or new legislation."

What all this means is that, if 1 See "How to Lose a War" by John Fiske, THE FREEMAN, December, 1964, page 17.

1965 "FOCUS ON CONSUMER NEEDS" 33 we're going to try to consume our way to prosperity, we'll need to use coercion. No individual can peacefully consume his way out of poverty; he might be able to steal his way out, but that would be both immoral and illegal. The poor individual's only peace ful recourse - aside from charit able offerings - is to try to work his way out of poverty, that is, produce or earn the additional goods and services he wants. And a helpful means to that end is voluntary exchange in the open market. An outstanding feature of the open market is the businessman, whose success or failure depends entirely upon his ability to "focus on consumer needs" and so com bine existing and potential factors of production to serve consumers most efficiently. The only construc tive role government can play un der the free market method of overcoming poverty is to see that the participation of individuals is strictly voluntary - that none is permitted to steal from or cheat or enslave another. In the free and open society, the organized force of government is to be used only if necessary to protect the lives and the property of peaceful individuals. In other words, the proper function of government is to protect against robbery rather than practice it.

By the Choice of the Individual, or Government Control? The alternatives are quite clear. The question is whether human energy is to be free for use ac cording to the choice of each in dividual; or, is the government to regulate and control the produc tive efforts of individuals and the fruits thereof? As each of us faces that partic ular decision, he should be well aware that competitive private enterprise by way of a free mar ket can never be expected to over come poverty in the absolute sense that all desires will be satisfied or that all will be equal in their possession and enjoyment of the necessities and comforts of life. Even if by some miracle it were possible to start everyone equally each morning, each with freedom to use his share as he pleased, by nightfall the material wealth of the world would again be distrib uted unevenly and the "lower third" would "go to bed hungry."

Freedom assures the individual of nothing but the unbridled op portunity to do the best he can with the abilities with which the Creator endowed him. This may seem to some persons to be inadequate - that the poorly endowed are entitled to more than they are capable of earning. Any one who feels that way surely should be free to exhaust his own 34 THE FREEMAN April resources in behalf of the poor. Beyond that, however, if such per sons then feel prepared to take upon themselves the role of the Creator - which must be the pre sumption of anyone advocating government direction of peaceful human affairs - they also should be well aware that never yet, in the long history of mankind, has there been a single case where such intervention has resulted in the alleviation of poverty. Joseph's and the Pharaoh's ever-normal granary in ancient Egypt lured a nation into bondage; the share and -share-alike-from-a-common storehouse plan of the Pilgrims at Plymouth Rock had to be aban doned lest everyone perish; and the agrarian reformers in modern Red China still face the same old consequences of massive coercion: mass starvation.

Not Necessarily So We may acknowledge that in the comparatively free market economies, even in the United States today, there is no equality of material possessions. Some per sons have a great deal more than the minimum requirements to sus tain life, while others face pov erty; and per haps there may be some few who actually go to bed hungry at night. But to observe that the free market has not to tally eliminated poverty does not justify the conclusion that pov erty, therefore, will automatically be overcome if the market is aban doned and the government placed in control of distribution. To observe that a man cannot walk very well with a broken leg does not necessarily mean that he will be able to walk better if we equalize matters by breaking his other leg, too! If a person has only the ability and the incentive to earn two square meals a day, it does not necessarily serve him right to relieve him of the incen tive - the necessity - to earn those two meals. If the government sub sidizes poverty, it does not neces sarily mean that poverty will thereby be diminished; on the con trary, it necessarily means that poverty will tend to be popularized as a way of life.

The free market rewards those who are most productive, those who serve consumers most effi ciently, whereas government inter vention on behalf of consumers rewards those who produce the least and operate most inefficient ly. These opposed methods of re ward have different eff'ects on the production process; the market method encourages prod uction, whereas the coercive government method takes away the incentive to produce. Which method will be most likely to allevia te poverty ought to be perfectly clear. ~ FREEDOM OF THE PRESS DEAN RUSSELL To THE BEST of my knowledge, freedom of the press (the printed word) is complete in the' United States today. That is, anyone can still write whatever he pleases and (subject to our reasonable' libel laws) the police will protect both him and his manuscript. But all too many of us confuse "free dom to write" with "what is printed." Both my liberal and con servative friends are equally guilty of this disservice to freedom. If they disagree with what is printed in the newspapers, they are often prone to complain that freedom of the press doesn't exist. That at titude demonstrates a total mis understanding of the meaning of freedom of the press.

For example, it so happens that I am in general disagreement with the editorial viewpoints expressed by more than 90 per cent of the Dr. Russell, economist, is a member. of the staff of The Foundation for EconomIc Edu cation. large daily newspapers in our country. But that fact has nothing whatever to do with the existence of freedom of the press. The only issue of consequence is whether or not the owners and editors of the newspapers are printing what they themselves choose to print and for any good or bad reason that pleases them. If any publisher is ever compelled to print view points that do not appeal to him personally, freedom of the press will be finished. There is, of course, only one source from which that compul sion could come - government. Yet I have heard many of my teaching colleagues seriously propose the idea that newspapers should be compelled to print all viewpoints or, worse yet, that the government should establish "opposition news papers" as a "public service."

Both proposals are, of course, the reverse of freedom of the press. The only valid test of freedom of the press is this: Can you write anything you please, pay to have it printed, and send it through the mails at your own expense without police interference? If so, freedom of the press is complete. If not, there is no freedom of the press. The fact that you may not have the large amount of capital that is today required to establish a daily newspaper is in no way related to this issue. + 35 JOHN MAYNARD KEYNES LENIN is said to have declared that the best way to destroy the Cap italist System was to debauch the currency. By a continuing process of inflation, governments can con fiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily,. and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrange*From The Economic Consequences of the Peace by John Maynard Keynes, copyright, 1920, by Harcourt, Brace & World, Inc., renewed, 1948, by Lydia Lopokova Keynes.

Reprinted by permission of the publishers. 36 ment of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the sys tem brings windfalls, beyond their deserts and even beyond their ex pectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impov erished, not less than of the pro letariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations be tween debtors and creditors, which form the ultimate foundation of 1965 INFLATION 37 capitalism, become so utterly dis ordered as to be almost meaning less; and the process of wealth getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the cur rency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

In the latter stages of the war all the belligerent governments practised, from necessity or in competence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weak ness the same malpractices. But further, the Governments of Eu rope, being many of them at this moment reckless in their methods as well as weak, seek to direct on to a class known as "profiteers" the popular indignation against the more obvious consequences of their vicious methods. These "profiteers" are, broadly speaking, the entrepreneur class of capital ists, that is to say, the active and constructive element in the whole capitalist society, who in a period of rapidly rising prices cannot help but get rich quick whether they wish it or desire it or not. If prices are continually rising, every trader who has purchased for stock or owns property and plant inevitably makes profits. By directing hatred against this class, therefore the European Govern ments are carrying a step further the fatal process which the subtle mind of Lenin had consciously conceived. The profiteers are a consequence and not a cause of rising prices. By combining a pop ular hatred of the class of entre preneurs with the blow already given to social security by the violent and arbitrary disturbance of contract and of the established equilibrium of wealth which is the inevitable result of inflation, these Governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century. But they have no plan for replacing it.

No Will to Defend We are thus faced in Europe with the spectacle of an extraor dinary weakness on the part of the great capitalist class, which has emerged from the industrial tri umphs of the nineteenth century, and seemed a very few years ago our all-powerful master. The ter ror and personal timidity of the individuals of this class is now so great, their confidence in their place in society and in their neces sity to the social organism so di minished, that they are the easy 38 THE FREEMAN April victims of intimidation. This was not so in the England twenty-five years ago, any more than it is now [1920] in the United States. Then the capitalists believed in them selves, in their value to society, in the propriety of their continued existence in the full enj oyment of their riches and the unlimited ex ercise of their power. Now they tremble before every insult; c,all them pro-Germans, interna tional financiers, or profiteers, and they will give you any ransom you choose to ask not to speak of them so harshly. They allow themselves to be ruined and altogether un done by their own instruments, governments of their own making, and a press of which they are the proprietors. Perhaps it is his torically true that no order of society ever perishes save by its own hand. In the complexer world of Western Europe the Immanent Will may achieve its ends more subtly and bring in the revolution no less inevitably through a Klotz or a George than by the intellec tualisms, too ruthless and self-con scious for us, of the bloodthirsty philosophers of Russia.

The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The var ious belligerent Governments, un able, or too timid or too short sighted to secure from loans or taxes the resources they required, have printed notes for the balance. In Russia and Austria-Hungary this process has reached a point where for the purpose of foreign trade the currency is practically valueless. The Polish mark can be bought for about three cents and the Austrian crown for less than two cents, but they cannot be sold at all. The German mark is worth less than four cents on the ex changes. In most of the other countries of Eastern and SouthI Eastern Europe the real position is nearly as bad. The currency of Italy has fallen to little more than a half of its nominal value in spite of its being still subject to some degree of regulation; French cur rency maintains an uncertain mar ket; and even sterling is seriously diminished in present value and impaired in its future prospects.

A Sentimental Value But while these currencies en joy a precarious value abroad, they have never entirely lost, not even in Russia, their purchasing power at home. A sentiment of trust in the legal money of the State is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value. To their minds it appears that value is in herent in money as such, and they do not apprehend that the real 1965 INFLATION 39 wealth, which this money might have stood for, has been dissipated once and for all. This sentiment is supported by the various legal reg ulations with which the Govern ments endeavor to control internal prices, and so to preserve some purchasing power for their legal tender. Thus the force of law pre serves a measure of immediate purchasing power over some com modities and the force of senti ment and custom maintains, es pecially amongst peasants, a will ingness to hoard paper which is really worthless.

The presumption of a spurious value for the currency, by the force of law expressed in the reg ulation of prices, contains in it self, however, the seeds of final economic decay, and soon dries up the sources of ultimate supply. If a man is compelled to exchange the fruits of his labors for paper which, as experience soon teaches him, he cannot use to purchase what he requires at a price com parable to that which he has re ceived for his own products, he will keep his produce for .himself, dispose of it to his friends and neighbors as a favor, or relax his efforts in producing it. A system of compelling the exchange of commodities at what is not their real relative value not only relaxes production, but leads finally to the waste and inefficiency of barter. If, however, a government refrains from regulation and allows mat ters to take their course, essential commodities soon attain a level of price out of the reach of all but the rich, the worthlessness of the money becomes apparent, and the fraud upon the public can be con cealed no longer.

The effect on foreign trade of price-regulation and profiteer hunting as cures for inflation is even worse. Whatever may be the case at home, the currency must soon reach its real level abroad, with the result that prices inside and outside the country lose their normal adjustment. The price of imported commodities, when con verted at the current rate of ex change, is far in excess of the local price, so that many essential goods will not be imported at all by pri vate agency, and must be provided by the government, which, in re selling the goods below cost price, plunges thereby a little further in to insolvency. The bread subsidies, now almost universal throughout Europe, are the leading example of this phenomenon. + 7. The Pragmatic Sanction of Flux CLARENCE B. CARSON .••A pragmatist turns his back resolutely and once for all upon a lot of inveterate habits dear to professional philosophers. He turns away from abstraction and insufficiency, from verbal solution, from bad a priori reasons, from fixed principles, closed systems, and pretended absolutes and origins.

He turns towards ... facts, towards action and towards power. -WILLIAM JAMES, 1907 Instead of a closed universe, science now presents us with one infinite in space and time, having no limits here or there, at this end, so to speak, or at that, and as infinitely complex in internal structure as it is infinite in extent. Hence it is also an open world . ... And change rather than fixity is now a measure of "reality" or energy of being,. change is omnipresent. -JOH N DEWEY. 1920 How DIFFICULT it was to launch the bulk of Americans on the flight from reality! What obstacles were met with in the efforts to turn Americans into the path of melio ristic reform! Only a reformer of some years back can really appre ciate the immense energy and in genuity that went into providing a new outlook for Americans and getting them to accept it. Utopian Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The Ameri can Tradition, both of which are now avail able as books.

40 visions appealed to some, but there was still the difficulty of convinc ing people that these dreams could be turned into reality. Philosophi cal thought could be cut loose from its moorings in reality, but the generality of men, probably even intellectuals, did not know about it. European ideologies proliferat ed, but Americans, when and if they heard of them, tended to re ject them. No great violence will be done to the reality to describe it figuratively. Hence, Americans clung tenaciously to constitutional ism, to private property, to free 1965 THE PRAGMATIC SANCTION OF FLUX 41 enterprise, to the individual way, and to the belief in an order in the universe. The tasks of those who advanced reformist ideas in the late years of the nineteenth century and the early years of this century were manifold. They had to overcome the inertia which blocks the ac.. ceptance of any innovation. They had not only to implant a new ver sion of reality but also to convince many people that they had based their lives upon an illusion rather than upon reality. Moreover, they had to counter the intellectual trends of the times. In our day, we are accustomed to the bulk of pro fessors, teachers, preachers, jour nalists, and so on being favorable to reform. It was not so in the period under consideration. Col leges, schools, religious denomina tions, and publications had not yet been won to the melioristic view.

The Trend Toward Nationalism Indeed, the leading trend in so cial thought in the latter part of the nineteenth century was dia metrically opposed to meliorism. This trend has been called by sev eral names - naturalism, social Darwinism, rugged individualism, among others. Naturalism may be a better generic name for a whole range of thought at the time, em bracing the arts and sciences as well as social thought. Social Darwinism may be understood as nat uralistic thought in its relation to society. One historian says that the cosmology of the naturalists "was compounded out of the nebu lar hypothesis of Kant and La place, the uniformitarian geology of Lyell, and the organic evolution of Darwin. It assumed universal change under naturallaw."l Social Darwinism, on the other hand, is usually applied to the particular social application of evolutionary ideas by Herbert Spencer and his American disciple, William Gra ham Sumner. Since this particu lar usage is common, it may be ap propriate to discuss the natural istic view first, and social Darwin ism as a variant of it.

In essence, naturalism was an account of reality in natural terms. That is, the earth, man, life, inanimate matter, and the universe were viewed as the result of nat ural processes. As evolutionists, naturalists turned away from any enduring reality and focused upon change. But they took with them an interest in natural law from the older outlook. The major impetus of scientists for several centuries had been the quest for natural law. Naturalists were full to overflow ing with the scientific (or scien tistic) animus, and they contin1 Stow Persons, American Minds: A History of Ideas (New York: Holt, 1958), p. 222.

42 THE FREEMAN April ued the search for laws. But a most important change had oc curred in the conception of nat ural law. To earlier thinkers, in deed to virtually the whole tradi tion of Western thought, natural law had been something fixed in the universe. It was that enduring order in the universe as it is known to man. To naturalists, nat ural law was the law by which changes occurred, the law, or laws, of evolutionary development. Natural law was active rather than fixed or passive. It was felt through forces at work in the uni verse. Naturalists gave their at tention either to discovering and expounding the stages of develop ment or to describing the forces which produced the changes. In short, they were greatly concerned with what was determining the course and direction of changes that had been and (presumably) were occurring. Naturalists were determinists, then; they pictured man's actions as products of forces within or without him but, which ever, beyond his control.

These interpretations amounted to a radical transformation of the significance of natural law. Nat ural law as orderin-the-universe has ever been a liberating concept. It has served as the basis for lim iting governments, for freeing economies, as foundation for posi tive law, as the basis of government by law, and as the substruc ture for peaceful relations among nations and peoples. But natural laws as forces are tyrannical, though not necessarily arbitrarily so. That is, natural laws then be come acti ve rather than passive, subject to change rather than en during, founts of change rather than bases for rational order. Nat uralism pervades the thinking of Karl Marx, Charles Darwin, Emile Zola, William Graham Sumner, John W. Draper, Frederick Jack son Turner, Theodore Dreiser, and many other writers and thinkers. The point that concerns us here is the opposition of such an out look to reform. If change occurs as a result of forces, if the course and direction of change is deter mined by processes beyond the power of man to alter, if social changes are the product of such processes, reform is impossible.

Human intervention in the process is virtually impossible, and, were it possible to any extent, it would be undesirable, for it would only deter the beneficent course of evo lution - or so the more optimistic naturalists thought. William Graham Sumner The social view of the signifi cance of evolution that was most congenial to the prevailing Ameri can way, and to many Americans, was that of William Graham 1965 THE PRAGMATIC SANCTION OF FLUX 43 Sumner. His views, as 1 have sug gested, are often cited as the epit ome of social Darwinism. Sumner was a thoroughgoing Darwinian, naturalistic in emphasis, and his works are replete with references to "forces" at work upon and within society. Yet the views which he set forth appeared to be in keeping with American institu tions and basic beliefs. For ex ample, in defending a higher stage of civilization, he said: It sets free individual energy, and while the social bond gains in scope and variety, it also gains in elastic ity, for the solidarity of the group is broken up and the individual may work out his own ends by his own means.... 2 He defends private property, and praises virtues which are undeni ably those admired by many Americans of his day. Thus, The only two things which really tell on the welfare of man on earth are hard work and self-denial (in technical language, labor and capi tal), and these tell most when they are brought to bear directly upon the effort to earn an honest living, to accumulate capital, and to bring up a family to be industrious and self-denying in their turn. 3 2 William G. Sumner, "Sociology,"

American Thought: Civil War to World War I, Perry Miller, ed. (New York: Rinehart, 1954), p. 8l. 3 Ibid., p. 87. Moreover, he conceived that soci ology would provide facts and theories which would support the American system. It could answer one of the most important ques tions, he thought. "Shall we, in our general social policy, pursue the effort to realize more com pletely that constitutional liberty for which we have been struggling throughout modern history ... ?"4 Short Shrift for Reformers Most important for the matter under consideration, Sumner held an uncompromising position to the effect that melioristic reform was practically impossible. Of utopians and socialists, he said: "These per sons, vexed with the intricacies of social problems and revolting against the facts of the social or der, take upon themselves the task of inventing a new and better world. They brush away all which troubles us men and create a world free from annoying limita tions and conditions - in their imagination." 5 Why can't men simply conceive a world of the sort they want and then set out to build it? Sumner offers many rea sons - human nature, the nature of the world, natural law - but the primary one was of a different order. This was the argument from the evolution of society.

4 Ibid., p. 9l. 5 Ibid., p. 73.

44 THE FREEMAN April Specifically, society had reached an industrial stage of development. Sumner conceived society as an organism, and industrial society as-organism was highly and com plexly organized. To talk of alter ing this organization and institut ing another by taking thought was utter folly. Men do not control it; It controls us all because we are all in it. It creates the conditions of our existence, sets the limits of our social activity, regulates the bonds of our social relations, determines our conceptions of good and evil, suggests our life-philosophy, molds our inherited political institutions, and reforms the oldest and toughest customs, like marriage and property. In short, "the industrial organiza tion" exercises an "all-pervading control over human life .... "6 He offers a technological explanation of how this all-pervading organi zation came about. "The great in ventions both make the intension of the organization possible and make it inevitable, with all its con sequences, whatever they may be."7 The only thing that men can constructively do is this: "We have to make up our minds to it, adjust ourselves to it, and sit down and live with it."s 6 William G. Sumner, "The Absurd Effort to Make the World Over," in ibid., p.94.

7 Ibid., p. 95. 8 Ibid. The Sociologist Emerges The perils of the sociological mode of thought are great; Sum ner's premises had led him to a strange conclusion. In the first essay cited, originally published in 1881, he had boldly asserted that sociological knowledge would expose the tyranny of reformism and demonstrate the blessings of liberty. Yet, in the second essay cited, published in 1894, he was opposing reform by proclaiming that all of us are caught in the web of the social organization, and he did so in words and phrases that would have been worthy of Karl Marx. Sumner's thought is confused and contradictory. Much that he wrote has an indi vid ualis tic tenor, but he was committed by his mode of the search for truth to the study of thought in terms of society. His confusion was further complicated by the use of analogies drawn from the biological thought of Darwin, thought concerned rightly with organisms, but which could not be appropriately trans ferred to the consideration of so ciety. Natural law had been moved into the historical stream to be come force. Thus, Sumner's con clusion derives from the premises he was using, but it was hardly propitious for human freedom.

His assumptions had induced my opia - the myopia which perceives society-as-organism and natural1965 THE PRAGMATIC SANCTION OF FLUX 45 law-as-force - and he was op posing flights from reality by arguments drawn from a distorted view of reality. Be that as it may, the evolu tionary premises had been used to erect an apparently formidable argument against reformism. The Darwinian modes of progress competition for available re sources, struggle for life, surviv al of the fittest - natural law in terpreted as force, and the pre vailing trends ran counter to re form. If one rejected these, he was hardly nearer to a position which made reformism intellectually fea sible, for the traditional view of reality was an even more formid able obstacle to such reformist vi sions than social Darwinism. The Turning Point But could the evolutionary ideas not be turned to the advantage of meliorism? They could be, and were. Moreover, those who turned the arguments could appear to be on the side of the angels - that is, in favor of freedom, in favor of the amelioration of circumstances, in favor of humanity. The chances are good that reformers did not generally see this clearly at the time, but social Darwinism made an excellent target, and the re pudiation of this pseudo-philos ophy could bring down with it much of the traditional philosophy which it had subsumed. At any rate, something like this did oc cur.

Before examining these latter developments, however, it is in order to show how the evolution ary obstacle to reform was over turned. Social Darwinism carried with it a heavy freight of assump tions about continuous change, stages of development in civiliza tion, and organicism. Who could say what the next stage of de velopment would be like? Some thing that was impossible at one stage could become highly prob able, even inevitable, at the next stage. Sumner admitted as much in his discussion of private prop erty. He believed that the develop ment of protections to private property had been a great ad vance. However, it "may give way at a future time to some other in stitution which will grow up by imperceptible stages out of the efforts of men to contend success fully with existing evils .... "9 Lester Frank Ward Lester Frank Ward, a contem porary of Sumner, a sociologist and meliorist, proclaimed that a new stage in evolution had been emerging for millennia, and he believed that it was ready to be brought to fruition. The new stage was the "advent with man of the 9 Sumner, "Sociology," ibid., p. 82.

46 THE FREEMAN April thinking, knowing, foreseeing, cal culating, designing, inventing and constructing faculty, which is wanting in lower creatures .... " It repealed "the law of nature and enacted in its stead the psycho logic law, or law of mind."lo He held that men could now take over the direction of social develop ment, and that they could shape it to human ends. His work was a call to men to take up their rightful place in the universe and bring nature and natural law to heel: ... When nature comes to be re garded as passive and man as ac tive ... , when human action is recognised as the most· important of all forms of action, and when the power of the human intellect over vital, psychic and social phenomena is practically conceded, then, and then only, can man justly claim to have risen out of the animal and fully to have entered the human stage of development. ll Ward retained the evolutionary frame, the focus upon society, the progressive tendency of natural ism, but he turned the argument against the possibility of reform and opened the way for the ad10 Quoted in Henry S. Commager, The American Mind (New Haven: Yale Uni versity Press, 1954), p. 206.

11 Lester F. Ward, "Mind as a Social Factor," American Ideas, Gerald N. Grob and Robert N. Beck, eds., II (New York: Free Press of Glencoe, 1963), 129. vance of meliorism. He drew at tention away from the enduring features of man and the universe even more emphatically than Sum ner had done. The alternatives which he offered can be put this way: either men in society are controlled and determined by nat ural laws of social development or they are free to alter and control the development of society. Probable Errors It should be emphasized that the analysis of both Sumner and Ward is gross. Ward had no more proved that any particular melio ristic reform was possible than had Sumner proved that it was impos sible. Both of them were at least three removes from the relevant reality. In the first place, the arg uments are conducted at too gen eral and abstract a level. One is reminded of Zeno's paradox which purports to prove that there can be no change. The problem lies in the premises upon which the argument is based, not in reality.

Second, both arguments rely upon a most dubious extension of evolu tionary ideas. Third, both thinkers conceived society organically rath er than viewing the matter from the point of view of individuals. Moreover, both appear to have been confused, or at least confus ing, about the nature of natural law.

1965 THE PRAGMATIC SANCTION OF FLUX 47 Even so, Ward had opened the way to reformist efforts within the contemporary outlook. Other reformers took advantage of the opening to press through the de fenses and advance their reforms. Developing a New Philosophy of Pragmatism But reformers needed more than the vision which utopia provided and the theoretical possibility of reform. They needed a philosophy to replace older views and one which would buttress meliorism. Such a philosophy was provided by pragmatism. Pragmatism of fered refutations of traditional philosophy by proclaiming its ir relevance, was futuristic in its orientation, and made boundless reconstruction the aim and pur pose of thought. Most important, it made meliorism intellectually respectable, a necessary step to draw in the bulk of the intellec tuals, and it made it possible for thinkers to advance reform with out avowing any particular ideol ogy.

Pragmatism stands for an ap proved method and attitude today. Not only are intellectuals proud to be known as pragmatists, but they bestow what they conceive to be one of the highest accolades upon politicians by describing them as pragmatic. The word has long since passed into the vernacular, and many people use it with out any clear conception of its meaning . It is sometimes employed as if it were a synonym of prac tical, and it is adopted as a mode of thought by those who have given little or no thought to phi losophy. The word was given philosophi cal currency by Charles Sanders Peirce, a rather obscure American thinker of the latter part of the nineteen th centu ry. But it was popularized by William James. When this had occurred, Peirce abandoned the word,. "pragma tism," for a new formulation, "pragmaticism."12 John Dewey, who was the most prolific writer of this school of thought, called his variant of pragmatism, "in strumentalism." This left James as the only major exponent of pragmatism who used that name for his philosophy. There were important differences, particularly between Peirce and the other two, but these do not concern the basic meaning of pragmatism.

Each of them contributed to its development. As one writer says, "It suffices ... to say that if Peirce may be regarded as the Socrates of pragmatism, and James as its Plato, Dewey is certainly its Aris12 See Charles S. Peirce, "What Prag matism Is," Philosophy in the Twentieth Century, William Barrett, ed., I (New York: Random House, 1962), 138-40.

48 THE FREEMAN April totle."13 This may be taken to imply, also, that pragmatists claimed to be constructing a new philosophy as important for the future ages as the ancient philos ophy had been for those from that time. Peirce "framed the theory that a conception, that is, the rational purport of a word or other expres sion, lies exclusively in its conceiv able bearing upon the conduct of life; so that, since obviously noth ing that might not result from ex periment can have any direct bear ing upon conduct, if one can define accurately all the conceivable ex perimental phenomena which the affirm ation or denial of a concept could imply, one will have therein a complete definition of the con cept, and there is absolutely noth ing more in it."14 This was what he meant by pragmatism. With his gift for simplification and clarity, James defined pragmatism in the following way: To attain perfect clearness in our thoughts of an object, then, we need only consider what conceivable ef fects of a practical kind the object may involve - what sensations we are to expect from it, and what re actions we must prepare. Our con ception of these effects, whether immediate or remote, is then for us 13 Henry D. Aiken, "Introduction,"

ibid., p. 49. 14 Peirce, op. cit., p. 138. the whole of our conception of the object, so far as that conception has positive significance at all.l 5 Dewey defined the same concept instrumentally: If ideas, meanings, conceptions, notions, theories, systems are instru mental to an active reorganization of the given environment, to a re moval of some specific trouble and perplexity, then the test of their validity and value lies in accomplish ing this work. If they succeed in their office, they are reliable, sound, valid, good, true.l 6 A Radical Departure How radical pragmatism was (and is) may not appear from these definitions. There is an am biguity in these formulations of the method. Conceivably, it might be a method for discovering truth, finding principles, uncovering laws that are in the universe. One might proceed from "effects" to their causes, and from thence to the order which makes for regu larity of the operation of cause and effect. If this were what is in volved, pragmatism would be only a particular formulation of the in ductive method of reasoning. It 15 William James, "What Pragmatism Means," Pragmatism and American Cul ture, Gail Kennedy, ed. (Boston: D. C.

Heath, 1950), p. 13. 16 John Dewey, Reconstruction in Philosophy (New York: Henry Holt, 1920), p. 156.

1965 THE PRAGMATIC SANCTION OF FLUX 49 must be made clear, however, that pragmatism was not intended by its proponents to be fitted into any traditional mode of thought, that it was not intended as a means for finding truth, order, or regularity, that it was founded upon a counter view of reality. Pragmatists were not concerned to discover any fixity or absolutes, nor were they building upon tra ditional philosophy. On the con trary, a part of the work of all three men under consideration was devoted to refuting (and denounc ing) absolutes, fixities, and tradi tions. Peirce declared that prag matism "will serve to show that almost every proposition of onto logical metaphysics is either meaningless gibberish ... or else is downright absurd. . . ."17 In making expositions of his philos ophy, James alterna ted between repudiations of rationalism, ideal ism, objectivity, and metaphysics and affirmations of pragmatism.

Of the belief in the Absolute, he said, "it clashes with other truths of mine. . . . It happens to be· as sociated with a kind of logic of which I am the enemy; I find that it entangles, me in metaphysical paradoxes .... " Therefore, "I per sonally just give up the Abso lute."18 Dewey points out that in the older philosophy truth and 17 Peirce, Ope cit., p. 144. 18 James, Ope cit., p. 22. falsity "are thought of as fixed, ready-made static properties of things themselves .... Such a no tion lies at the back of the head of everyone who has, in however an indirect way, been a recipient of the ancient and medieval tra dition. This view is radically chal lenged by the pragmatic concep tion of truth, and the impossibility of reconciliation or compromise is . . . the cause of the shock occa sioned by the newer theory."19 Ev~r·Chang;ng IITruth li Truth is not something pre existing to be discovered, accord ing to the pragmatists; it is brought within the evolutionary frame of the continually changing.

It is not fixed, but changing; not pre-existent, but evolving; not dis covered, but made. Peirce says that the summum bonum consists "in that process of evolution whereby the existent comes more and more to embody those gen erals which were just now said to be destined.. . ."20 James says, "The truth of an idea is not a stagnant property inherent in it. Truth happens to an idea. It be comes true, is made true by events."21 Elsewhere, he makes clear the relationship of this no19 Dewey, op. cit., pp. 158-59. 20 Peirce, Ope cit., p. 149. 21 William James, "Pragmatism's Con ception of Truth," Philosophy in the Twentieth Century, I, 194.

50 THE FREEMAN April tion to the concept of evolution: "When the whole universe seems only to be making itself valid and to be still incomplete (else why its ceaseless changing?) why, of all things, should knowing be exempt? Why should it not be making itself valid like everything else? "22 John Dewey says "that there is change going on all the time, that there is movement within each thing in seeming repose; and that since the process is veiled from percep tion the way to know it is to bring the thing into novel circumstances until change becomes evident. In short, the thing which is to be ac cepted and paid heed to is not what is originally given but that which emerges .... "23 To the pragmatists, then, the universe was open. Reality was not something given, something to be discovered, something with fixed feature; it was open, alterable, and changing. For Peirce, according to one interpreter, "laws, like habits, are 'emergent' principles which characterize only certain limited phases of the evolutionary process.

In this sense, laws themselves are mutable .... There is, however, no universal law of development .... The universe as a whole is funda mentally open-ended. . . ."24 Ac22 William James, "A World of Pure Experience," ibid., p. 235. 23 Dewey, op. cit., p. 114. 24 Aiken, op. cit., p. 62. cording to Dewey, fixity, where it apparently existed, was not some thing to be observed, recorded, and admired. "Rather, the experi mental method tries to break down apparent fixities and to induce changes. The form that remains unchanged to sense, the form of seed or tree, is regarded not as the key to knowledge of the thing, but as a wall, an obstruction to be broken down."25 What were once conceived as enduring realities Dewey would have us view as tem porary obstacles. Primarily a Method Pragmatists agreed with one another that theirs was primarily a method. In terms of the above elucidation, it should be clear that it was a method for operating in a world of flux and change. Change and development do not adequately describe the world view of these pragmatists. The universe must also be described as in a state of flux, for there is no necessary di rection to its development. Men located in a world where things are forever fluctuating may be likened to someone embarked on a voyage into perpetually uncharted seas. There would be great need, in these circumstances, for some thing by which to steer. Peirce, James, and Dewey proposed that pragmatism should be that guide.

25 Dewey, op. cit., p. 113.

1965 THE PRAGMATIC SANCTION OF FLUX 51 They accepted a method, then, to replace the knowledge they had repudiated. The model for that method, or so they believed, was the scientific method. Someone has observed that pragmatism is not so much a philosophy as a way of doing without a philosophy. With equal justice, it should be observed that pragmatism is not so much a method for acquiring knowledge as a means of operating in lieu of knowledge and certainty. At any rate, pragmatism resulted from the efforts of the founders to render the scientific method, as they understood it, into· a philos ophy. These men were conscious that this latter was what they were doing. Peirce declared that after the "gibberish" of meta physics had' been swept away, "what will remain of philosophy will be a series of problems cap able of investigation by the obser vational methods of the true sciences .... "26 Confusion· of the Scientific Method with Technology It should be made clear, though, that the scientific method James and Dewey, at least, had in mind was not the method as it received its classic formulation in the seventeenth century. That was a method designed for and aimed at discovering and describing the 26 Peirce, Ope cit., p. 144.

laws in the universe - what is to day vestigially ref erred to as "pure" science. Rather, the con ceptions of the pragmatists were based on the technological applica tions of science. The scientist, as technologist, is concerned with ways to reshape, reform, and re order natural things. Such tech nologists have had (and are hav ing) remarkable successes. It has been stated so often that it is now a cliche - but it will bear repeat ing in this context - that these technological achievements rest upon prior achievements in "basic" science. The meaning is, or should be, that technologists achieve their effects because of a knowledge of underlying laws which preceded their labors. Their work rests upon a foundation of laws, regularities, and established connections. This is precisely the point which James and Dewey, particularly Dewey, missed. They apparently thought that the technologist was doing what he appeared to be do ing - experimenting at random until he came up with something, then going on to other modifica tions and experiments. Dewey con ceived of the scientist not as dis coverer but as innovator. Scien tific knowledge is obtained, he de clared, by the "deliberate institu tion of a definite and specified course of change. The method of 52 THE FREEMAN April physical inquiry is to introduce some change in order to see what other change ensues; the correla tion between these changes ...

constitutes the definite and desired object of knowledge."27 He made clear that he thought that there was only one valid scientific meth od, and it was the method used both in laboratories and in indus tries. "Moreover, there is no dif ference in logical principle be tween the method of science and the method pursued in technolo gies."28 At any rate, James and Dewey took what they thought was the scientific method from the limited arena of applied science and gave it universal application as the method. They attempted to make experimentation into a way of life. Ideas and concepts were conceived, in this context, as a scientist was believed to conceive of hypotheses, that is, as instruments of change. As James put it, Theories thus become instruments, not answers to enigmas, in which we can rest. We don't lie back upon them, we move forward, and, on oc casion, make nature over again by their aid. 29 27 John Dewey, "The Quest for Cer tainty," The Golden Age of American Philosophy, Charles Frankel, ed. (New York: George Braziller, 1960), p. 414.

28 Ibid., pp. 414-15. 29 James, "What Pragmatism Means," Ope cit., p. 15. Dewey spells out the implications of this 'belief: ... Here it is enough to note that notions, theories, systems . . . must be regarded as hypotheses. They are to be accepted as bases of actions which test them, not as finalities .... They are tools. As in the case of all tools, their value resides not in them selves but in their capacity to work shown in the consequences of their use. 30 As tools, then, ideas are relative to the uses to which they are put. If the point does not emerge, it must be stated: pragmatists are relativists. John Dewey Spells It Out The importance of pragmatism for social reform was made abun dantly clear in the numerous works of John Dewey. The indica tions are that Charles Sanders Peirce was interested in technical philosophy rather than reform. William James was more con cerned with the psychology of be lief than with social reform. It was left to Dewey, then, to apply pragmatism to ameliorative re form. He is best known as an edu cational reformer, but he was much concerned with all sorts of reform. He may well have been the central figure in the promotion of reformism in America.

30 Dewey, Reconstruction in Philos ophy, p. 145.

1965 THE PRAGMATIC SANCTION OF FLUX 53 Dewey openly advocated that philosophy should be reoriented so as to perform a social function, tha t is, to make over men and so ciety. Too long, he thought, philos ophers had pretended to have some special method for arriving at truth, to be concerned with Reality beyond reality. The time had come for philosophy to come out in the open and get on with the task it had been covertly performing all along. "Philosophy which surren ders its somewhat barren monopoly of dealings with Ultimate and Absolute Reality will find a com pensation in enlightening the moral forces which move mankind and in contributing to the aspira tion of men to attain to a more ordered and intelligent hap pi ness."31 More bluntly, and in the form of rhetorical questions, he proclaimed what he conceived to be the real end of philosophy: ... But would not the elimination of these traditional problems permit philosophy to devote itself to a more fruitful and more needed task?

Would it not encourage philosophy to face the great social and moral defects and troubles from which hu manity suffers, to concentrate its attention upon clearing up the causes and exact nature of these evils and upon developing a clear idea of better social possibilities; in short upon projecting an idea or ideal 31 Ibid., PP. 26-27. which . . . would be used as a method of understanding and recti fying social ills? 32 Despite the appearance of caution in formulating the ideas, there should be no doubt that Dewey thought philosophy should per form a melioristic function. R@shape th@ Environment In sum, then, the pragmatists had denigrated and repudiated traditional philosophy. They held forth the vision of a universe in a continuous state of flux. Such order as existed would have to be wrought by man, and no order would be final or complete. Man's task was to reshape and remake himself and his environment.

There were no pre-existing rules - no fixed principles, no enduring laws, no underlying order - to guide or restrain him in his en deavor. Traditionalists had been wrong in believing that there were static natural laws ; natural ists had been wrong in thinking there were forces-as-Iaws govern ing development. Pragmatists af firmed a radical new freedom - the freedom to reshape reality accord ing to how they would have it be. The method for operating in this flux was to be pragmatism, the method of continual experimenta tion in moving toward their in definite goals. 32 Ibid., p. 124.

54 THE FREEMAN April A philosophy had been formed to buttress and promote melior is tic reform. One other point needs to be made. It has often been claimed that reformism is alien to Amer ica. There is a sense in which this is true. That is, it is alien to the system of constitutionalism devel oped in America, and to the be liefs by which it was buttressed. But it was not alien in the sense of being foisted upon Americans by foreigners. Instead, the reform ist bent was established by citi zens of America, in the main. This is most important to un derstanding the nature of reform ism in America. Insofar as it was pragmatic, it was not specifically socialism nor communism. Prag matists do not define goals in such rigid fashion as this. Of course, the reforms have been socialistic in tendency, but this can be as cribed to the utopian visions which reformers imbibed, which were so cialistic, rather than to a con sciously worked out program to achieve socialism. Of course, other assumptions, to be taken up later, bent the reformer toward social ism. But the pragmatist, qua pragmatist, just continues to ex periment, not toward a final goal but toward the general goal of growth and improvement which is never to end. ~ The next article in this series will concern "The Deactivation of History."

Source of Natural Law THIS TENDENCY to the conservation of society, which we now expressed in a rude manner, and which tendency is in agree ment with the nature of the human intellect, is the source of Jus, or Natural Law, properly so called. To this Jus belongs the rule of abstaining from that which belongs to other persons; and if we have in our possession anything of others, the resti tution of it, or of any gain which we have made from it; the fulfilling of promises, and the reparation of damage done by fault; and the recognition of certain things as meriting punish ment among men. HUGO GROTIUS, On the Rights of War and Peace (1625) GERDA'S EMPIRE REBECCA WEST Rebecca West's Black Lamb and Grey Falcon (Viking Press, 1941) analyzes the dictator complex ex emplified in Gerda, encountered by Miss West and her husband in their travels through Yugoslavia. GERDA has no sense of process.

That is what is the matter with Gerda. She wants the result with out doing any of the work that goes to make it. . . . She is angry because we have some money. She feels that it might just as well belong to her . . . For her, the money might as easily have been attached to her as to us by a move ment as simple as that which pastes a label on a trunk ... As she has no sense of what goes to bring people love, or friendship, or distinction, or wealth, it seems to her that the whole world is enjoying undeserved benefits; and in a universe where all is arbi trary, it might just as well happen that the inj ustice was pushed a little further and that all these benefits were taken from other people, leaving them nothing, and transf erred to her, giving her everything. Given the premise that the uni verse is purely arbitrary, that there is no causality at work any where, there is nothing absurd in that proposal. This is the con queror's point of view ... Let us admit it, for a little while the whole of our world may belong to Gerda. She will snatch it out of hands too well bred and com passionate and astonished to de fend it. What we must remember is that she will not be able to keep it. For her contempt for the proc ess makes her unable to conduct any process ... To go up in an aeroplane and drop bombs is a simple use of an elaborate process that has already been developed.

But you cannot administer a country on this principle . . . Gerda's empire . . . will be an object of fear and nothing else. For this reason, I believe that Gerda's empire cannot last long. But while it lasts it will be ter rible. And what it leaves when it passes will also be terrible. For we cannot hope for anything but a succession of struggles for lead ership among men whose minds will have been unfitted for leader ship by the existence of tyranny and the rupture of European tra dition, until slowly and painfully, the nations re-emerge, civilization re-emerges. ~ 55 MALLORY CROSS ALTHOUGH strongly independent by nature, my friend thought cer tain government welfare projects were necessary - because he had never heard of an alternative. As I presented the libertarian view point, he listened attentively, but very soon caught me up. "Freedom? Are you sure free dom is always good?"

"Oh, yes," I replied innocently. "Well, some people want free dom to line their own pockets, to run riot and steal and get rich without working. They want free dom to do exactly as they please!" "Wait a minute: I should have said, 'equal freedom.' Each man should have equal freedom to run his own life without interference from others." "Then you want to give every body equal freedom to do exactly as he pleases? To steal or attack others ?" "N0, I said without interference Miss Cross is a freelance writer, residing in France. 56 from others. Every man should have equal freedom to undertake creative activities, so long as he doesn't interfere with other men's creative work." "Then freedom is not always good for everyone. And you do not really want to grant all men freedom." "Not if it means interfering with someone else's creative ac tivity. Freedom must be accom panied by responsibility."

"Ah," said my friend, "freedom with responsibility: that is a dif ferent picture altogether!" In the years since that conver sation, I have made the same dis covery that anyone who is growing in libertarian understanding must eventually make. If we talk only about "freedom for all," or "equal freedom" or even "freedom to be creative," we may be misunder stood. Socialists want freedom to be creative, too: they want to create 1965 SELF-DISCIPLINE: FREE CHOICE: RESPONSIBILITY 57 an egalitarian society where men work for the "common good," and each receives according to his need - no more, no less - regardless of the size of his contribution. The Union of Soviet Socialist Repub lics has been creative in that field for over forty-five years. What, then, is the essence of human life at its best? What can we be for, in a positive way, that will not be misunderstood? All men have one goal in common, regardless of differences of race, creed, or political philosophy. All men want to be happy, to have a better life. That is the "common good."

St. Augustine said in 390 A.D., "Error comes about when we fol Iowan aim which does not lead us where we wish to go." The question is, how can we achieve happiness, the "common good," without falling into error? The best I can do in answer is this: Combine self-discipline and free dom of choice with responsibilit·y. Three Aspects of Self-Discipline Self-discipline is admired in all countries, especially in the USSR. There, each citizen is expected to fulfill his obligations, and to criti cize his own shortcomings in public meetings. In all nations the dis cipline of parading troops is ad mired. Each soldier makes an ef fort to keep in perfect step, knowing he will be called to account if he fails. Here we have two ex amples of discipline and responsi bility imposed on the individual by threat of force, rather than his own free will, or conscience, or desire for betterment. His free dom of choice is narrowly limited: to accept or refuse to comply with another's will, under threat of punishment. (Note that punish ment invariably involves a further restriction of free choice.) Self-discipline means "self teaching," or "self-government,"

or "self-chastisement." Self-teaching means not only learning facts and ideas, but also learning from experience. Each must set his own goals (have an incentive), and bear the burden of any error in his choice of goals or in his efforts to achieve them. Self-government means not only controlling one's temper, but also directing one's choice of goals and choosing the means to reach them. It includes the will to deprive one self of a short-run good in order to attain a greater good in the long-run. Self-chastisement means not on ly admitting a mistake and back tracking when one has made an error; but also refusing to follow passions, relationships, or ideas once recognized as erroneous, Le., as means which will not lead to the desired end. This may be called 58 THE FREEMAN April "punishment" by those who are shortsighted, but chastisement al so means "correction." Thus, it is intimately related to learning and governing: learning prepares one to choose wisely; governing is the act of choice; chastisement is correction of wrong choice.

Freedom of choice must there fore be combined with all three meanings of self-discipline. "Free" means "unrestrained" or "unlim ited." "Choice" means "the act of choosing from among available alternatives." Combining the words, we then define freedom of choice as: "the unrestrained act of choosing from among available alternatives." When the act of choosing is not restrained by other persons, then the only limitations are those imposed by nature and our own will. However, we must remember that our choices may not necessarily be good from other people's point of view. Here we come to the concept of responsi bility. Answerable for Our Actions Responsible means "answer able." We all talk to ourselves sometimes, but generally an an swer is elicited in response to a question from someone else. Man does live in society, in company with others. As soon as we choose a course of action and start mov ing toward it, we find other peopIe in our path. Some of them may have no business there; others may have a perfect right to ask, "Where do you think you're go ing? How are you going to get there ?"

Your answer may draw one of several reactions. "Do what you like; it doesn't interest me." Or perhaps, "May I come along? I'm going that way myself." Or: "You're crazy - you don't know what you're talking about!" (Pos sibly he is right; we had better have a little talk with that one.) But there may be one more stand ing in the path: "You can't go this way because I refuse to per mit it." (This may be your gov ernment, but it may also be your wife or your conscience or your banker.) Family, friends, and government can all take up those various posi tions: indifference, cooperation, warning, or opposition. Now it may be that the just answer from you should be, "You're on the wrong track." (The indifferent one perhaps ought to be interested.) But we cannot ignore them, even if the error be theirs rather than ours. All those who demand an answer must be satisfied, or we shall not be allowed to get on toward our goal unhampered - if at all.

Responsibility is a habit of character that looks far ahead, 1965 SELF-DISCIPLINE: FREE CHOICE: RESPONSIBILITY 59 that tries to foresee what obstacle or opposition - justified or not may arise, and prepare to meet it with satisfactory answers. A re sponsible person does not start a vacation in his car without seeing that there is air in the tires, gas in the tank, money in his pocket, and an open road ahead. Each time we encounter firm opposition the cycle of self-dis cipline, choice, responsibility be gins anew. These qualities are needed daily and hourly as long as we live in this world. The grea ter our self -disci pline, the less will our own weakness and igno rance delay us. The wider area of choice we have, the less serious will be any particular obstacle to our constructive purposes. The more responsible we are, the far ther-seeing we will learn to be, tracing our route ahead of time to avoid insurmountable barriers.

Let us work continually to de velop and use these qualities in ourselves. Here is an area where we can get action now, without waiting for the other fellow. Even in the area of choice, we are not exercising our freedom to the full est unless we always choose the highest good as we see it, instead of moving with the herd. This means fighting our own battles and cheerfully accepting the con sequences. Individually, all men seek hap piness. But how can we achieve the "common good"? It will be re vealed progressively as one by one we learn to combine self-discipline with freedom of choice and re sponsibility. ~ Seek The Good ALL WISH TO BE HAPPY, but not all are able so to be. Not all wish to live rightly, which is the only state of will that deserves a happy life .... All ... seek the good and shun evil, but they follow different aims because they have different opinions about the good. If a man seeks what ought not to be sought, he errs, even though he would not seek it unless he thought it was good .... Therefore, in so far as all men seek a happy life, they are not in error.

ST. AUGUSTINE, The Problem of Free Choice (Circa 390 A.D.) A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE INSTITUTE of Economic Af fairs in Great Britain, which is a nonparty group of economists "held together by a common inter est in the working of free eco nomic institutions," has put out a remarkable paperback book, Re birth of Britain (Pan Books, Ltd., 8 Headfort Place, London S.W.I.; 5 shillings). Eighteen au thors have contributed to it, and some of their essays would per plex any classical liberal of the nineteenth century. The key to both the tone and the strategy of the papers is the fact that a na tion which is far gone in state welfarism gives its citizens very little reom in which to maneuver in their efforts to restore individ ual freedom of action. Because of the situation in Britain, the con tributors to this book do not ar gue for an immediate restoration of free capitalist institutions. In stead, they concentrate on taking their adversaries on the flank, proposing only "a drastic pruning 60 of unnecessary state welfare ser vices." The key to that statement is the word "unnecessary." Who is to say?

Well, an "unnecessary" state service in our various authors' estimation is one that does not permi t a voluntary choice between private and public welfare agen cies. This implicit definition con trols the strategy of the Rebirth of Britain authors. They don't really advocate dismantling any of the features of the welfare state. But they do suggest the idea of "contracting out," presum ably on a basis that would still compel all people to maintain some form of insurance protec tion against such things as sick ness and old age. In this book we find Arthur Sel don advocating enough govern ment welfarism to provide some state support to "people with low incomes." But he would not pro vide this support through free services. Instead, he would have 1965 "CONTRACTING OUT" OF SOCIALISM 61 the government give to the poor "generous cash money grants or vouchers to enable them· to assert themselves in the marke( place by exerting a choice between state and private welfare services." The idea would be to put the welfare agencies of the state into renewed competition with private insurance agencies, private schools (or "pub lic," as they are called in Eng land), and private businesses.

The voucher idea has been ad vanced in the United States by Professor Milton Friedman, who thinks it could be adapted to aid to education without putting the government into the business of supporting colleges with grants of money that might corrupt the cur riculum. Obviously, in America the creation of a system of higher educational vouchers would in crease the sum total of state wel farism. This is sufficient to raise the hackles of libertarians. But in the existing British context, a voucher system might very well represent an advance toward lib ertarianism over what they now have. This would seem to be especial ly true in the case of the British health services. If a British citi zen were to be permitted to "con tract out" of dependence on the apparatus of the National Health Service, wouldn't it be a net gain for freedom? Counterbarrage to Planners Rebirth of Britain was provoked by a special issue of Encounter magazine in which sixteen writers under the general editorshi p of Arthur Koestler wrote on econom ic planning, education, state wel farism, and related topics. The Koestler group, a bunch of latter day Fabians who lamented the corning "suicide" of Britain sim ply because the state hadn't man aged to conscript more than a fifth of the national wealth for com pulsory welfare schemes, advocat ed a far greater direction of the national energy from the top. This so appalled tp-e economists who are banded together in the Insti tute of Economic Affairs that they decided to let go at the Koestler total planners with a counterbar rage advocating as much of a re treat from state compulsion as can be made plausible to Britons who have forgotten that there ever was a classical tradition in economics.

Well, what in Rebirth of Britain is deemed a plausible retreat toward freedom in the current British context? Graham Hutton would curb the unions but contin ue "a national minimum wage plus locally negotiated supplements differing between industries, firms and regions." Jack Wiseman would relate payments for TV entertain ment to "quantity consumed,"

62 THE FREEMAN April which would not necessarily put the government-owned British Broadcasting Company out of business but would force it to compete more directly for favor with commercial broadcasting. Mr. Wiseman would return some gov ernment monopolies (coal, trans portation) to private ownership, but remains doubtful about gas and electricity. Gwyn James would decrease the government supports to British agriculture, but finds a good word to say for the Swed ish Land Acquisition Act of 1945 which prevents "unsuitable amal gamations" of farm property and keeps nonfarmers from acquiring farm and forest land. Denis Thomas, like Jack Wise man, would not do away with the BBC, but would hold it "in check by competition." Colin Clark would reduce the structure of state wel fare by limiting the sum total of taxation to twenty-five per cent of the national income. (He quotes John Maynard Keynes as saying to him that "your figure of twen ty-five per cent" is "the maximum tolerable proportion of taxation.") Arthur Seldon would let schools be "sold in stages to private in dividuals, partnerships, companies or trusts," and he would permit "doctors' private lists" to "in creasingly replace National Health Service lists," but he would also create a "Permanent Commission on the Social Services" to "advise which state services should be run down and which expanded." E. G.

West would increase the amount of private education, but would give all parents a basic annual sixty pounds in state vouchers "spendable on schooling." Getting from Here to There: The Gradualist Approach It is apparent from the fore going recital that not even those who are "held together by a com mon interest in the working of free economic institutions" dare propose in England a whole hog reversion to the world of Adam Smith. Some of the contributors of Rebirth of Britain - notably John Jewkes, John Brunner, John Carmichael, and J ossleyn Hen nessy - make a general case for economic freedom, but when it comes to "getting from here to there" the vast majority of the authors represented in this book would be content to cut the wel fare state back by slow degrees. What the whole business adds up to is a sort of Fabianism-in reverse-gear, approaching free dom as a limit in much the same manner that Bernard Shaw, H. G.

Wells, and Sidney and Beatrice Webb used in approaching social ism as a limit back in the eighteen nineties. It is the "inevitability of grad uaIism" all over again, but 1965 "CONTRACTINGOUT" OF SOCIALISM 63 with the arrows pointing in a dif ferent direction. Well, maybe such gradualism toward freedom as a limit is the only viable program for an Eng land in which a socialist-minded Labor Party still insists that the steel business would be national ized. Of course, it all seems a la mentably far cry from what was once preached in the land of Cob den, Bright, Lord Acton, the early John Stuart Mill, Ricardo, and Adam Smith. But Americans, these days, can't afford to feel very superior to British Fabian ism-in-reverse. It won't be long at the rate we are going before we, too, are saddled with state medi cine and more government sup ported colleges and heavy subsi dies to depressed regions and all the other things that have made Britain so regressive. When we have gone down the garden path a hit longer, we, too, may be re duced to putting our hopes on the idea of "contracting out" from all manner of state programs. ~ ~ COLD FRIDAY by Whittaker Chambers (New York: Random House, 1964), 327 pp., $5.95 Reviewed by Robert M. Thornton IF AN INTELLECTUAL may be de fined as a person concerned with the things of the mind, Whittaker Chambers qualifies with flying col ors. Widely read and conversant in several languages, he sought not knowledge alone but also wis dom, the right use of knowledge.

His joy and reverence for the wonder and mystery of life set him apart from those whose ultra sophistication renders them in capable of experiencing the higher emotions. This great difference Chambers, a humble poet, seeking God, while his fellow-intellectuals too often were content to sit smug in the confidence that "God is dead"- helps explain the treat ment accorded Chambers when he revealed his break with the Com munist Party. Chambers hated the notoriety of the Hiss Case. This was not a man eager for the plaudits of the world but a man forced by his own integrity to do what he believed was right regardless of consequences. His break with com munism was not unlike the ex perience of a narcotic addict or alcoholic "taking the cure." It left a permanent scar. Dr. Franz Winkler has said that Western civilization is breaking down because its spiritual founda tion has been ignored or discard ed, first several generations ago by the "intellectuals," and now by the common man. Chambers docu mented this with his life. He tells of his early college days when 64 THE FREEMAN April few professors, if any, advocated communism, but many teachers scorned religion and derided any one who believed in the objectivity of transcendent reality. But since man must have some religion, be it good or bad, the vacuum left by the rejection of Christianity (a good religion) was sometimes filled by communism (a bad re ligion) .

Communism, then, is not the disease itself; it is a symptom. The "disease" is the denial of God. The world is not divided between good and bad nations, for good and evil are to be found in every nation. The problem for the West is not to "defeat" communism or "coexist" with com munism but to achieve a rebirth of the spiritual life among its own people, and restore its value system. This is not a job for com mittees, government or private, and no amount of money will bring it about. Rather, it is for each of us to look searchingly at his own life and at his spiritual heritage. Cold Friday is a field in Cham bers' Maryland farm, deeded by Chambers to his son - a piece of the good earth as a heritage from father to son. Cold Friday, Whit taker Chambers deeded to pos terity. ~ Whittaker Chambers IT IS IDLE to talk about preventing the wreck of Western civili zation. It is already a wreck from within. That is why we can hope to do little more than snatch a fingernail of a saint from the rack or a handful of ashes from the faggots, and bury them secretly in a flowerpot against the day, ages hence, when a few men begin again to dare to believe that there was once some thing else, that something else is thinkable, and need some evidence of what it was, and the fortifying knowledge that there were those who, at the great nightfall, took loving thought to preserve the tokens of hope and truth.

From a letter to National Review, July 29, 1961 Percy L Greaves, Stanley Yankus 14 Pat Vincent Clarence B. Carson 20 Wyatt 8. Durretfe, Jr. 34 8erton Braley 36 Paul L Poirof 40 William Henry Chamberlin 42 Insight and Outlook 51 D. M. Westerholm 52 Hans F. Sennholz 56 M Y 1965 How Much Money? . Under a Gum Tree . Labor Drives for Allotal SecurityU . The Flight from Realty: 8. The Deactivation of HistC'ny . The Will to Be Free . Hang the Expense - 1t8s Worlrh It to Me A Part of the Problem . Groping for the Secret of fir4~ Beans . The Coin of Freedom TVA Reports Books: A Better Answer Needed John Chamberlain 60 63 FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Earnings for 1964 paid at 4.9% per year. MAIN OFFICE 9th & Hill, los Angeles SAVE·BY·MAIL-We pay postage.

MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California ~ The popular demand for money, so widely used as the political excuse for inflation, is carefully examined by a competent economic analyst. .. p. 3 ~ Stanley Yankus explains how he's going about promoting the ideas of liberty in Australia, and invites sug gestions for a better way. .. ...p. 14 ~ Observing the Japanese backing away from paternalistic practices in the labor movement, Pat Vincent wonders when the trend may change in America ....... p. 17 ~ To grease the skids for The Flight from Reality, it was necessary to de activate history, explains Dr. Carson .... p. 20 ~ Unless there is a will to be free, says this student of political science, constitutional forms cannot save us ....... p. 34 ~ Some interesting thoughts by a professional journalist on a shopping tour of a supermarket.. .. ....... p. 36 ~ Are we aggravating or relieving the problems of the poor when we offer them something for nothing? ....p. 40 ~ If socialism is carried far enough in practice, speculates William Henry Chamberlin, the victims will find it necessary to rediscover some of the facts of life learned by the first cave men ... ...p. 42 ", Have you ever looked on a library shelf for a can of beans and the story it tells? ..... p. 51 ", A mother explains to her lad the other side of the coi n of freedom ...... p. 52 ", Dr. Sennholz reads between the lines of various TVA reports for a story unlike the one intended ...p. 56 ", John Chamberlain agrees with much Paul Goodman has to say about Compulsory Mis-Education, but has some doubts about the proposed remedy p. 60 ", A Theological Interpretation of American History by C. Gregg Singer merits a word of approval by reviewer Thornton ....p. 63 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

MAY 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.5 President, Foundation for Economic Education l11anaging Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in Whole or in part, providing customary credit is given, except "The Flight from Reality." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

HOW MUCH MONEY? PERCY L. GREAVES, JR. MOST PEOPLE want more money. So do I. But I wouldn't keep it long. I would soon spend it for the things I need or want. So would most people. In other words, for most of us, more money is merely a means for buying what we really want. Only misers want more money for the sake of holding on to it permanently. However, if more money is to be given out, most of us would like to get some of it. If we can't get any for ourselves, the next best thing, from our viewpoint, would be for it to be given to those who might buy our goods or services. Mr. Greaves is a freelance economist and lecturer. For then it is likely their in creased spending would make us richer. From such reasoning, many have corne to believe that spread ing more money around is a good thing - not only for their personal needs, but also for solving most all of the nation's problems. For them, more money becomes the source of prosperity. So they ap prove all sorts of government pro grams for pumping more money into the economy.

If such programs are helpful, why not have more money for everyone? Why not have the gov ernment create and give every one $100 or $200 or, better yet, 3 4 THE FREEMAN May $1,000? Why not have the govern ment do it every year or every month or, better yet, every week? Of course, such a system would not work. But why not? When we understand why not, we will know why every attempt to create pros perity by creating more money will not work. When we have learned the answer, we shall have taken a long step toward eliminat ing the greatest cause of both hu man misery and the decay of great civilizations. One way to find the answer is to analyze the logic which seem ingly supports the idea that more money in a nation's economy means more prosperity for all. If we can spot an error in the chain of reasoning, we should be able to make it clear to others. Once such an error is generally recognized, the populari ty of governmen t money-creation programs will soon disappear. Neither moral leaders nor voting majorities will long endorse ideas they know to be false.

Stable Price Argument Perhaps the basic thought that supports an ever-increasing money supply is the popular idea that more business requires more money: if we produce more goods and services, customers must have more money with which to buy the additional goods and services. From this, it is assumed that the need for prosperity and "economic growth" makes it the govern ment's duty to pump out more purchasing power to the politically worthy in the form of more money or subsidies paid for by the crea tion of more money. Support for such reasoning is found in an idea that goes back at· least to medieval days. In the thirteenth and fourteenth centur ies some of the world's best minds believed there was a "just price" for everything. The "just price" was then thought to be determined by a fixed cost of production. Ac tual prices might fluctuate slight ly from day to day or season to season, but they were always ex pected to return to the basic "just price," reflecting the supposedly never-changing number of man hours required for production.

From such thinking, it natural ly follows that increased produc tion can only be sold when con sumers have more money. More goods might be needed for any of several reasons, let us say for an increased population. However, no matter how much they were needed, they would remain unsold and un used unless buyers were supplied additional funds with which to buy them at, or near, the "just price." What is the situation in real life? What do businessmen do 1965 HOW MUCH MONEY? 5 when they have more goods to sell than customers will buy at their asking price? They reduce prices. They adver tise sales at mark-down prices. If that doesn't work, they reduce their prices again and again until all their surplus goods are sold. Any economic {food can always be sold, if the price is right. The way to move increased pro duction into consumption is to ad just prices downward. Business men, who have made mistakes in judging consumer wants, will suf fer losses. Those who provide what consumers prefer will earn prof its. Lower prices will benefit all consumers and mean lower costs for future business operations.

Under such a flexible price system, there is no need for more money. Businessmen soon learn to convert available supplies of labor and ra\v materials into those goods for which consumers will willingly pay the highest prices. What Are Prices? Prices are quantities of money. They reflect a complex of inter related market conditions and in dividual value judgments at any one time and place. Each price re flects not only the available sup ply of that good in relation to the supply of all other available goods and services, but also the demand of individuals for that good in relation to their demand for all other available goods and services. But even this is only one side of price-determining factors. The money side must also be taken in to consideration. Every price also reflects not only the supply of money held by each market par ticipant, but also - since very fe\v people ever spend their last cent how much money each participant decides to keep for his future needs and unknown contingencies.

Prices thus depend on many things besides the cost of produc tion. They depend primarily on the relative values that consumers place on the satisfactions they ex pect to get from owning the par ticular mixture of goods and serv ices that they select. However, prices also depend on the amount of money available both to each individual and to all individuals. In a free market economy, un hampered prices easily adj ust to reflect consumer demand no mat ter what the total supply of money or who owns how much of it. What Is This Thing Called Money? Money is a commodity that is used for facilitating indirect ex change. Money first appeared when individuals recognized the advan tages of the division of labor and saw that indirect exchange was easier and more efficient than the 6 THE FREEMAN May clumsy, time-consuming direct ex change of barter. In the earliest days of special ized production, those who made shoes or caught fish soon found that if they wanted to buy a house, it was easier to buy it with a quan tity of a universally desired commodity than with quantities of shoes or fresh fish.

So, they first exchanged their shoes or fish for a quantity of that commodity which they knew was most in demand. Such a commod ity would keep and not spoil. It could be divided without loss. And most important, all people would value it no matter what the size of their feet or their desire for fish. The commodity which best meets these qualifications soon be comes a community's medium of exchange, or money. Many things have been used as money. In this country we once used the wampum beads of Indians and the shells found on our shores. As time pased, reason and experi ence indicated that the commodi ties best suited for use as money were the precious metals, silver and gold. By the beginning of this century, the prime money of the world had become gold. And so it is today. Gold is the commodity most in demand in world markets. Money is always that commod ity which all sellers are most hap py to accept for their goods or services, if the quantity or price offered is considered sufficient.

Money is thus the most market able commodity of a market so ciety. It is also the most impor tant single commodity of a mar ket society. This is so because it forms a part of every market transaction and whatever affects its value affects every transaction and every contemplated transac tion. Kinds of Goods There are three types of econ 0mic goods: 1. Consumers' goods. 2. Producers' goods. 3. Money. Consumers' goods are those goods which are valued because they supply satisfaction to those who use or consume them. Pro ducers' goods are goods which are valued· because they can be used to make or produce consumers' goods. They include raw materials, tools, machines, factories, rail roads, and the like. Money is that good which is valued because it can be used as a medium of ex change. It is the only type of econ omic good that is not consumed by its normal usage. In the case of consumers' goods and producers' goods, every ad ditional unit that is produced and offered for sale increases the wealth not only of the owner but 1965 HOW MUCH MONEY? 7 of everyone else. Every additional automobile that is produced not only makes the manufacturer rich er but it also makes every member of the market society richer.

How? The more useful things there are in this world, the larger the numbers of human needs or wants that can be satisfied. The market system is a process for distribut ing a part of every increase in production to every participant in that market economy. When there is no increase in the money sup ply, the more goods that are of fered for sale, the lower prices will be - and, consequently, the more each person can buy with the limited amount of money he has to spend. So every increase in pro duction for a market economy normally means more for every member of that economy. On the other hand,when any consumers' goods or producers' goods are lost or destroyed, not only the owner but all members of the market community suffer losses. With fewer goods available in the market place, and assuming no increase in the money supply, prices must tend to rise. Every body's limited supply of money will thus buy less.

Recently, a Montreal apartment house was destroyed by an ex plosion. The loss. to the occupants and the owners or insurance companies is obvious. The loss to all of us may be less obvious, but nevertheless it is a fact. The market society has lost for ever the services and contribu tions of all those who were killed. It has also lost for a time the contributions of all those whose injuries temporarily incapacitated them. There is also a loss for all of us in the fact that human serv ices and producers' goods must be used to clear away the wreckage and rebuild what was destroyed. This diversion of labor and pro ducers' goods means the market ,viII never be able to offer the things that such labor and pro ducers' goods could otherwise have been used to produce. With fewer things available in the market, prices will tend to be higher. Such higher prices will force each one of us to get along with a little less than would have been the case if there had been no explosion.

Thus, we are all sufferers from every catastrophe. Be it an air plane crash, a tornado, or a fire in some distant community, we all lose a little bit. And all these lit tle bits often add up to a signifi cant sum. This is particularly true of war losses. Every American killed in Vietnam hurts everyone of us not only in the heart but also in the pocketbook. Our government must supply some monetary com8 THE FREEMAN May pensation to his family and an in come, however little, to his depen dents. In such cases, the loss may continue for years. The killed man's services are lost for his normal life span and his depen dents become a long-term burden on the nation's taxpayers and con sumers. Such losses can never be measured or calculated, but they are real nonetheless. So, in a market society every increase in consumers' goods or producers' goods permits us to buy more with whatever money we have, and every decrease in con sumers' goods or producers' goods means ultimately higher prices and less for our money. Increased supplies of such economic goods help both the producers and every one else who owns one or more units of money.

Limited Goods Available With money, the situation is quite different. Any increase in the supply of money helps those who receive some of the new sup ply, but it hurts all those who do not. Those who receive some of the new supply can rush out and buy a larger share of the goods and services in the market place. Those who receive none of the new money supply will then find less available for them to buy. Prices will rise and they will get less for their money. Pumping more money into a nation's economy merely helps some people at the expense of others. It must, by its very nature, send prices up higher than they would have been, if the money sup ply had not been increased. Those with no part of the new money supply must be satisfied with less. It does not and cannot increase the quantity of goods and services available. There are some who claim that increasing the money supply puts more men to work. This can only be so when there is unemployment resulting from pushing wage rates above those of a free market by such political measures as mini mum wage laws and legally sanc tioned labor union pressures. Un der such conditions, increasing the money supply reduces the val ue of each monetary unit and thus reduces the real value of all wages.

By doing this, it brings' the high er-than-free-market wage rates nearer to what they would be in a free market. This in turn brings employment nearer to what it would be in a free market, where there is a job for all who want to work.! Those who create and slip new supplies of money into the econ omy are silently transferring 1 See "Jobs for All" by Percy L. Greaves, Jr. in the February 1959 issue of THE FREEMAN.

1965 HOW MUCH MONEY? 9 wealth which rightfully belongs to savers and producers to those who, without contributing to so ciety, are the first to spend the new money in the market place. When this is done by private per sons, they are called counterfeit ers. Their attempts to help them selves at the expense of others are easily recognized. When caught, they are soon placed where they can add no more to the money supply. Governments Inflate In recent generations our ma jor problem has not been private counterfeiters. It has been gov ernments. Over the years, govern ments have found ways to increase the money supply that not more than one or two persons in a mil lion can detect. This is particu larly true when production is in creasing and when more and more of the monetary units are held off the market. Nonetheless, whether prices go up or not, every time a government increases the money supply, it is taking wealth from some and giving it to others.

This semi-hidden increase in the money supply occurs in two ways: One, by the creation and issu ance of money against government securities. This is a favorite way to finance government deficits. Government securities that private investors will not buy, because they pay lo\ver-than-free-market interest rates, are sold to com mercial banks. The banks pay for such securities by merely adding the price of the securities to gov ernment bank accounts. The gov ernment can then draw checks to pay suppliers, employees, and sub sidy recipients. (This process is encouraged and increased by tech nical actions and direct purchases of the nation's central bank. In the United States, these powers reside in the Federal Reserve Board, which has not been hesi tant about using them.) The government thus receives purchasing power without contrib uting anything to the goods and services offered in the market place. It thus gets something for nothing. As a result, there is less available for those spending and investing dollars they have re ceived for their contributions to society. The consequence of such government spending is that prices are higher than they would other wise have been.

T\vo, the other major semi-hid den means of increasing the money supply is for banks to lend money to private individuals or organiza tions by merely creating or adding a credit to the borro\vers' check ing accounts. In such cases, they are not lending the savings of de positors. They are merely creating dollars, in the form of bank ac10 THE FREEMAN May counts, by simple bookkeeping en tries. The borrowers are thereby enabled to draw checks or ask for newly created money with which to buy a part of the goods and services available in the market place. This means that those re sponsible for the production of these goods and services must be satisfied with less than the share they would have received if the money supply had not been so in creased. By such systems of money crea tion, our government and our gov ernment-controlled banking sys tem have, from the end of 1945, increased the nation's money sup ply from $132.5 billion to an es timated $289.9 billion by the end of 1964. This is an increase of $157.4 billion. During the same period, the gold stock, held as a reserve against this money and valued at $35 an ounce, fell from $20.1 billion to $15.4 billion. The increase in the money supply for 1964 amounted to $21.0 billion.:!

All these new dollars provided the first recipients with wealth which, had there been no artificial additions to the money supply, would have gone to those spenders 2 Figures from the Federal Reserve Bulletin, February 1965. Figures for the money supply include those for currency outside of banks, demand deposits, and time deposits of commercial banks which in practice may be withdrawn on de mand. and investors who received their dollars in return for contributions to society. Last year alone, politi cal favorites were helped to the tune of $21 billion, at the expense of all the nation's producers and savers of real wealth. These money-increasing policies remain hidden from most people, particularly when prices do not rise rapidly. It is now popular to say there is no inflation unless official price indexes rise appreci ably. This popular corruption of the term inflation, originally de fined as an increase in the money supply, makes it seem safe for the government to increase the money supply so long as the government's own price indexes do not rise no ticeably. So, if these price indexes can somehow be kept down, the government can continue buying or allocating wealth which has been created by private individu als who must be satisfied with less than the free market value of their contributions.

Price Rise Kept Down Since World War II, there have been two continuing situations which have helped to keep official price indexes from reflecting the full effect of this huge increase in the money supply. The first such situation is that throughout this period American production of wealth has continued to increase.

1965 HOW MUCH MONEY? 11 The second is that during these years foreigners and their banks and governments have taken and held off the market increasing sup plies of dollars. If there had been no upward manipulation of the money supply, the increased production of wealth would have resulted in lower prices. This would have provided more for everyone who earned or saved a dollar. It would also have reduced costs and increased the amount of goods and services that would have been sold at home· and abroad. As it was, with prices rising slowly over the 1945-64 period, the Federal government and our government-controlled banking system have been able to allocate the benefits of increased produc tion, and a little bit more, to fa vored bank borrowers who pay lower than free market interest rates and those who received Fed eral funds over and above the sums collected in taxes or borrowed from private individuals or cor porations.

Untold billions of dollars have also gone into the hands or bank accounts of international organiza tions, foreigners,. their banks, and governments. Many of these dol lar holders consider $35 to be worth more than an ounce of gold. Such dollar holders have felt they could always get the gold and, meanwhile, they can get interest by leaving their dollars on deposit with American banks. Foreign governments could even count such deposits as part of their reserves against their own currencies. For example, the more dollars held by the Bank of France, the more it can expand the supply of French francs. So the inflations of many European governments are built on top of the great increase in their holdings of dollars. Short term liabilities of Ameri can banks to foreigners at the end of 1945 were only $6.9 billion. 3 By the end of last year, they had risen to an estimated $28.8 billion, an increase of $20.9 billion. 4 How many more dollars rest in foreign billfolds or under foreign mattress es cannot even be guessed. Should such foreign dollar holders lose confidence in the ability of their central banks to get an ounce of gold for every $35 presented to our government, more and more of these dollars will return to our shores where their presence· will bid up American prices.

This whole process of increasing the money supply by semi-hidden manipulations is not only highly questionable from the viewpoint of morality and economic incen~ Federal Reserve Board "Supple ment" to Banking and Monetary Sta tistics, Sec. 15. International Finance. 4 Federal Reserve Bulletin February, 1965.

12 THE FREEMAN May tives, but it also has a highly dis organizing effect on the production pattern of our economy. Over the years, as these newly created dol lars have found their way into the market, they have forced profit seeking enterprises to allocate a growing part of production to the spenders of the newly created dol lars, leaving less production avail able for the spenders of dollars which represent contributions to society. Once this artificial crea tion of dollars comes to an end, as it must eventually, those business es whose sales have become de pendent upon the spending of the newly created dollars will lose their customers. This will call for a reorganiza tion of the nation's production facilities. Such reorganizations of business have become known as depressions. The depression can be short, with a minimum of human misery, if prices, wage rates, and interest rates are left free to re flect a true picture of the ever changing demands of consumers and supplies of labor, raw materi als, and savings. Private business will then move promptly and ef ficiently to employ what is avail able to produce the highest valued mixture of goods and services.

Any interference with the free market indicators will not only slow down recovery but also mis direct some efforts and reduce the ability of business to satisfy as much human need as a completely free economy would. The day of reckoning can only be put off so long. Once the na tion's workers and savers realize that such semi-hidden increases in the money supply are appropri ating a part of their purchasing power, they may take their dollars out of government bonds, savings banks, life insurance policies, and the like in order to buy goods or invest in real estate or common stocks, and even borrow at the banks to do so. If this trend should develop, the government would soon be forced to adopt sound fis cal and monetary policies. The same effect might be pro duced by a rush of foreign dollar holders to spend the dollars they now consider as good as one thir ty-fifth of an ounce of gold. In any case, an ever-increasing supply of dollars and ever-increasing prices will eventually bring on a "run away inflation," unless the gov ernment stops its present practices before the situation gets complete ly out of hand.

The important thing to remem ber is that increases in the na tion's money supply can never benefit the nation's economy. Such increases in the money supply· do not and cannot increase the sup ply of goods and services that a free economy would produce. Such 1965 HOW MUCH MONEY? 13 inflations of the money supply can only help some at the expense of others. Even such help for the politically favored is at best only temporary. As prices rise, it takes ever bigger doses of new money to have the same effect, and this in turn means still higher prices. The fact is that no matter what the volume of business may be, any given supply of money is suf ficient to perform all the services money can perform for an econ omy. All that is needed for con tinued prosperity is for the gov ernment to let prices, wage rates, and interest rates fluctuate so that they reveal rather than hide the true state of market conditions.

Under the paper money stand ard, politicians are easily tempt ed to keep voting for just a little more spending than last year, and just a Iittle less taxing than last year. The gap can be covered by a semi-hidden increase in the money supply - just a little more than last year. Then, too, the il lusions of prosperity are often helped along by an easy money policy - holding interest rates be low those of a free market. This tends to increase the demand for loans above the amount of real savings available for lending. The banks then meet the demand for more credit by the bookkeeping device of increasing the bank ac counts of borrowers. Clever financial officials must then find ways to put off the day of reckoning. If gold continues to flow out, private travel, imports, and investments can be blamed and controls instituted. When the first controls do. not succeed, more and more controls can be added.

When these fail, public attention can always be diverted by a war. War is now generally considered a sufficient excuse for more in flation and a completely controlled economy of the type Hitler estab lished in Germany. No man or government should ever be trusted with the legal power to increase a nation's money supply at will. The great advantage of the gold standard is that gold cannot be crea ted by printing presses or by bookkeeping entries. When a coun try is on the gold standard, politi cians who want to vote for spend ing measures must also vote for increased taxes or sanction the is suance of government securities paying free market interest rates that will attract the funds of pri vate savers and investors. Under a true gold standard, men remain free, the quantity of money is determined by market forces, and both the manipulated inflations and the resulting depressions are eliminated, along with all the pov erty and human misery that they cause. ~ UNDER A STANLEY YANKUS GUM TREE Stanley Yankus moved to Australia some years ago in protest at not being allowed to grow as much wheat as he pleased on his own farm in Michigan for his own chickens without paying a penalty tax. We are pleased to share here a recent letter from him, concerningthe practice of freedom.

A SOUTH AMERICAN correspond ent asks: "What progress are you making in promoting the ideas of Iiberty in Australia?" Australia is a vast country. The nature of my job prevents my wandering off to Toowoomba, Queensland, or some other town a thousand miles away. So how can I promote liberty all over Australia? Did you ever get the feeling that you can't do much alone? On the surface it seems most of us lack the funds and are ill-equipped to promote freedom without be longing to a large organization. But I'm in favor of two-man con versations held under the shade 14 of an Australian gum tree, or any other convenient place, as one of the best means of promoting lib erty. If one's ideas are good, I have faith the ideas will spread like dandelion seeds. If the ideas are worthless like some seeds, they won't even germinate. To illustrate, let me relate a re cent conversation with a libertar ian friend concerning the follow ing story: Back in the days of horse trans portation, a group of tourists were being hauled around the country side by team and wagon. The dri ver was an expert with his whip.

Whenever a fly landed ona horse, the driver flicked it off with a quick snap of the whip. Then a bee land1965 UNDER A GUM TREE 15 ed on one of the horses, but the driver never moved. One of the curious tourists asked, "Why don't you use your whip on the bee?" The driver winked his eye know ingly and replied, "The bees are too well organized!" This story was intended to show that organizations have great pow ers while individuals have none. But my libertarian friend doesn't eat everything that's put on his plate. He had sharper insights. "Suppose," he said, "you were gi ven the task of eliminating all the bees or all the flies. Which task '''ould seem easier to accomplish? How easy it would be to sneak up on a hive at night and capture the entire organization of bees by throwing a plastic bag over the whole lot. How difficult it would be to catch all the flies. They seem to be everywhere and nowhere, un organized as they are."

Likewise, the unorganized lib ertarian can go about his busi ness of promoting liberty unno ticed in the middle of the action taking place. Have you ever no ticed how unobtrusive one is while strolling through a crowded shop ping center - seen and unseen at once? Edgar Allen Poe in his short story, "The Purloined Let ter," illustrated how well a letter could be hidden in plain view on top of the desk. But what can an unorganized individual do to promote liberty without such tools of communica tion as newspapers, radio, and TV publicity? After all, what good are the ideas of liberty if no one else knows about them but you? Hidden Tape Recorders After purchasing a tape re corder, I eagerly demonstrated my new possession to a family visiting our home. The lady, who heard herself for the first time on the play-back of the tape record ing, commented, "I would not like to be recorded secretly by a hidden tape recorder."

Her husband shrewdly ob served, "You are tape recorded by every man, woman, and child you talk to. Not only that, you are televised by family, friends, neigh bors, and strangers who see you. All of us have mental recollections of facial expressions and conversa tions we saw and heard many years ago." Since most of us come in con tact with thousands and thousands of individuals during a lifetime, the number of mental tape record ings we leave in other minds be comes difficult to calculate - even for a mathematics professor. All this communication takes place without spending a penny on the publicity of newspapers, radio, and TV. The lesson to derive from an awareness of the multitude of im16 THE FREEMAN May pressions made on others by our words and behavior is to work toward self-improvement - to make ever better tape recordings of self. These ideas were not generated by a large organization aiming to reform others, but, rather, by two ordinary individuals who were mutually trading ideas on liberty for their own self-improvement one hand washing the other. How better can. one promote liberty in Australia or elsewhere? ~ How to Advance Liberty ONCE AN INDIVIDUAL who would advance liberty has settled on self-perfection as correct method, the first fact to bear in mind is that ours is not a numbers problem. Were it necessary to bring a majority into a comprehension of the libertarian philosophy, the cause of liberty would be utterly hopeless. Every significant move ment in history has been led by one or just a few individuals with a small minority of energetic supporters. The leaders have come from strange and odd places; they could not have been predicted ahead of time. One, I recall, was born in a manger. Another, the leader of a bad movement, was an Austrian paper hanger. Who, more than any other, will advance liberty in America? I do not know; you do not know; that very individual does not know, for each person is possessed of aptitudes and potentialities about which he or she is unaware.

LEON ARD E. READ LABOR DRIVES FOR "TOTAL SECURITY" PAT VINCENT You are hired by the company the day you leave school. You move up the seniority lad der at a fixed and unalterable pace. There's no need to make a spe cial effort or develop new skills: your position and pay are fixed by the time you spend on the job. You receive financial assistance when you marry, later get addi tional benefits for your children. You retire at the age of 55. The worker's paradise? Not so, say Japanese union lead ers about the "lifetime employ ment plan" which covers approxi mately 40 per cent of their coun try's work force. In fact, both labor and management are now trying to find some way of dis mantling Japan's tradition-bound system. Unions are restive, pointMr. Vincent is a freelance writer specializing in the business and industrial field. ing out that the worker is stuck with one job for life, has no in centive to develop additional skills, and can't better himself by taking advantage of opportunities in a different industry. Management is hobbled by a work force that is stagnant, regimented, and un adaptable to changing times.

France, West Germany, Bel gium, the countries of Latin America, have had "job security" programs for decades, but with no perceptible increase in labor satis faction. There is always the ex ample of the American "capital ist" worker with his high stand ard of living, his freedom to move up the economic ladder at his own pace, to goad the security-bound worker of other lands into a real ization of his own plight. Or at least there has been - un til now. For the mid-sixties is wit nessing a massive drive by the 17 18 THE FREEMAN May labor hierarchy to impose a simi lar strait jacket on management and employees in this country in the guise of "total security." Decked out in the full panoply of expensive union propaganda, the term has an undeniable seduc tiveness: it is all-encompassing, impatient with logic and history. It promises everything to the worker and asks nothing; seem ingly, he can't lose.

The Obvious Strategy The strategy of implementation is becoming clearer day by day. You can see it in the attempt to focus attention on a few untypical situations as universal models, and in the increasing number of theo retical articles being published in those reliable bellweathers, the journals of opinion. "See - it works!" says the first. "And it's an intellectuallY respectable con cept, too," says the second. Take the case of the total job security program recently negoti ated by the United Steelworkers of America with Alan Wood Steel Company. In itself, the program for the 2,500 employees of the small Pennsylvania steel firm would have little if any repercus sion on the economy. As a pattern for negotiations with the can in dustry, steel industry, and all in dustry, however, it has been moved to the center of the labor arena with deliberate fanfare by United Steelworkers' president, David J.

McDonald. Here, he has said in ef fect, is the shape of things to come. The basics of the contract are familiar to everyone by now. For each worker, a guaranteed aver age rate of earnings which will "protect" him from a reduction of more than 5 per cent because of demotion or other job changes by management; a guarantee of 38 hours pay for each week in which an employee works, even though he is on the job only part of the time; payment to each worker with 10 or more years tenure of the equivalent of 85 per cent of his pay should he be laid off, until retirement; and sharing with all employees 32.5 per cent of savings achieved through labor or materials effi ciencies. No Mention of Weaknesses In "selling" this program to the country, labor spokesmen make no mention of the many factors in the program which have caused disillusionment abroad, such as the worker's loss of mobility and versatility, the discounting of in centives, the sapping of individual initiative, and the inability of companies to compete or even stay in business under this kind of fi nancial burden.

1965 LABOR DRIVES FOR "TOTAL SECURITY" 19 Instead, any suspicion as to the economic feasibility of the pro gram is to be allayed by the in tellectuals. Providing an ideologi cal base from which to influence the mass media. is their role in the strategy of implementation. And just what is the philosophical justification for "total security"? JOust how is this concept to be structured into American life? Here is Robert Theobald, author of Free Men and Free Markets, writing in The Commonweal of September 4, 1964: "... we had to develop a new, human and con stitutional right - the right to an income .... Every citizen who has resided in the United States for a period of five consecutive years should be guaranteed the· right to an income sufficient to enable him to live with dignity. No govern ment agency, judicial body or other organization whatsoever should have the right to suspend or limit any payment assured by this guarantee."

As Mr. Theobald candidly states, this· concept "justifies in come without toiL" And how is this total security to be paid for? By penalizing each employee who has the ambition and initi ative. to develop and market his skills beyond an arbitrarily fixed point. To quote Mr. Theobald, "We should establish the principle that the portion of income required to maintain a reasonable standard of living should be tax free. Taxes should only 0 be paid on incomes rising above this level." Here, then, is the cost which labor is to pay for "total secur ity": regimentation, abrogation of the right to enjoy the fruits of one's labor, atrophy of skills, and a universal but minimum standard of living at a "reasonable" leveL Is it not ironical that just as labor in Asia, Europe, even behind the Iron Curtain, seeks to cast off the confining restrictions of "total" systems and gain some of the mobility and freedom of the American worker, the latter should be offered this same tired and withered concept as his shining hope? ~ Legislated Security THE INTRODUCTION of compulsory social insurance in cases of sickness, or compulsory social insurance in cases of unemploy ment, means that the workers must be subject to examinations, investigations, regulations, and limitations.

SAMUEL GOMPERS (1916) 8. The Deactivation of History CLARENCE B. CARSON -JAMES HARVEY ROBINSON, 1912 To-day . .. one rarely finds a historical student who would venture to recom mend statesmen, warriors, and moralists to place any confidence whatsoever in historical analogies and warnings, for the supposed analogies usually prove illusive on inspection, and the warnings, impertinent . ... Our situation is so novel that it would seem as if political and military precedents of even a cen tury ago could have no possible value. The newer history . .. holds that few situations in a very remote past will allow of being used as data to test the validity or desirability of measures pro posed for present or future application. It regards civilization as a great or ganic complex and contends that, as the general cultural setting of events in the past was so vastly different from the present situation, past events can furnish only a very doubtful and unreliable criterion for judging of the wis dom of present policies.

- HARRY ELMER BARNES, 1925 MANY OBSTACLES barred the way of those who were attempting to institute melioristic reforms. The most formidable obstacle was re ality itself. As a matter of fact, since reality has not demonstrably changed, it still is an insurmount able obstacle to the success of many kinds of reforms. However, reformers have been able to at tempt many of their innovations. Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books. 20 This means that they have been able to alter generally held concep tions of reality. This was accom plished by embarking upon an ex tended flight from reality. Thus far, the story of the ad vance of reformist ideas has been told within a framework of an en during reality, and the departure of reformist conceptions from it.

In order for large-scale attempts to make over man and society to appear feasible, men had to cease to believe in an underlying struc tured and ordered reality. Many 1965 THE DEACTIVATION OF HISTORY 21 intellectuals made this step in their thought. It does not follow, of course, tha t the reason why they ceased to believe in an or dered reality was so that reforms could be instituted. On the con trary, many who contributed to this development in thought were not apparently interested in ex tensive reforms. Many· nineteenth century thinkers who had ceased to believe in a metaphysical reality . which endures did not, on the other hand, believe consciously directed reform to be possible. Nonetheless, by dispensing with the metaphysical framework, they set the stage for reform. If man has a nature, if all things have a nature, if there is an underlying order which endures, it follows that there are great limits to the kinds of change that can be made.

These conceptions are, however, metaphysical in character regard less of how obvious and demon strable they may appear to some people who have not been trained in metaphysics. The metaphysical underpinnings of these concep tions were swept away by David Hume and Immanuel Kant, or, to be more precise, these philos ophers held that they could not be directly validated by reason and sensual evidence. The house of philosophy collapsed in the early nineteenth century, and thinkers went off in every direction, erecting ideologies out of the bits and pieces that remained from the wreckage of philosophy. Reason cut loose from reality, and the imagination freed from the discipline of philosophy were used to draw up plans for new heavens on new earths. Even Americans began to feel the at traction of utopia by the latter part of the nineteenth century. When the enduring was cut away, time and change were all that was left. New pseudo philosophies Hegelianism, Marxism, Darwin ism - arose to offer accounts for changes in time. These were or iented, however, to the discovery and exposition of the laws of change and were not favorable to consciously initiated reforms.

Pragmatists offered a way out of this dilemlna by setting forth a radical new freedom, freedom from any underlying laws. John Dewey readily wrenched this pseudo philosophy into the orbit of reformism, calling his variant of the philosophy Instrumental ism. An Obstacle to Reform Some of the ground must be re traveled at this point, however. By moving all of reality into time, thinkers did not remove the con ceptual obstacles to the triumph of reformism. They only succeeded in making reality the subject mat22 THE FREEMAN May ter of history. The traditional role of history was inspirational and cautionary. Men studied history to be inspired by examples of noble actions, to enrich their limited experience by that of others, to draw sustenance for their lives from the lives of others. There was a negative side to this study of history, too: one could find there indications of the limits of what should be attempted, be re minded of the consequences of pre cipitate action, discover anew what was beyond his power to alter, be chastened by the records of the failure of others. In. short, history has usually played a conservative role in society. It was. a maj or obstacle to reform, as men cus tomarily thought of it and util ized it.

Some reformists, who were also historians, realized this. James Harvey Robinson, writing in the early twentieth century, declared: HHistory has been regularly in voked, to substantiate the claims of the conservative, but has hitherto usually been neglected by the radical. ... It is his weapon by right, and he should wrest it from the hand of the conserva tive."! In short, Robinson, as a would-be reformer, perceived that history must be reconstructed in order to make it an instrument of 1 James H. Robinson, The New History (New York: Macmillan, 1912), p. 252. reform. The older history must be deactivated; it must be replaced by a "new history." Traditional Use of History Before describing how this de activation and "instrumentation" of history took place, however, some examples of the traditional use of history are in order. In an earlier America, history was con ceived of as a depository of experi ence which might be examined for guidance in the affairs of men.

Nowhere is this usage better ex emplified than in the debates over the adoption of the Constitution. In some of the state conventions there were veri table outpourings of historical erudition to buttress one position or another. Americans were fearful at this time of entrusting overmuch power to governments. They found numerous instances in history of the working out of the dangers that they feared. For example, those attending the Massachusetts convention were treated to the fol lowing discourse on the· matter: Dr. Willard entered largely into the field of ancient history, and deduced therefrom arguments to prove that where power has been trusted to men, whether in great or small bodies, they had always abused it, and that thus republics had soon degenerated into aristocracies. He instanced Sparta, Athens, and Rome. The Amphictyonic 1965 THE DEACTIVATION OF HISTORY 23 league, he said, resembled the Confederation of the United States· while thus united, they defeated Xer: xes, but were subdued by the gold of Philip .... 2 A Mr. Nason in the same con vention points out the dangers of a standing army: A standing army ! Was it not with this that Caesar passed the Rubicon and laid prostrate the. liberties of hi~ country? By this have seven-eighths of the once free nations of the globe been brought into bondage! Time would fail me, were I to attempt to recapitulate the havoc made in the world by standing armies. 3 A Major Kingsley cites even more specific historical references, as he argues for better control by the people over their government: Let us look into ancient history.

The .Romans, after a war, thought themselves safe in a government of ten men, called the decemviri; these ten men were invested with all power, and were chosen for three years. By their arts and designs, they secured their second election; but, finding, from the manner in which they had exercised their power, they were not able to secure their third election, they declared themselves masters of Rome, impoverished the city, and de prived the people of their rights. 4 2 Elliot's Debates, Bk. I, vol. 2, p. 68. 3 Ibid., p. 136. 4 Ibid., p. 62. The Virginia convention was the scene of even more vigorous debate founded in historical al lusions than was that of Massa chusetts. James Madison was one of the most learned of these de baters. In the following citations, he is arguing from history that loose confederations are not ade quate to the exigencies of govern ment: The Amphictyonic league resem bled our Confederation in its nominal powers. . . . But, though its powers were more considerable in many re spects than those of our present sys tem, yet it had the same radical de feet ....

The Achaean league, though better constructed than the Amphictyonic, ... was continually agitated with do mestic dissensions, and driven to the necessity of calling in foreign aid; this, also, eventuated in the demoli tion of their confederacy .... The Germanic system is neither adequate to the external defence nor internal felicity of the people .... 5 By historical references, Edmund Randolph argues for the desira bility of union: If you wish to know the extent of such a scene, look at the· history of England and Scotland before the un ion; you will see their borderers con tinually committing depredations and cruelties of the most calamitous and deplorable nature, on one another .... 6 5 Ibid., vol. 3, pp. 129-3l. 6 Ibid., p. 75.

24 THE FREEMAN May The manner in which they were employing history was not left in doubt. They were reaching back into history for lessons ap propriate to actions they were considering. John Marshall makes this clear in the following pas sage: We may derive from Holland lessons very beneficial to ourselves. Happy that country which can avail itself of the misfortunes of others which can gain knowledge from that source without fatal experience!7 J ames Madison adds : "We may be warned by their example, and shun their fate, by removing the causes which produced their mis fortunes."8 Common Sense and Philosophy The didactic use of history rests upon both a common sense and a philosophical foundation. At the common sense level, it is only an extension of everyday practice. If we slip and fall on an icy street, we proceed with cau tion on icy streets thereafter, realizing that the same thing can happen again. By analogy, we reason that a street is not even necessary to recurrence, that it can happen anywhere on ice.

Written history - that is, what is ordinarily thought of as history is the formalized memory of a 7 Ibid., p. 225. 8 Ibid., p. 311. people, the record of their experi ence. History is the public mem ory of a people, and may serve in more general affairs in much the way that an individual's memor ies of experience serve him-i. e., as a compendium of dangers to be avoided, a depository of success ful methods, a storehouse of what the world is like and how one may operate within it. At the philosophical level, the didactic use of history was based upon the existence of an under lying order. It assumes that even ts, in essence, can recur and that the reason for this is an order in which a given cause will produce a given effect. To return to the example used above, a man walking requires traction to pro ceed. When he loses traction, his forward motion will continue him downward to the earth, and since he will usually try to brake him self, he will usually fall backward.

The occurrence of such events can be stated as laws; they recur and are even predictable. In the same fashion, there are larger developments that can be expected to recur under certain circumstances. For example, if political power is concentrated, and not strictly limited, tyranny may be expected to result. The explanation is to be found in the nature of man. The didactic use of history rests, then, upon the 1965 THE DEACTIVATION OF HISTORY 25 view that beneath the surface upon which changes occur there is a substratum which endures. This enduring substratum-this meta physical realm - makes it possible for men to discover from the study of history what is apt to happen when a particular course is fol lowed. In everyday affairs, men have continued to recur to and use their experience very much as they al ways have. One suspects that even the most determined reformist in tellectual wears his rubbers, or puts snow tires on his automobile, when he ventures out upon icy streets. He knows, as do we all, that "history" repeats itself many times over. But at the level of large and complex matters, his tory has been deactivated, the past has been cut off, and men have been disjoined from the com mon fund of experience. A new history has emerged which is not a useful record of experience but a herald of the future and an in strument for rebuilding society.

Defaming the Past One of the culminating steps in the deactivation of history was the defamation of the older his tory. Just as the older philosophy had been defamed, just as the older education, religion, and eco nomics would be defamed, just so history would be denigrated. The work of undermining the older history was mainly the work of historians. Many contributed, but three men who mounted the as sault in the first half of the twentieth century will provide us with sufficient illustrative mater ial. These men were: James Har vey Robinson, Harry Elmer Barnes, and Charles A. Beard. Robinson launched the attack upon the older history first. His position is made clear in the fol lowing: It is true that it has long been held that certain lessons could be derived from the past But there is a growing suspicion that this type of usefulness is purely illusory. The present writer is anxious to avoid any risk of being regarded as an advocate of these supposed advantages of histori cal study. Their value rests on the as sumption that conditions remain suf ficiently uniform to give precedents a perpetual value, while, as a matter of fact, conditions ... are so rapidly al tering that for the most part it would be dangerous indeed to attempt to ap ply past experience to the solution of current problems. 9 Writing some years later, Barnes much more vehemently denounced the reliance upon past experience. He declared that "the past has no direct lesson for the present in the way of analogies and forecasts." He goes on to 9 Robinson, op. cit., pp. 17-18.

26 THE FREEMAN May cast doubt upon the "wisdom of the Fathers," that is, the wisdom of leaders in past times. "The fact that every civilization prior to our own has ended up in a hope less wreck should be fairly proof of the frailty of patristic ""visdom in all ages of men." In short, "we are grotesquely wrong in assum ing that there has been any great amount of true wisdom in the past .... "10 But even if there had been wisdom in the past, he pointed out, it would not be rele vant to contemporary problems. Conditions have changed. Therefore, in our efforts to solve contemporary problems on the basis of the "wisdom of the past," we are somewhat more absurd in our atti tude and conduct than the animal trainer who would strap his pet an thropoid in the seat of an aeroplane on the ground of his prior mastery of the technique of the tricycle. Not even a Texas Methodist Kleagle would think of taking his car to Moses, Joshua, Luther or George Washing ton to have the carburetor adjusted or the valves ground, yet we assure ourselves and our fellowmen that we ought to continue to attempt to solve our contemporary problems of soci ety, economics, politics and conduct on the basis of methods, attitudes and' information which in many cases far antedates Moses)1 10 Harry E. Barnes, The New History and the Social Studies (New York: The Century Co., 1925), p. 588.

11 Ibid., p. 589. It is not necessary to disentangle all the ideas which Barnes mis takenly or dubiously associated and confused. The point is that he denied the relevance of historical lessons to the present, and, in the same passages, rejected all that may have been learned in the past. Charles A. Beard, a somewhat more disciplined thinker than Barnes, denied that cause and ef fect can be isolated in history. He maintained that no group of com plications can "be isolated from surrounding and preceding com plications. Even 'simple' events are complex when examined close ly. 'George Washington accepted the command of the American troops.' What 'caused' that ac tion ?"12 He goes on to conclude that it is impossible to draw a conclusion with certainty about the answer to the question he poses. In so complex a matter as the American Revolution, he con tinues, the attempt to assign causes is futile.

To apply the physical analogy of "cause and effect" we should be com pelled to think of the American Revo lution as an entity, like a ball, set in motion by impact of other entities. The latter are the "causes" and the motion of the ball is the "effect." The impossibility of making such analogy 12 Charles A. Beard, The Discussion of Human Affairs (New York: Macmillan, 1936), p. 90.

1965 THE DEACTIVATION OF HISTORY 27 conform to the recorded. facts of the Revolution is apparent to anybody who employs historical knowledge in the effort. We know that thousands of events took place in time, and that thousands of personalities were en gaged in them, but we cannot find chains of causes and effects in them.l 3 Questions Without Answers However obtusely he had done so, Beard had put his finger on the nerve that goes to the center of the didactic use of history. If it is impossible to discover cause and effect, it is not possible to know what action produced what results. Without this information there is little to be learned from the past. Beard's examples do not prove his case; instead, they show that it is possible to pose ques tions in such a way that no an swers can be found for them. In the first example, he asked what George Washington's motives were. He was quite right in point ing out that we cannot discover the answer to this question with any certainty. He was wrong, how ever, if he supposed that the an swer to the question would matter if it could be known. The effects of actions, once they have taken place, are not altered by motives.

Suppose he had asked another sort of question, a "simple" one involv ing George Washington. For ex ample, Continental troops were so 13 Ibid., p. 91. disposed on Long Island that they could have been cut off by General Howe. Why did this occur? Wash ington had issued an order that they be situated in this manner. He had caused them to be so dis posed. If the army had been cap tured, Washington could have been held responsible. If this had happened, there would have been instruction in it for future mili tary commanders. The case of the "cause (s)" of the "American Revolution," as Beard poses the problem, is even more instructive. It leads us to ward an understanding of the po sition from which historians de nied the relevance of the past-for the present. Beard started with a dubious assumption, i. e., that there was some occurrence which could properly be called the "American Revolution." This is highly dou btful. At best, this phrase is a convenient designation for a considerable number of events and developments - e.g., the break from England, the war, the drawirrg of constitutions, the making of reforms, and so forth.

Moreover, the question as posed may embrace motives, purposes, incentives, desires, accidents, in fluences, decisions, reasons, as well as cause and effect relation ships, in its answer. "American Revolution," when used as a phrase to designate a large number of de28 THE FREEMAN May velopments, is a fictional device, not a reality. The real question in volving causation concerning a convenient designation should con cern who invented it. To treat it as something that actually oc curred, to ask what caused it to oc cur, is bound to lead to confusion. To fail to distinguish among all that an historian might offer as explanation - to lump everything together as "causes" -compounds the confusion. The question of causation is important for the didactic use of history as it con cerns the results of human action. Beard had posed no question that brought the problem into focus. Actually, then, the arguments were irrelevant to the positions taken. Beard had not disproved the existence of cause and effect relationships. Barnes had not shown that there was nothing to be learned from the past, nor that men in the past had no wisdom.

Robinson had not shown that past experience is irrelevant in present circumstances. They, along with others, did succeed in discrediting didactic history, but what did the work was not the validity of their direct arguments against it but their assumptions. These men were historicists, and if one ac cepts the historicist position, he must, logically, reject the rele vance of the past to action in the future. A Hodgepodge of Details In essence, historicism has been defined - or described - in the fol lowing way by one historian: "The subject matter of history is human life in its totality and multiplicity. It is the historian's aim to portray the bewildering, unsystematic variety of historical forms ... in their unique, living expressions and in the process of continuous growth and transfor mation." In brief, "the special quality of history does not con sist in the statement of general laws or principles, but in the grasp, so far as possible, of the infinite variety of particular his torical forms immersed in the passage of time."14 Historicism was developed by German historians in the nine teenth century; it stemmed from Herder and was shaped by von Ranke, Dilthey, and Meinecke. It arose as a protest against the sci entific emphasis of eighteenth century thought and partook of the romantic concentration upon the concrete and the unique. 15 It was, in its inception, a definition of the limits and extent of their craft by historians. They were saying something such as this: Each event when viewed as a 14 Hans Meyerhoff, ed., The Philosophy of History in Our Time (Garden City: Doubleday, an Anchor book, 1959), p. 10.

15 See ibid., pp. 9-18.

1965 THE DEACTIVATION OF HISTORY 29 whole is unique. That is how we propose to view every happening, occurrence, and development. Per chance, there may be common fea tures to them, there may be laws and principles, but this is not our concern as historians. Well and good, one might say, let other disciplines explore re ality from their vantage points and discover such laws and princi ples as there are. But there was a catch. In the course of the nine teenth century, all of reality was being thrust into the domain of history by thinkers, by Hegel, by Marx, by the Darwinians. Every thing was conceived of as chang ing, and the historicists them selves were among the first to claim every aspect of life as grist for their mills. This brought them into conflict with the various "sci entific" schools (Hegelian, Marx ian, Darwinian), for these sought for and expounded "laws" of his torical change. On the whole, in the West, the .historicists appear to have won.

In the main, however, it was an empty victory. Most of the ideas that were denied entrance at the front door by historicists came in at the back by way of assump tions. Thus, scientism, progres sivism, determinism, and a host of other isms have pervaded his torical work in the twentieth century. Historicism is particularly vulnerable to determinism, and the historicist has no vantage point from which to resist the in tellectual currents of his day. This is so because historicism is in eluctably relativistic. Each event is unique; each happening must be understood in terms of the con text within which it occurs. To put it another way, everything is rel ative to its context. Rigorous his toricists (some of whom were romantic individualists) have tried to avoid the implicit deter minism in this view by insisting upon the uniqueness and individ uality of each thing. But most historians are not troubled by such philosophical scruples; thus, they allow the implicit assump tion of determinism free play in their work.

No Guide for the Future The main point, however, is that historicism makes history useless so far as instruction for future action is concerned. Regardless of how luxurious the detail with which events are described - or because of it in part - these events contain no lessons. They are unique, self-contained, or, in the case of the way in which most practition ers handle them, prelude to the future. Future happenings will be unique also, perhaps shaped, even determined, by the past, but un like anything in it. The reIativism 30 THE FREEMAN May in historicism can be utilized to reach yet another conclusion that the past is unknowable. This is roughly the conclusion which Charles A. Beard had reached by the mid-1930's,1H The reasoning follows this line. Both men and events are conditioned by the con text within which they occur, are relative to their "times." If this is so, it follows that the historian writes from his own unique posi tion and can never be certain that he is making truthful statements about the past. It is much more likely that he is revealing much more about himself and his times than he is about the past. The idea was already current -that each generation rewrites history in its own image, and Beard's position reinforced it.

The thought may well arise at this point, why bother with his tory, anyhow? It appears to be useless, meaningless, and in any case, .probably unknowable. Some historians have indeed drawn such a conclusion. But the most vigor ous defamers of the older history quite often had new uses in mind. They were what may be called historicist-progressives. From his toricism they took the idea that history does not repeat itself, that 16 His most famous statement of it is in "Written History as an Act of Faith," American Historical Review, XXXIX (January, 1934) 219-29. ideas .and events are relative to the context within which they oc cur, and that it is the business of the historian to reconstruct the whole of the past, in all its luxurious detail. From progres sivism came their idea that all of later history is a product of ear lier history - that the past is pro logue. If one could delineate all the trends at any present moment, they thought, he could discern the shape of the future .. This was a watered down version of the vari ous historical determinisms of the nineteenth century.

Changing the Past Historicist-progressives turned to the conscious use of history to ref orm man and society. This was the purpose of James Harvey Rob inson's New History. He declared, "We must develop historical mindedness upon a far more gen erous scale than hitherto, for this will add a still-deficient element in our intellectual equipment and will promote rational progress as nothing else can do. The· present has hitherto been the willing vic tim of the past; the time has come when it should turn on the past and exploit it in the interests of advance."17 The historian should come forward and direct the re forms, it appears: 17 Robinson, Ope cit., p. 24. Emphasis added.

1965 THE DEACTIVATION OF HISTORY 31 As for accomplishing the great re forms that demand our united efforts - the abolition of poverty and disease and war, and the promotion of happy and rational lives - the task would seem hopeless enough were it not for the considerations which have been recalled above ..... The reformer who appeals to the future is a recent up start. . . . But it is clear enough to day that the conscious reformer who appeals to the future is the final prod uct of a progressive order of things . . . .We are only just coming to realize that we can cooperate with and direct this innate force of change ... .18 Even as long ago as 1913 the vil lain of the piece - conservatism had been identified. "At last, per haps, the long-disputed sin against the Holy Ghost has been found; it may be the refusal to cooperate with the vital principle of better ment. History would seem, in short, to condemn the principle of conservatism as a hopeless and wicked anachronism."19 Harry Elmer Barnes accepted the "value of historical knowledge as an aid in improving the present and in planning for the future .... "

He declared that the "chief way in which history can be an aid to the future is by revealing those elements in our civilization which are unquestionably primitive, an achronistic and obstructive and by making clear those forces and 18 Ibid., pp. 263-65. 19 Ibid., p. 265. factors in our culture which have been most potent ... in· removing these primitive barriers to more rapid progress."20 The ubiquitous John Dewey can be quoted to the same effect: "Intelligent under standing of past history is to some extent a lever for moving the present into a certain kind of fu ture."21 The Projection of Historical Trends History was not only deacti vated, then, but also reactivated. The older history was defamed and cast aside, but aNew History was. conceived to take its place. History ceased to be a record of man's experience from the past, rooted in an enduring reality, and was given a new role of being an instrument of reform in the pres ent and for the future. This New History was (and is) presentistic and futuristic. The past is con sciously and intentionally viewed from the present perspective and in terms of future goals. The emphasis is upon trends and forces at work in history, and upon the changing cultural setting within which men live and events take place.

History was rewritten to the above formulas. The modus oper andus was something such as this. 20 Barnes, Ope cit., p. 16. 21 John Dewey, "Historical Judgments," in Meyerhoff, Ope cit., p. 172.

32 THE FREEMAN May The historian combed whatever history he happened to be study ing for currents and trends lead ing up to the present situation or which could be expected to culmi nate in the not too distant future. Quite often, such history was written with a particular idea, goal, or ideal in mind. A favorite goal for American history has been democracy. A historian writ ing from this angle is apt to dis cover "seeds of democracy" in Puritan New England, "limited democracy" in the constitutional period, "Jeffersonian democracy" in the time of the badly misunder stood Jefferson, and "Jacksonian democracy" a little later. Of course, the J acksonians only witnessed the Advent of Democ racy, as any reader of such his tories knows. A great struggle had yet to take place. Children and women labored long hours in inhospitable factories. The enfran chisement of the adult population was only well underway. In the latter part of the nineteenth cen tury, the "plutocrats" almost suc ceeded in wrenching the control of the government out of the hands of "the people." But, in the early twentieth century, "the people"

wrested control away from the usurpers, and turned it over to progressive reformers. From that time on, with some setbacks, the advance of "democracy" has been upward and onward. The work is not finished, of course, as one historian points out in the perora tion to his text: High though our standard of living is, it reveals glaring inequalities. Vigorous efforts should be made to narrow the gap between the rich few and the poor many. A better life must be assured our millions of sub-stand ard tenant farmers, sharecroppers, migratory fruit-and-vegetable work ers, and day laborers, both Negro and white. Millions of our people enjoy less than a decent standard of living, and consequently fall victim to ill ness, crime, and other misfortunes re sulting from a low income. A high standard of democracy and a high standard of decency go hand in hand. 22 He has, of course, already de scribed trends which, when they culminate, should deal rather ef fectively with these problems.

The Subtle Path to Re/orm It should be noted that the historicist-progressive historian need not come out in the open as an advocate of reforms, as the above quoted historian does. He can, and usually does, accomplish his advocacy in more subtIe ways. The story that he tells is usually oriented toward reforms. The 22 Thorn,as A. Bailey, The American Pageant (Boston: Heath, 1961, 2nd edi tion), p. 970.

1965 THE DEACTIVATION OF HISTORY 33 trends he discovers make the re forms virtually inevitable. He can describe the surrounding circum stances in such a way (the hand ling of the Great Depression is a good example) that the reforms are made to appear unavoidable and entirely desirable. All of this he can do while maintaining a stance of "objectivity." All that he has been doing, he may protest, is to describe what happened, to show the context within which it happene~ and to sort out the trends which led up to the happen ing. Actually, many historians of this stripe take no particular pains to hide their melioristic bias. The ones quoted above were hardly doing so. It is a handy stance to have around, however , when some historian arises to oppose reform. It should be noted, too, that "lessons" have crept back into the New History. They usually have to do with the temporary triunlph of the "forces of reac tion." Perhaps the most commonly repeated "lesson" is the one to be learned from the failure of the United States to join the League of Nations. Many historians at tribute failure of the League to the absence of American support.

If America had joined, they say, things would have been different. Look at all the horrors that ensued. The hardly concealed "les son" was that the United States should join the United Nations and should stay with it and sup port it at all cost. Notice that this is not a lesson to be learned from history at all. It is a preachment written into history. No one knows what might have happened had the United States joined the League of Nations. It is pure sup position that the course of events would have been much altered. It is not a lesson drawn from what men did and what the conse quences were; it is a lesson drawn from what men might have done and what might have been the result had they done so. As the above indicates, history has been cut loose from reality. The only reality with which his tory can properly deal is in the past. When, and to the extent that they did, historians cut loose from reality, they cut all of us off from much of our experience. They opened the way to reform efforts unchastened by experience. They turned history into an instrument for remaking man and society.

They wrenched history out of its path of reliance on the concrete experience of the past and at tempted to root it in their own subjective longings. • The next article in this series will treat of "The New 'Reality.'"

THE WILL TO BE WYATT B. DURRETTE, JR. IN THE STRANGE dialectic of Rous seau the mystery of freedom lies in the forcing of others to be free: a perversion so immense that it has captured many minds in its beguiling grasp. The Founding Fathers of the United States suffered no such il lusions, for they believed man ca pable of self-responsibility. As Dr. Felix Morley expressed it in The Power in the People: "To put the power in the people implies faith. It implies that the component in dividuals are, for the most part, already endowed with self-control. This Republic is grounded in the belief that the individual can gov ern himself. On the validity of that belief it will stand - or fall." This is a recognition of the es sential nature of freedom: that it cannot be imposed from without; it must exist and thrive in the minds and hearts of men or not at all. It is on this foundation that Mr. Durrette is pursuing graduate studies in Political Science at Johns Hopkins University~ 34 the Founding Fathers sought to construct a nation. Though the structure is important, they knew, and we must remember, that free dom can only survive if men cher ish and prize it above all else.

James Madison wrote in The Federalist (No. 39) of "that hon orabledetermination which ani mates every votary of freedom, to rest all our political experiments on the~ capacity of mankind for self -governmen t." Benj amin Franklin voiced this same thought. The story is told tha t he was asked shortly after the Philadelphia Convention concern ing the nature of the product which their labors had produced. "We have given you a Republic, madam, if you can keep it," is re puted to have been the old gentle man's reply. Usually this anecdote is recalled to emphasize that our government was conceived as a Republic, not a democracy, suggesting that the key to the continuity of our con1965 THE WILL TO BE FREE 35 cepts of liberty and individual freedom lies in the preservation of this governmental structure. This accounts for much of the ef fort to protect the integrity of the Constitution by detailed an alysis, laborious research, and scholarly writing, and explains why such importance is given to the balancing of power among the three repositories of Federal au thority and between the national and state governments.

That this structure has contrib uted immeasurably to the preser vation of liberty is not to be de nied. Yet, there was more, an es sential ingredient - present in the past, but fading today. This ingredient is the spirit and vision of freedom captured by the Declaration of Independence and manifested in the Constitution, the fire of liberty which burns in the minds and hearts of individ uals. Here is the foundation upon which this nation was built, and the only foundation upon which it can endure. Thomas J etferson knew that the strength of our Republic lay in the people's fidelity to the vision of 1776, to the spirit of freedom: "When that is lost," he wrote, "all experience has shewn that no forms can keep [people] free against their own will." Thus viewed, Franklin's "if you can keep it" assumes greater significance than is usually attributed to it. The structure was only as strong and enduring as man's will to be free.

As Judge Learned Hand phrased it: "Liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no con stitution, no law, no court even can do much to help it." Here then lies our challenge. The governmental framework is important, perhaps vital; but even the best governmental structure is merely a paper barrier against tyranny unless there are those who value freedom. Madison, Jefferson, Hand, and Franklin, among many others, have clearly seen this. They knew that freedom lives and breathes in the hearts of men, not in a con stitution nor a formal code of law. At best these forms can only serve to preserve the conditions propi tious to the continued life of the vision. But when the vision goes, the structure soon follows. Our pri mary task is to rekindle that vi sion. Should we succeed, we need worry little about the structure. For the will to be free provides its own structure; and where free dom is found, men manage to cre ate and preserve the framework around which it can grow. ~ BERTON BRALEY My FRIEND Jones, whom I don't keep down with, is very price con scious.

We were shopping in the same supermarket, and I had just dropped a package of Grandma's Oats in my cart. "That," said Jones, "is an ex ample of the way the consumer is gouged on the cost of living. Grandma's Oats - maybe four cents worth of oatmeal in a fancy package, nineteen cents! Four hundred per cent profit. It's a stick-up. It ain't worth it." "It's worth it to me," I said. "I'm not paying nineteen cents for four cents worth of oatmeal, I'm paying 19 cents for oatmeal I know is accurately weighed, free of dirt and worms, cookable in five minutes instead of five hours, and put up in a convenient package to use or store in the cupboard. Mr. Braley continues freelance writing after fifty years as author, correspondent, and poet. 36 "Using Grandma's Oats instead of loose oatmeal saves on my gas bills, saves my wife labor and time, and adds maybe one cent to the cost of our breakfast. If the manu facturer and the retailer split a 400 per cent profit in furnishing me these advantages - they're wel come to it. So, 19 cents for Grand ma's Oats - it's worth it to me."

Maybe our food cost runs a lit tle higher than the J oneses though I doubt there's much dif ference - but it's worth it to me in time and trouble saved by not worrying whether I could have got something two cents, or two dollars, in some cases, cheaper by bargain-hunting. It's worth it to me in the convenience and ease of shopping where pre-packaged and wrapped goods are all ready for me to pick up and take home. So when Jones and I met again at the milk counter - I think he was haunting me to see what next 1965 HANG THE EXPENSE - IT'S WORTH IT TO ME 37 extravagance in buying I would commit - and as I put a container of homogenized milk and a half pint of heavy cream in my cart, he said, "Two cents extra for ho mogenizing - which probably costs half a cent. Another stick-up!" I said, "It's worth it to me. I'm not too lazy to shake up the milk each time I use it, but I don't like to be bothered, and it's worth two cents a quart to me not to have to."

"Is it worth ten cents more a half pint to buy heavy cream in stead of light?" he protested. "It is to me," I replied, "I like real cream in my coffee, not forti fied milk. Also, it's worth it in the economy sense. First, I need only half as much heavy as light cream to get the same effect, or better, in my Java. Second, I can get the same consistency as light cream if I wanted it, which I don't - by mixing heavy cream with milk, at a mingled cost less than the light stuff." In the vegetable department, J ones loaded a five pound bag of potatoes into his cart and I did likewise, only, as Jones pointed out, I was paying two cents a pound more than he was. And I pointed out that I was getting selected, sized, and washed potatoes, in a transparent bag through which my wife could see to pick out the particular potatoes she wanted to cook; while Jones was getting a heterogeneous lot of spuds that had to be dumped out to determine their size, and scrubbed by Mrs. Jones before they could be used.

If that extra work and bother to the Joneses is covered by the ten cents they save on the bag, it isn't worth it to me. And, again, if the potato-packer makes eight cents out of this "fancy packag ing," he's welcome to it, as far as I am concerned. However, Jones to the contrary notwithstanding, there are very few swollen profits wrapped up in packaged and frozen foods. With the competition as fierce as it is, the greedy purveyor would find himself out of business in a month if he tried to mulct the buyer for more than the packaging is worth. And in pre-cut and wrapped meats, for instance, I find a sav ing not only of time, but of money. In my supermarket - which is typical - I can find exactly the kind, cut, quality, and quantity of meat I want, visible and easily handled in its cellophane wrapper, labeled with its weight, price per pound, and a guarantee as to qual ity. And I don't have to accept the extra ounces that a butcher fre quently adds as he cuts to fill the order, or watch to see that he doesn't weigh his hand with the 38 THE FREEMAN May steak, or pay him from two to ten cents a pound more than for the "prettified" kind from the pre-cut counter.

And, even if it were more ex pensive to buy the prepared stuff, it would be worth it to me in con venience, and the sanitary absence of flies. In the list of grocery items for which I cheerfully pay a small premium in price are certain brands of coffee, salad dressing, tea, soup, pudding, detergents, scrubbing powder, and the like that have been recommended to me through years of national adver tising, but permanently sold to me because experience proves their superior quality. That same price differential is also worth it to me in a number of other categories -like car pol ish, floor wax, vacuum bottles, hand lotion, and razor blades, to list a few - in which certain brands demonstrably are best and most efficient to use. Incidentally, some of these special brands, while higher priced than many competi tors, are not the most expensive. While I contend that paying more for the best is generally worth the difference, it doesn't follow that paying the most always gets you the best.

So, I agree with Jones about shopping around for some items. There's no advantage to me in paying 29 cents for four ounces of perfumed lighter fluid when there's a chain store that sells it (unscented) for 9¢. Paying lO¢ an ounce for nail polish remover, when lacquer thinner (the same chemical) costs 50¢ a pint, isn't worth it to me. Nor is it worth it, to a smoker who has "tried 'em all," to pay several dollars a pound for uItra special blends of tobacco when a dozen brands at a dollar-a-pound are just as satisfactory and a lot easier on the throat. And, to step into a higher brack et of expenditure, it isn't worth it to me - and wouldn't be if I were "loaded" or had a limitless ex pense account - to pay $25 for a steak dinner at a swank bistro, when $3.75 will get me as good a meal in surroundings just as lux urious except for the figures on the right of the carte du jour. I say that isn't worth it to me; yet, I readily concede that it must be worth it to those who freely and willingly partake of such fare.

With comparatively few excep tions, it's worth it to me to pay whatever is the small added price for a better or more conveniently packaged product; and let Jones use his price-conscience penny-wis dom in what I call pound-foolish ness.

1965 HANG THE EXPENSE - IT'S WORTH IT TO ME 39 I've made this piece personal be cause I think I'm typical of the "improvident and extravagant American customer" who'buys on impulse and doesn't count the cost - and because it's my per sonal opinion that the "extrava gant and improvident American customer" is nothing of the kind, but actually a better economist than the price-conscious bargain hunter. When he - or rather, she, (for women do most of the shopping) - buys advertised brands of soap or sealing wax, packaged cereals, pre-cut meats, frozen vegetables and fish, the cent or two more they cost (and not all of them do) are worth it to her in convenience, confidence in quality, time and labor saved. It's because Mrs. Shopper is convenience-minded, quality minded, and time-minded that our producers have built up a market vaster and more varied than any where else on earth, in which "ex travagant" shoppers can go on ex panding the list of things that are worth it to them.

To the kind of mind that views saving string and straightening nails as economy, most Americans are heedless spendthrifts, but that sort of economy is sound only when fresh string and new nails are not on the market. So, I think that the American buyer is basically the most intel ligently provident of people in us ing "it's worth it to me" as his slogan. My opinion on this may not be worth your considering, but it's worth it to me. ~ Serving the Consumer THE PRINCIPLE which enables consumers to get the most of what they want is the principle of the free market. The heroine of the free market is the typical Queensway housewife who will go out of her way rejoicing to buy a box of detergent two cents cheaper. Such an opportunity our heroine is glad to discover by shop ping around. She would most vocally resent any restriction on her freedom to shop around. Without this vital freedom, all other freedoms - worship, speech, press, assembly, and so on - are shadowy if not impossible.

HART BUCK, Freedom to Shop Around A PAUL L. POIROT ONLY the inimitable Victor Borge would have "an uncle who once invented a cure for which there is no known disease." But all of us can claim an "uncle" who is adept at formulating answers without knowing what the prob lem is; and "Uncle Sam's" favor ite answer is, "Subsidy!" In fairness to "Uncle," it may be conceded that his failure to identify problems clearly could be a shortcoming picked up from various of his nieces and nephews. It happens to the best of us! For example, what about all these victims of poverty we see throughout the world? Blessed as we are today with our fast cars and planes and instantaneous ra dar and television entry into the most remote corners, we can de tect the first pangs of hunger or the slightest sigh of suffering or hardship, in a matter of seconds, it seems, from anywhere on earth. Previously, when a man's "world"

was little larger than he could circumscribe conveniently on foot 40 or horseback, his chances of spot ting anyone much poorer or hun grier than himself were not great. And if there were a neighbor in need, it was not so difficult to fig ure out just what he needed and how to help him. In those days, if a farmer lacked a plow, none of his friends would have thought of giving him a fully automated steel mill. 1 If no one had an extra plow to give, at least someone would be willing to lend the tool in ex change for some help with the corn at harvest time. If a family were really up against it, perhaps with illness and a shortage of food in the dead of winter, it wouldn't have been considered real neighborly to send over a "relief" check and a prom ise of more when needed. A near by housewife might drop in with a pot of stew, and spend some time nursing the sick and tidying up the cabin before returning 1 See "Statism and the Free Market"

by Sudha R. Shenoy, THE I<'REEMAN, May 1962, p. 44.

1965 A PART OF THE PROBLEM 41 home. And the expectation would be, in most cases, that when the stew kettle eventually was re turned to its owner, it would con tain a freshly baked pound cake or some repayment in kind. Or, a neighbor would stop to see if one of the boys from the needy family might be able to spend a few weeks helping with the chores at the neighbor's place - for his room and board, and perhaps a chance for some schooling. There is an art to helping a person help himself, of being char itable toward anyone without damaging his self-respect and sense of self-responsibility. When those one would aid are close to home, well known and loved and respected, the temptation to be rash or careless in rendering aid is diminished. A friend's life and character is at stake, and the prob lem can be more clearly .seen as not simply a need to fill his belly but a way for him to earn self respect and a reason for living.

Contrast this with the modern method of perceiving poverty from a jet or helicopter or through a picture tube, a tele scopic view of multitudes of stran gers, too numerous to be counted or cared for one by one, too much of a job for anyone neighbor. The picture is accurate enough; these are actual human beings who are hungry, homeless, ragged, diseased, illiterate. Their sad plight is real and evokes the sym pathy of all who observe their con dition. But feeding a starving multitude is no job for a friendly housewife with a kettle of stew. An individual, yes, or perhaps several members of a family can be cared for by anyone of us - but viewing the problem en masse tends to conceal the fact that it still is the individual who suffers hunger, disease, privation. It is the individual who needs a pur pose in life and a way to earn his own living - a way to achieve his purpose. Populating the earth with purposeless creatures is a goal un worthy of any human being; yet, this would seem to be the tendency inherent in most of the so-called charitable programs of the welfare state.

Aside from the case of hopeless cripples and invalids for whom others may care, poverty is a con tinuing problem only (1), to in dividuals who have no incentive to rise above that challenge, and (2), to those who take it upon themselves to perpetuate the situa tion through irresponsible sub sidies. Of these two aspects of the problem, the latter is probably the more serious. ~ SUPPOSE that a primitive tribe in a distant jungle had forgotten the secret of how to make fire. Sup pose the tribesmen were groping about with one experiment after another, trying desperately to re gain the lost secret. There, in a nutshell, one would have a clue to much that has been going on in the Soviet Union before and since the fall from power of Nik ita Khrushchev last October. Anyone who has followed Soviet developments in the speeches of Soviet leaders and in Soviet news papers and magazines during the last few years must be impressed by the amount of attention de voted to failings and breakdowns in the management of industry and agriculture. Khrushchev made one experiment after another.

First, he set out to decentralize the cumbersome state economic bureaucracy that tries to run the national economy. Then, finding that the decentralized local "coun cils of national economy" were trying to keep for themselves more than their proper share of the available resources, he lurched uncertainly back to new methods of central direction. He was never able or willing to admit that the root of the trouble is in the sysMr. Chamberlin is a skilled observer and re porter of economic and political conditions at home and abroad. In addition to writing a number of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines.

1965 GROPING FOR THE SECRET OF FIRE 43 tern itself, not in this or that de tail of administration or organiza tion. Khrushchev followed the same pattern in agriculture, regarding which he imagined himself a spe cialauthority. In his last years of power he was continually rushing about the Soviet Union, hauling local officials over the coals, issu ing a stream of new recommenda tions and orders. In 1958, when good weather gave the Soviet Un ion a record harvest, the bouncy extrovert believed he had the farm problem licked. He began to boast that the Soviet Union would soon pass the United States in per capita output of meat and dairy products - a boast which inspired considerable skepticism in all who have lived and traveled in both countries. But there was a very different story in 1963 when the Soviet Un ion was saved from hunger, if not actual starvation, by purchasing millions of tons of grain from the United States, Canada, and Aus tralia. The other communist giant, Red China, found itself under the same necessity. A joke began to circulate about Khrushchev that he deserved a Nobel Prize in agri culture. He had planted grain in Russia and harvested it· in Amer ica.

Although political change in the Soviet Union is enveloped in a thick cloak of secrecy, it seems probable that economic failure ranks high among the reasons why Khrushchev had to go. For seven years he had stood nn the pinnacle of Soviet power; he had been given his opportunity to make good on Stalin's old predic tion that the Soviet Union would overtake and outstrip the leading capitalist countries, including the United States. (This boast elicited a private joke overheard by a number of foreign travelers in Russia: "We shouldn't get too far ahead or they will see we have nothing on our behinds.") Standard of Living of Soviets Still Low by Comparison There is a mountain of evi dence .to show tha t the Soviet standard of living today, with the fiftieth anniversary of the com munist revolution less than three years off, remains abysmally low by comparison with the United States or most countries of West ern Europe or even some of the Soviet satellite states in East Eu rope. Two recent news items may suffice. Here is an excerpt from the British New Statesman of Octo ber 23, 1964, written by a corres pondent on the spot about living conditions in Moscow. (The New Statesman is a magazine of strongly socialist sympathies and, although not communist, cannot 44 THE FREEMAN May be accused of bias against the So viet regime.) "Russia is still the only major world power which cannot provide an adequate supply of fresh milk, eggs, fresh fruit and vegetables for its population. Distribution is still shocking. The quality of the meat usually makes it fit only for stewing. The waiting time for a telephone is from three to five years, depending on where you live. Buses, trains, and the under ground are hopelessly overcrowd ed at most times of the day, mak ing traveling to work and back much more of a nightmare than the rush hour is in London. Laun dries and shoe repair shops per petually ruin or lose things and the consumer has little redress.

The housewife has fewer labor saving devices than anywhere else in the rest of Europe, although a great number of women go out to work." Item Number Two: Radio Lib erty, which broadcasts in Russian and other languages of the Soviet Union and monitors Soviet broad casts, recently made a calculation of comparative New York and Moscow priees, in terms of work ing time required to earn this or that commodity. Roughly speak ing, the Soviet worker or employee must toil ten times as long as the American for a quart of milk, sixteen times as long for a pound of sugar, ten times as long for a pound of coffee, seven times as long for a pound of pork - and so on through a long list of com modities. And the important con siderations of quality and avail ability are also much more dis advantageous in Moscow than in New York. What with foreign tourists com ing into the country, foreign broadcasts, and a limited number of Soviet citizens permitted to travel abroad, the Soviet citizen is becoming more and more aware of how badly off he is. The old excuses are played out. It is al most twenty years since the last shot was fired in WorId War II.

If, as around-the-clock propagan da assures him, the Soviet eco nomic system is superior to the individualist or capitalist, Ivan Ivanovich, the Soviet man in the street, would like to see a few tangible proofs. An Urgent Problem So, as several of their public statements indicate, the front men for the new Soviet regime, Leonid Brezhnev and Aleksei Kosygin, face an urgent problem in creating more tolerable living conditions. And it is in the field of internal economic policy that they have de parted most noticeably from Khrushchev policies. The fallen Khrushchev proceed ed on the basis of tightening the control of the local branches of the Communist Party over every 1965 GROPING FOR THE SECRET OF FIRE 45 detail of industrial and agricul tural production. These branches were even split up into two de partments, one for industry, one for farming. This split has been canceled and present policy is to let the Communist Party stick to the function of providing "gener al political guidance," leaving tasks of management to the state managerial class. Although the small private plots of land which are left to peasants in the collec tive farms for individual cultiva tion produce a disproportionate share of such foodstuffs as poul try, vegetables, and dairy prod ucts, Khrushchev had been cut ting back on these allotments as a source of capitalist infection.

One of the first acts of his suc cessors was to repeal these cuts. Professor Liberman Proposes Test of Sales and Profits There now seems to be an inten tion to tryout on a much larger scale the ideas of ProfessorYevsei Liberman, of Kharkov University, who has long been advocating a freer hand for the individual en terprise within the general scheme of a state planned economy. Liber man's central idea, as he expressed it in a letter published in The Economist of London, is as fol lows: "The success of a factory's work is judged, first by how well its wares sell, and, second, by the profit level." Formerly, the state planning agencies tried to dictate every de tail of factory production and sales. This proved especially un workable in the consumers' goods industries and created a tempta tion to fulfill the plan figures at any cost, paying little regard to quality or consumer desire. Now, the clothing industry and perhaps some others turning out consumer goods will experiment with the Liberman method, which will at tempt to test genuine efficiency, not simply to produce a given number of units of this or that product. Many examples of the disastrous results of this latter method appear in the Soviet news papers. So one can learn from Pravda - official organ of the So viet Communist Party, which in this case was living up to its name, "Truth" - that every television set purchased by Muscovites in the first half of 1960 had been re paired at least twice; that the "Saratov 2" and "Dnieper" types of refrigerators were useless ; that the shoe factory at Chernovtsy, in the Ukraine, had piled up 40, 000 pairs of children's shoes that no one wanted to buy.

Equally instructive are the woes of one Mr. Kamenev, general man ager of GUM, the department store in Moscow which is the big46 THE FREEMAN May gest establishment of its kind in the Soviet Union. In a letter to Izvestia, another leading Soviet newspaper, he stated that during the previous year he had sent more than 100,000 letters of protest, complaint, and advice to the in dustries supplying his store, with out receiving a single reply. In the overcoat department alone the unsalable stock had reached a val ue of 30 million rubles (nominally a slightly larger sum in dollars). A hat factory with the martial name of Krasny Voin (Red War rior) turned out every year 150, 000 hats, all black and unaccept able in shape, and GUM lost a mil lion rubles trying to sell them. When an inquiring reporter from Izvestia got in touch with the man ager of the Krasny Voin, he re ceived a standard reply in such circumstances: "We have fulfilled the production plan; the rest doesn't concern us."

To anyone who, like the writer, has lived for a considerable time in the Soviet Union, these com plaints are a very old story. For, although criticism of the basic dogmas of Marxism and commu nism is strictly forbidden, Soviet citizens are permitted and even encouraged to blow off stea,m de nouncing cases of poor quality and inferior service. But the psycho logical satisfaction of blowing off steam is about all they accomplish. For the automatic remedies which prevent the existence of such conditions in a free enter prise system - market pricing, competition, the penalty of bank ruptcy for firms which fail to meet customers' requirements - have been entirely absent under the Soviet command economy. So far, the industrial manager there has been able to "get by" merely turning out an arbitrarily set figure of units of production, quite regardless of quality, dur ability, and general satisfactori ness. The Liberman proposals, which have been debated for years, represent an effort to inject something of these missing ele ments into the Soviet productive scheme.

Authority Without Responsibility Whether the normal techniques of private capitalism can work within the strait jacket of a state owned, state-controlled economy remains to be seen. On this ques tion Mr. Henry Hazlitt ventures a pessimistic forecast in his recent book, The Foundations of Moral ity: "If I am a government com missar, selling something I don't really own, and you are another commissar, buying it with money that is really not yours, neither of us really cares what the price is." But what is significant is that Khrushchev during his time of 1965 GROPING FOR THE SECRET OF FIRE 47 power, and now his successors, recognized that some dynamo was lacking in the Soviet system of production and groped around as desperately as one might imagine primitive tribesmen doing who had forgotten how to light their campfire. This same trend is no ticeable in the Soviet satellite states of eastern Europe, especial ly in Czechoslovakia, where a rigid planning system led to such a breakdown that a radical reorgan ization of the whole system of pro duction and distribution is under way.

Conditions for Progress To ignite fire or, to drop the figure of speech, to make a modern industrial and agricultural system function at high efficiency, the fol lowing elements are essential: the right to earn and inherit prop erty, the payment of differential incentive wages for superior skill and diligence; the right to oper ate a business for profit - or loss; the existence of a free market to determine the value of what is be ing produced; a sound, freely ex changeable currency; and· a com petitive system as the surest and least painful guaranty of stand ards of quality and efficiency. When L.enin and his followers took over power, profiting by the chaos and disorganization of Rus sia, following years of costly warfare and the collapse of the tra ditional Czarist system, they threw over all these proved foun dations of a productive economy and instituted what later became known as a system of war com munism.

All forms of private ownership for profit were abolished; the state undertook to run the entire economy; money practically lost all value; it was meager ration that counted, not the pay in in creasingly worthless paper rubles. Some of these changes were in line with communist ideology; others were forced on the regime by the exigencies of prolonged civil war. The ultimate result was what even communist economists recog nize as one of the most formidable breakdowns of production in world economic history, with industrial production falling to 20 per cent, farm output to about 50 per cent of normal. In 1921 there was a prodigious famine which took mil lions of lives and would have taken millions more if it had not been for the large-scale supply of food by Herbert Hoover's American Re lief Administration and the smal ler contributions of many other foreign humanitarian organiza tions.

By this time Lenin realized that something had to be done, and quickly, if the whole Soviet sys48 THE FREEMAN May tem, which had won the civil war against the divided and poorly or ganized resistance of the anti communist forces, was not to founder as a result of complete economic paralysis. He came up with what was known as the NEP, or New Economic Policy, of which one important feature was the substitution of a fixed tax for the former policy of requisitioning whatever the government judged was the peasant's surplus food stuffs - a policy that produced more peasant uprisings than food. At the same time pri vate trade was legalized and a regular wage system replaced the payment of wages in kind. Small industries were again permitted to function. Considerable inequalities in com pensation were permitted and there was an attempt, not always successful, to keep the ruble cur rency fairly stable in terms of purchasing power.

Spectacular Results The res ults of this lukewarm, halfhearted return to capitalism were spectacular, comparable with what happened in Germany after the mark was stabilized in 1948 and Economics Minister Ludwig Erhard made a bonfire of price and wage controls and told his coun trymen it was up to them to improve their war-shattered stand ard of living by intelligent hard work. In both cases there was an almost miraculous appearance of goods and foodstuffs; hope re placed despair, with bustling ac tivity instead of bleak stagnation. But, while Germany went from success to success on the path way of full capitalist restoration, Josef Stalin, after getting a firm grip on the levers of power, pro ceeded to liquidate the NEP, abol ishing private trade, forcing the peasants, with the most ruthless Inethods of compulsion, to give up their small private holdings and work in big state-controlled collective farms, imposing on the country all the rigors of a com mand economy. Stalin's goal was a swift build-up of the heavy in dustries and the war preparedness of the Soviet Union; and he suc ceeded - at the price of millions of human lives and a reduction of his subjects to a bleak, drab stand ard of living. He kept the per sonal incentive system in wages and salaries and he abolished some of the more foolish early ideas of the Revolution, highly permis sive methods in education and preference in admission to uni versities for applicants of work ing-class origin. But he based the Soviet economic system on a foun dation of hideously exploited and maltreated slave laborers. And the nominally free workers in factor ies and offices were forbidden to 1965 GROPING FOR THE SECRET OF FIRE 49 change jobs without permission and were subject to imprisonment for tardiness or absence.

The Missing Spark After the grim dictator's death in 1953 there was an easing of his more ruthless measures. Many of the victims of his slave labor camps were released and condi tions in the camps were somewhat humanized. Slave-driving methods in the factories were relaxed. The peasants, who had been the low men on the Soviet totem pole, as they had been, indeed, throughout Russian history, were given a lit tle more incentive. Yet some essential sparkplug was lacking; and this fact became clearer as the Soviet economy be came more complex. It had been comparatively easy to set a few simple goals: so much steel, coal, oil, and the like, although agri culture lagged badly as a result of the destruction of the peasant's old incentive of personal owner ship of land. There were years under Stalin when the output of farm products was little more than it had been before the Revolution, despite the growth of population and the large injection of tractors and other modern machinery.

Somehow, the secret of fire had not been rediscovered and the groping for new methods of stim ulating productivity under Khrushchev and under Khrushchev's successors let some curious skeletons out of the cupboard. It is obvious from the most orthodox Soviet sources that the national economy has bent, almost to the breaking point, under a crushing load of competing and often con flicting bureaucratic planning in structions. About the end of 1964 a deputy in the Supreme Soviet (parliament) cited the case of the Izhora factory, which received seventy different official instruc tions from nine state committees, four economic councils, and two state planning committees, all authorized to give orders. Some of the grotesque things that have been happening would have defied the imagination of the great Russian satirical humorist Gogo!. There was, for instance, a chandelier factory where the workers were paid higher bonuses for turning out heavier chan deliers. The upshot was that they produced chandeliers that pulled down the ceilings.

Small ,vonder that Yevsei Lib erman and other would-be reform ers are getting a hearing. Yet the pull of communist dogma and of the vested interests in maintain ing the old system of bureaucratic controls should not be underes timated. Once a machine of bu reaucratic planning is set up, dis entanglement becomes as difficult 50 THE FREEMAN May as for a fly to extricate itself from flypaper. It is still far from cer tain, given the Soviet political and ideological system, that its rulers will succeed in relearning the se cret of fire. However this may be, two con clusions seem to be in order. The first is that the Soviet Union is not and never has been and never will be under its present economic system, a serious challenger to the United States, or to any advanced industrial country, in terms of achieving a high standard of everyday living. The Soviet sys tem makes possible successful con centration on costly stunts in space, of which the practical value is extremely dubious. It does not make possible the assurance of an all-around high and rising stand ard of living.

Second, we can see today a new illustration of the truth of Ox enstierna's maxim: With how lit tle wisdom the world is governed! Just when state economic plan ning, pushed to extreme lengths in the Soviet Union, is emitting sounds that suggest a death rat tle, the people of Great Britain, by a very narrow margin to be sure, have entrusted their government to a party which holds up the planning of productivity and the regulation of individual incomes as Alpha and Omega of progress and economic wisdom. ~ Necessarily Inefficient EVERY GOVERNMENT activity is delayed and directed by hundreds of democratic checks and balances. Economically, this is neces sarily inefficient. But the preservation of freedom requires us to keep these checks and balances, even though the cost of govern ment services and production is thereby greatly increased. Inefficiency in government is the price we pay for liberty. If, in an attempt to make our government more efficient, we under mine the cumbersome checks and balances and divisions of power specified in our Constitution, liberty will disappear in the United States.

DEAN RUSSELL AMIDST the books on the shelves of an acquaintance of ours, whom we know to be a man of refined sensibilities, we found to our as tonishment a squat, homely can of beans. Ordinary pork and beans. Here was a mystery - what could possibly have moved our friend to place such an humble object among his less earthy vol umes. A moment of insanity? Never. Hunger? Impossible. It was hard to push back the suspicion had he had some didactic. purpose in mind? What, indeed, can one learn from a can of beans? It was a preposterous object, and irksome. A mere fleck of chaos in the otherwise impeccable surroundings of a civilized man. We tried to ignore it, but tension grew between us and that smug, disorderly tin. Curiosity overcame reticence; we picked it up fur tively and turned it this way and that, .hoping to divine its secret. It yielded none, for it was, after all, just a can of beans.

Wha t can one learn from a can An editorial from the March 1962 issue of Insight and Outlook, a conservat;ive s~udent journal published in Madison, WlsconSln. of beans? It has no poetic qualities to speak of, and is smaller than a breadbox. A symbol of the mass es, perhaps, focusing their as pirations for material betterment with nature's parsimony? Dubious. Then we noticed the price: seven cents. Curiously low; was it some sort of novelty in the age of clipped coinage? What an enor mous quantity of materials, tools, steps, services, and knowledge went into the production of the can: iron from the Mesabi, mined, shipped, refined, cast, stamped, rolled, shaped, coated with tin from Bolivia; paper label, a prod uct of an entire industry, printed a~d dyed by two more; the beans themselves, and the .pork, and sauce, raised, shipped, prepared, finally canned. Almost uncount able processes of production, transportation, and marketing set into motion to disgorge the can.

Noone man or one hundred men had all the knowledge necessary to produce it, and yet it appeared - for seven cents. An excellent symbol of the interdependence of economic effects on the market. As we thus pondered, can of beans flagrante delicto in the hand, our friend entered the room. "Ra ther the essence of social cooperation," we said, replacing the can to the shelves. "Just so," he said, unperturbed. "J ust so." ~ 51 THE COIN OF FREEDOM D. M. WESTER HOLM My 12-YEAR-OLD SON looked up rebelliously from a flower bed he was weeding, his face flushed with exertion and firm intent to speak his mind. "The other kids don't have to weed flower beds. They're out playing baseball, and I don't think it's fair that I can't go, tOO!" "Well, son," I said quietly, re membering earnest rebellions of my own childhood, "you did agree that you would do this chore each week. You said that you wanted to do your part to help the family; and you were mighty happy to earn some extra money, too.

Right?" "Sure, mom," he nodded im patiently, "but not when the guys need me to play shortstop!" And Mrs. Westerholm is a Registered Nurse, housewife, and student of liberty of Gardena, California. 52 he gave me a look which spoke eloquently of a 12-year-old's opin ion of such obviously unfair tac tics as reasonableness and logic. This seemed to be the proper moment to give my lad a small (and somewhat sneaky) gift which we had acquired for just this sort of situation. He reacted with cautious in terest when I returned from the house and handed him a tiny box. Scrubbing his earth-stained hands on his pants, he opened the box and took out a silver disk about the size of a 501 piece, and slowly turned it over and back again. On one side was engraved the word FREEDOM; on the other side the word RESPONSIBILITY. He studied the shining coin for awhile, and then grinned with 1965 THE COIN OF FREEDOM 53 elaborate mock re·signation.

"Guess there's supposed to be a lesson here, hmm?" "Maybe," I smiled. "Know what it might be?" He thought a moment and then ventured: "Could be that if I want the 'freedom' to play baseball, I ought to take care of my 'responsi bility' for the weeds, first?" "Could be," I nodded. "Maybe if you keep that in your pocket it might help explain some other things, too, as time goes on. Free dom' always has that other side. Freedom of speech carries with it the responsibility not to malign or slander another by your speech, for instance. It isn't a true coin without both sides - just a coun terfeit." The Cat stuffed the coin care fully into his pocket and said a bit ruefully, "Oh, well - I guess some guys do carry good luck pieces!" I grinned back at him. "You might find that this one can be a real 'good luck piece' if you use it to help yourself think." "Mothers!" he muttered - but he was smiling as he resumed his weeding.

An Important Lesson An unimportant little episode? Not at all. There was an extremely important basic concept involved here; and this was one step we were taking to try to teach it to our oldest child. The relationship between freedom and responsibil ity is one that has been essential to the formation and growth of this nation. It must be a balanced, equal relationship if the value and strength of either is to be main tained - let alone increased. This relationship is also one which can only be maintained by individuals; for to attempt to delegate or re fuse to accept individual responsi bility is to lose freedom propor tionately - not only for oneself but for all others as well. One cannot legislate away the burden of re sponsibility without also automati cally legislating away an equal de gree of personal control - and "personal control" is simply an other way of saying "freedom."

It is easy to understand a threat to freedom when it is a matter of someone bursting over the horizon, shooting up the town, and killing or capturing the citizens. It is easy then to understand and recog nize the need for assuming imme diate personal responsibility for the safeguarding of one's freedom. It is far more difficult to recognize a threat to freedom which comes gradually, insidiously, and through legalized peaceful means, enacted by our own people and loudly claimed to be "for our own good." But the threat is just as real in eithe I' case! A long careful look at the condi54 THE FREEMAN May tions under which we now live in this greatest citadel of freedom will disclose an amazing lack of personal freedom, compared with the degree we once had. There is literally no phase of living which is not controlled in one way or another by some branch of the state - from the moment we bite into our breakfast toast (made of parity-priced wheat, and spread with price-controlled butter) and send our children off to school (to compulsory attendance, usually at a government-controlled school) and draw our paycheck (upon which all sorts of compulsory de ductions have already been levied and withheld) and drive home (on multibill ion-dollar tax-built roads) to a rent-controlled or gov ernment-subsidized dwelling - and so on and on and on.

Our Sad Departure When we speak, rather smugly and complacently, about our re vered American heritage of indi vidual freedom, we are not speak ing of our present way of life. When we, step by step, legislated away our personal responsibility to handle the various problems of living, just so, step by step, we departed from that heritage of freedom. Granted, many so-called "benefits" have been gained - de grees of material security from birth to death - but at what a price! The price is not only in terms of lost personal freedom seldom missed until it is gone en tirely - but also in more easily un derstood terms of dollars and cents. Bureaucracy has always been a most expensive method of accom plishing anything, in contrast to the accomplishments of free com petitive enterprise. A glance at our soaring national debt, the rate of inflation, the tax burden, should demonstrate quite clearly this hard dollars-and-cents price.

But there is another price we are paying, the disastrous price of gradual, inevitable loss of individ ual initiative and integrity - the loss of the individual sense of re sponsibility. Without these traits, respected and put into practice, we cannot hope to regain personal freedom and all it entails. Without these traits, we face deeper and deeper immersion into a collecti vistic way of life. Dnder any socialized scheme, there is less and less material or psychological incentive to attempt to develop the creative ability nec essary for progress. Where is the incentive to excel, individually, un der a system which guarantees the same benefits to all, regardless of effort or ability? Also, moral in tegrity is inevitably lost when the whole societal emphasis is on dele gating personal responsibility and 1965 THE COIN OF FREEDOM 55 placing it in the hands of the im personal state. Moral integrity is a matter of individual growth, and cannot be legislated into existence.

Now, if we adults of this gener ation are practicing less and less personal responsibility, then we probably are teaching and empha sizing this trait less and less to our children. It seems reasonable that children thus untrained in the importance of initiative, in tegrity, and responsibility would certainly be apt to demonstrate less respect for others, less respect for property rights, less respect for the laws which were estab lished to protect these rights, and less respect for the social courte sies. The term is "juvenile delin quency." By the same token, children who have been taught respect for the rights of others, and have learned self-respect through initiative and achievement, are more apt to enter adulthood better prepared to en rich and enjoy their own lives and to help stem the tide of collec tivism sweeping our country. Most of us will quietly continue to try to teach ourselves and our children to understand freedom, to search after knowledge and wis dom, to. love our Creator, to re spect all men - and ourselves; to attempt to improve ourselves at all times, and to take humble pride in creative accomplishment. We will try to teach our children and ourselves that freedom must be earned, and guarded carefully; that it is a privilege which carries with it a real and continuous re sponsibility.

We will try to remember that these are learned concepts - not instinctive knowledge; that espe cially in this socialized society in which we live it is necessary to teach these concepts, deliberately and carefully, if we hope to pre pare our children to face adult situations and problems in a capa ble and responsible manner. And so, in our family, as an aid to learning, we each carry a small coin. One side says FREEDOM. One side says RESPONSIBILITY. We call it the coin of freedom. ~ Jr 7 hat's the DiDerence? IF IT IS WRONG for a .politician to buy Yotes with his own money, what makes him a great humanitarian to be backed by the churches when he buys millions of Yotes with other people's money? Is bribery in the one case right and the other wrong? If so, what makes it so? THE REV. KENNETH W. SOLLITT, Four Foundations of Freedom SUPPOSEthat an entrepreneur with a sense of scenic beauty builds a million-dollar motel on the down stream side of a dam that harness es a wild river for the needs of man. Shall the dam's owners, by reason of that motel, henceforth claim credit for $1 million of an nual flood damage prevention, and thereby justify further investment in the dam?

The Tennessee Valley Author ity seems to .figure that way. From the Report of the Chief Engineer for 1963 we find that "at June 30, 1963, the estimated cumulative benefits from flood reg ulation of the Tennessee River system amounted to $461 million. The total TVA investment allocat ed to flood control was $184.8 mil lion, and the cumulative expense of the flood control program was $53.1 million." (p. 90) The annual flood damage figure is calculated with the help of an appraisal curve that shows the recorded floods and the economic damage they would do if they oc curred today without regulation by TV A dams. Every few years the curve is lifted to reflect new construction and higher values. Thus, the curve informs us that, according to 1961 values and state of development, damages averted in fiscal year 1963 amounted to Dr. Sennholz is head of the Department of Economics, Grove City College, Pennsylvania.

56 some $113 million at Chattanooga and other locations at the Valley and to $4 million along the lower Ohio and Mississippi Rivers. Thus, multibillion -dollar spending by the Federal government is "justi fied." The 1963 edition of Facts about TVA Operations further reveals that "the Federal government is sole proprietor of an electric sys tem which at the end of the fiscal year 1962 had a net worth of $1.8 billion, well over half a billion more than the $1.2 billion Treas ury investment in the system." (p. 2) The adj oining income statement reveals a net income of $56.2 million for 1962, and $51.6 million for 1961. Let us assume that this net in come figure is correct, although the statistical and bookkeeping procedures cast grave doubt on its reliability. Every student of accounting and every investor knows that the capitalized value HANS F. SENNHOLZ of a company with $56.2 million net income usually is less than $1 billion. Even with an assumed yield as low as 6 per cent, the market value of the TVA power system would be only $937 million.

Yet, bear in mind that TVA's to tal investment for all programs amounts to $2,581 million, includ ing a "non power investment" of $652 million. (p. 2) A bit later in the same report we find that "in the Tennessee Valley the operating costs per kil owatt-hour for producing, trans mitting, and distributing electri city are about half the average for the Nation's private utilities. These costs aTe unaffected by taxes and inteTest - factors some times given as the reason why rates are low in the Tennessee Valley." (p. 5, italics added) The preceding page, however, had seemed to say the very op posite in enumerating the TVA benefits to the Federal government: "Despite the fact that most of the power systems in the Ten nessee Valley region are exempt from Federal income taxes, the to tal financial benefits the Federal government receives from power operations are probably greater in this area than any other. Nearly half of all the power TVA sells goes to agencies of the Federal government, primarily the atomic energy plants at Oak Ridge and at Paducah. TVA's low rates, and the exemption of these Federal power sales from taxation by the states and counties of this region, result in large savings to the gov ernment and to taxpayers in all parts of the Nation who support these agencies." (p. 4) Taxes and Costs But the main reason for TVA's low operating costs, we are told, is yet another: the wisdom of its managers to charge low rates which in turn reduce costs! Here is the explanation by TVA's Di rector of Information: "The re gion does, of course, have low cost hydroelectric power. And large amounts of coal in or near the area. But more important are the economies that TVA and the distributors accomplish through the mass production that is achieved by giving primary con cern and constant attention to keeping rates as low as possible to 57 58 THE FREEMAN May encourage the widest and most abundant use of electricity. It is generally accepted that low costs can produce low rates. The oppo site also is true: low rates can produce low costs." (p. 5) There follows a table of com parison of TVA costs with inves tor-owned utilities. In operation and distribution TVA costs are said to be 45 per cent of investor owned utilities; in transmission and distribution, 35 per cent; in collection and customers account ing, 30 per cent; sales and demon stration, 25 per cent; administra tion overhead, 30 per cent; and finally, depreciation, 70 per cent.

Altogether, TVA claims to oper ate at 45 per cent of the costs of investor-owned utilities. To discover what accounts for this amazing comparison, we must understand the TVA method of cost allocation. TVA announces construction of "multiple-use dams" and then charges 22 per cent of the construction costs and 27 per cent of its common costs to "navigation," 14 per cent of con struction and 31 per cent of over head to "flood control," and only 64 per cent and 42 per cent re spectively to "electric power." (p. 10) Investor-owned companies, how ever, have no way to remove mil lions of dollars from cost account ing. They build dams whose purpose is flood control, and yet every penny spent constitutes power cost. "A Competitive Challenge" This competitive challenge to individual enterprise is empha sized throughout the pages of Facts about TVA Operations. The following passage is indicative: "The effects of competition by comparison are apparent beyond the limits of the Valley region.

Adjacent utility companies found that rate reductions which they initiated because of TVA's influ ence helped to bring rapid in creases in the home use of elec tricity. The closer private utilities are to the Valley area the lower their residential rates tend to be. Similarly, rural electric coopera tives pay lower wholesale rates for electric power the closer they are to TVA and to the most near ly comparable other area, the Pacific Northwest. Federal Power Commission figures show that the private utilities have been helped, not hurt, financially by low-rate policies. The common stock earn ings of all the large privately owned utilities in the U. S. multi plied about 4 times in the years 1937 to 1960; in the same period, nine large private companies ad joining the TVA area multiplied their common stock earnings more than 10 times." (p.7) 1965 TVA REPORTS 59 The truth is that in recent years most privately-owned utili ties have reduced their rates be cause of improved technology and rising productivity. Even in states where coal, oil, or gas have re mained the most economical fuel, electricity has become an effective competitor. And it should not be surprising that despite such rate reductions, most utilities now show higher earnings than pre vailed in the depression. years of the late thirties. Yet, TVA would take all the credit!

Perhaps the most enlightening of all the Facts about TVA Opera tions is to be found in. the con cluding passages. While the report claims exceptionally economical operation in all TV A endeavors and thus "justifies" the Federal expenditures through extraordin ary returns and benefits, it coneludes that the Tennessee Valley is entitled to this expenditure in the distribution of Federal funds. Why should New York, Pitts burgh, California's Central Valley enjoy Federal funds, and the Ten nessee Valley be without them? In fact, the Tennessee Valley is said to have received less than its proper share in the redistribution of wealth and income. "Is it fair," the report asks rhetorically, "that such states as Texas, Oklahoma, and Louisiana should enjoy low cost gas and oil, simply because their states are richly endowed with such resources, while people farther away must pay more dear ly?" (p. 14) This, presumably, is why the people of the Tennessee Valley deserve TVA. The princi ple of sharing-the-wealth through redistribution could not be stated more succinctly. ~ Socialized People IN THE FINAL ANALYSIS, this study concerns persons, and not things. When we speak of the socialization of the electrical industry, we are, of course, referring to persons. Electricity doesn't care who or what produces it. In a like manner, when we speak of controlled production or controlled prices, we really mean controlled persons. Under a controlled economy, it is persons - not things - who are told by government what they must or must not do. This coercion of individual citizens is the vital issue. And in the long run the individual consumers of electricity have just as much at stake in this matter as do the private producers of electricity.

DEAN RUSSELL, The TVA Idea A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN a IF READERS will pardon the pun, Paul Goodman, the author of Com pulsory Mis-Education (Horizon Press, $3.95), is a really good man. But, as we shall see, he mis takes his natural friends for ene mies, and he ends up by becoming lost between the two big camps that are contending for the con trol of the American educational system. Being a man who can use his eyes and ears, he knows that the country is not getting its money's worth for the fantastic sums that are being spent on education. Great funds go to support scien tific research, but in the past thirty years the average number of hours per week spent in class room work by science teachers has dropped from nineteen to six. In huge educational factories .such as the University of California at Berkeley a common complaint is that a professor never really sees a student's paper; it is usually 60 read by a paid student reader who mayor may not know what he is about. Yet a retired California English professor, George Stew art, who is a fine novelist and his torian, insists that the ratio of teachers to students at Berkeley is not bad; students can get coun sel and aid if they really ask for it. We must look elsewhere for the source of what is called the aliena tion of the student from the fac ulty. Hugh Kenner, who teaches at another branch of the Univer sity of California, the one at sun drenched Santa Barbara, says the trouble with American education is that our schools and colleges are filled with boys and girls who should not be forced to hang on in hopes of getting degrees. They are there merely to mark time, and they keep real students from learning. In short, we need more dropouts, not fewer.

Paul Goodman agrees with Hugh Kenner that a "reasonable 1965 A BETTER ANSWER NEEDED 61 social policy would be not to have these youth in school, certainly not in high school, but to educate them otherwise and provide op portunity for a decent future in some other way." The practical argument against such a social policy is, of course, that you have to have a degree - even an ad vanced degree - to hold down any sort of good job. Paul Goodman doesn't doubt that this is true, but he says it is a ridiculous state of affairs that is maintained by the stupidity of those in charge of hiring for big corporations. Nat urally, he says, if a corporation insists that a youngster have a diploma, the correlation of school ing and employment is self-prov ing. Actually, the spread of auto mation means that most· jobs are of such a nature that they can be done by people with no long back ground of schooling. The average job in General Motors' most auto mated plant, he says, requires only three weeks of training for peo ple who have had no education whatever. And in the Army and Navy, complicated skills, such as radar operation, are taught on the job, sometimes to virtual illit erates.

A Problem of Degrees Why, then, the rage to keep Johnny in school until he is twen ty-two, or even twenty-five? Paul Goodman suspects that it is be cause the unions don't want J ohn ny coming on the labor market as a teenager. He is obviously right about the unions' desire to limit the available work force, but this is not the primary reason for our national insistence on years and years of formal schooling. Mr. Goodman is closer to the mark in another context, when he talks about the "mass superstition" cul tivated by our "school-monks," by which he means our "administra tors, professors, academic sociolo gists, and licensees with diplomas who have proliferated into an in vested intellectual class worse than anything since the time of Henry the Eighth." It is the "school monks'; who have set themselves up as "indispensable mentors for creativity, business-practice, so cial work, mental hygiene, genuine literacy - name it, and there are credits for it leading to a degree."

Beca use of our insistence on educational scaffolding and trap pings and the parchment evidences of having spent time in school, the self-made man is becoming an im possibility in America simply be cause he is an "out" before he can even make a start. Mr Goodman recalls the time when the ninety four per cent of Americans who did not finish high school were our future farmers, shopkeepers, millionaires, politicians, inventors, 62 THE FREEMAN May and journalists. He speaks of "two master architects" who were born around 1900. One quit school at the eighth grade to leave home and support himself in an archi tect's office as an office boy. The other left school at age thirteen to support his mother by working for a stone cutter. "Would these two have become architects at all," so Mr. Goodman asks, "if they were continually interrupted by high school Chemistry, Freshman Composition, Psychology 106, at a time when they didn't care about such things?" Then he adds, "But they have learned them since, nevertheless.' , "Shoot 'I You Must . .."

This sort of plain speaking is iconoclasm with a vengeance. But Paul Goodman isn't really advo cating a return to the old world that did not require a degree be fore a boy could get a job as a draftsman in an architect's office. In the old world children got solid drilling in such things as phonetics in the early grades, they read literature that provided them with some background of history ("Paul Revere's Ride," "Barbara Frietchie," and so forth), and they were permitted to work at a young age without having the policemen of the child labor ·and minimum wage laws descend upon them. Paul Goodman, as a believer in the doctrines of John Dewey, denounces the "Rickovers and Max Raffertys" who would restore both discipline and intellectual nourish ment to the first years of school ing. This doesn't make much sense, for Max Rafferty is one of our most effective enemies of the very "life adjustment" fetish that Paul Goodman himself deplores for its accent on "conformity." It also ignores the probability that there was a definite correlation between the type of education that one got in the grammar grades in pre Deweyan times and the great ef florescence of self-made men that, among other things, produced Paul Goodman's two favorite ar chitects.

Learning by Doing But Doing What? The great paradox is that the nineteenth century, which really believed in "learning by doing," got along without John Dewey (or John Dewey's far more benighted successors), while the twentieth century, which has gone in heav ily for "progressive" education, is producing students who can't "do" a coherent outline in a fresh man college course. The old world was better: concentration on ba sics for a few years, then the "learning by doing" that went with actual experience in the world of affairs.

1965 A BETTER ANSWER NEEDED 63 Mr. Goodman wants to simu late that old world of affairs by big spending in the "public sec tor," which would provide "educa tional occasions" for youths who could be put to work "on town improvement, community service, or rural rehabilitation." Somehow one doubts that "public sector" experiences would help very much. Mr. Goodman himself mentions the fact that "the professor-ridden Peace Corps needs $15,000 to get a single youngster in the field for a year, whereas the dedicated Qua kers achieve almost the same end for $3,500." And "again, when $13 millions are allotted for a lo cal Mobilization forY outh pro gram, it is soon found that nearly $12 million have gone for sociol ogists doing 'research,' diplomat ed social workers, the N.Y. school system, and administrators, but only one million to field workers and the youths themselves." Paul Goodman seems to be caught in a major contradiction here. He hates what the exaltation of the "official" has done to our world. Yet his cure is to hand over more money to the state, which is always "official," to provide op portunities for experience and spontaneity to youths in some iII defined outside-of-school sch.ool ing. The contradiction mars what is otherwise a most stimulating book. + • A THEOLOGICAL INTERPRE TATION OF AMERICAN HIS TORY by C. Gregg Singer, Phila delphia: Presbyterian and Re formed Publishing Co., $4.95, 305 pp.

Reviewed by Robert M. Thornton SOME who read this book may not find Dr. Singer's theology entirely acceptable, but it would be hard to disagree with his statement that "it is impossible to understand completely the history of a nation apart from the philosophies and the theologies which lie at the heart of its intellectual life." These constitute the basic prem ises on which people act. Dr. Singer contends that the history of this country since its early days reflects the drastic changes in its prevailing world view from Puritanism through Deism, Transcendentalism, and Unitarianism, to Social Darwin ism and the Social Gospel. Man, not God, comes to occupy the cen ter of the universe, so it follows that man, now the master of his fate, can create a utopia here and now. The Kingdom of Heaven, brought to earth, becomes the goal of politics, and there is a growing acceptance of the belief that "gov ernment is responsible to people rather than to God and that law is little more than the embodi ment or expression of the will of the majority." Hence man, for64 THE FREEMAN May getting he is a creature of God, lets himself become a minion of the state. Statesmanship neglects principles and becomes the art of compromise or the art of the pos sible.

Dr. Singer's book is an urgent warning to check our premises lest the political and economic order that has made this country free and prosperous crumble to the ground because its theological and philosophical foundations have been eaten away. ~ The Process of Inflation As descr'ibed by Secretary of Treasury, Robert B. Anderson, April 4, 1959 Now SUPPOSE I wanted to write checks of $100 million starting tomorrow morning, but the Treasury was out of money. If I called up a bank and said, "Will you loan me $100 million at 31J2 per cent for six months if I send you over a note to that effect?" the banker would probably say, "Yes, I will." Where would he get the $100 million with which to credit the amount of the United States Treasury? Would he take it from the account of someone else? No, certainly not. He would merely create that much money, subject to reserve requirements, by crediting our account in that sum and accepting the government's note as an asset.

When I had finished writing checks for $100 million, the operation would have added that sum to the money supply. Now certainly that approaches the same degree of monetization (creating money) as if I had called down to the Bureau of Engraving and Printing and said, "Please print me up $100 million worth of greenbacks which I can payout tomorrow."

William Henry Chamber/in 11 D. M. Westerho/m 18 Harold O. J. Brown 20 Richard T. Scott 26 Wellington Long 30 Clarence B. Carson 38 John C. Merrill 52 Melvin D. Barger 56 JUNE 1965 The Gold Problem . The Chance to Escape Musical Forced Feeding People Are Not Goldfish • Business Implications of the "New Morality" . Inequality - a Blessing! "People's Shares" in Volkswagen . The Flight from Reality 9. The New Reality . Danger to a Free Press . More Lessons of Lost Weekends . Books: Forgotten Prophet • Ludwig von Mises Donald Walter Shorock John Chamberlain 3 9 61 I OU'S'.NDI"CI"V."'AtI~ FDR COAST FEDERAL SAVERS FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Current rate 4.95 % per year, compounded semi-annually. MAIN OFFICE 9th & Hill. Los Angeles SAVE·BY·MAIL - We pay postage.

MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California 5-56A-l "", Dr. Mises explains how the gold standard makes the determination of money's purchasing power independ ent of the ambitions and machinations of political rulers and pressure groups. ............ p.3 "", Prison records would indicate that the will to be free diminishes from the moment freedom is lost p. 9 "" The departure from order, and har mony in so many areas of human affairs also may be noted, says this critic, in the raucous dissonance sand wiched into symphony concerts ............ p. 11 "", Life in a goldfish bowl is hardly the environment conducive to the growth and emergence of the best of which man is capable p. 18 VI' A minister sees in the "New Moral ity" the loss of integrity and character upon which the freedom of the market place and all other aspects of freedom depend p. 20 VI' The fact that we are unequal in our ambitions and abilities may be the difference to which we owe our lives ............ p. 26 V" An experienced reporter explains how the West German government managed to denationalize the Volks wagen industry and what difference it maikes to the people p. 30 "", The "New Reality," explains Dr.

Carson, insists that change is good, per se, that society, rather than the individual, is the living entity .....p. 38 "" A tolerance for differences of opin ion is the essential requirement for freedom of the press p. 52 V" Mel Barger draws from personal ob servation the conclusion that men of little faith and self-respect stand little chance to be free p. 56 "", John Chamberlain delights in a new paperbacked collection of for gotten essays by William Graham Sumner p. 61 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

JUNE 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No. 6 President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-H udson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except "The Flight from Reality." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

LUDWIG VON MISES THE PROBLEM WHY GOLD? Because, as conditions are today and for the time that can be fore seen today, the gold standard alone makes the determination of mon ey's purchasing power independent of the ambitions and machinations of dictators, political parties, and pressure groups. The gold stand ard alone is what the nineteenth century liberals, the champions of representative governmen t,ci viI liberties, and prosperity for all, called sound money. The eminence and usefulness of the gold standard consists in the fact that it makes the supply of money depend on the profitability Dr. Mises is Visiting Professor of Economics at New York University and part-time ad viser, consultant, and staff member of The Foundation for Economic Education. Further discussion of the gold problem may be found in his book, The Theory of Money and Credit (Yale University Press, 1953) also available from The Foundation.

of mInIng gold, and thus checks large-scale inflationary ventures on the part of governments. The gold standard did not fail. The governments sabotaged it and still go on sabotaging it. But no gov ernment is powerful enough to de stroy the gold standard as long as the market economy is not entirely suppressed by the establishment of socialism in every part of the world. Governments believe that it is the gold standard's fault alone that their inflationary schemes not only fail to produce the expected benefits but unavoidably bring about conditions that also in the eyes of the rulers themselves and of all. of the people are considered as much worse than the alleged or real evils they were designed to eliminate. But for the gold stand ard, they are told by hosts of 3 4 THE FREEMAN June pseudo-economists, they could make everybody perfectly prosper ous. Let us test the three doctrines advanced for the support of this fable of government omnipotence.

The Santa Claus Power of the State The state is God, said Ferdi nand Lassalle, the founder of the German socialist movement. As such the state has the power to "create" unlimited quantities of money and thus to make everybody happy. Irreverent people branded such a policy of "creating" money as inflation. The official terminol ogy calls it nowadays "deficit spending." But whatever the name used in dealing with this phenomenon may be, its meaning is obvious. The government increases the quantity of money in circulation. Then a greater quantity of money "chases," as a rather silly but pop ular way of talking about these problems says, a quantity of goods and services that has not in creased. The government's action did not add anything to the avail able amount of useful things and services. It merely makes the prices paid for them soar. If the government wants to raise the income of some people e.g., government employees - it has to confiscate by taxation a part of some other people's incomes and to distribute the amount collected among its em ployees. Then the taxpayers are forced to restrict their spending, while the recipients of the higher salaries are increasing their spending to the same amount.

There does not result a, conspicu ous change in the purchasing pow er of the monetary unit. But if the government provides the money it wants for the pay ment of higher salaries by print ing it, the new money in the hands of the beneficiaries of the higher salaries constitutes on the market an additional demand for the not increased quantity of goods and services offered for sale. The un avoidable result is a general tend ency of prices to rise. Any attempts the governments and their propaganda offices make to conceal this concatenation of events are vain. Deficit spending means increasing the quantity of money in circulation. That the of ficial terminology avoids calling it inflation, is of no avail whatever. The government and its chiefs do not have the powers of the mythical Santa Claus. They can not spend but by taking out of the pockets of some people. The IICheap Moneyll Fallacy Interest is the difference in the valuation of present goods and fu ture goods. It is the discount in 1965 THE GOLD PROBLEM 5 the valuation of future goods as against that of present goods. It cannot be "abolished" as long as people prefer an apple available today to an apple available only in a year, in ten years, or in a hun dred years. The height of the orig inary rate of interest, which is the main component of the market rate of interest as determined on the loan market, reflects the dif ference in people's valuation of present and future satisfaction of needs. The disappearance of in terest, that is an interest rate· of zero, would mean that people do not care a whit about satisfying any of their present wants and are exclusively intent upon satisfying their future wants, their wants of the later years, decades, and cen turies to come. People would only save and invest and never con sume. On the other hand, if peo ple were to stop making any pro vision for the future, be it even the future of the tomorrow, would not save at all and consume all capital goods accum ula ted by pre vious generations, the rate of in terest would rise beyond any limits.

It is thus obvious that the height of the market rate of in terest ultimately does not depend on the whims, fancies, and the pecuniary interests of the person nel operating the government ap paratus of coercion and compulsion, the much referred to "public sector" of the economy. But the governmen t has the power to push the Federal Reserve System and the banks subject to it into a pol icy of cheap money. Then the banks are expanding credit. Un derbidding the rate of interest as established on the not-manipulated loan market, they offer additional credit created out of nothing. Thus they are intentionally falsifying the businessmen's estimation of market conditions. Although the supply of capital goods (that can only be increased by additional saving) remained unchanged, the illusion of a richer supply of capi tal is conjured up. Business is in duced to embark upon projects which a sober calculation, not mis led by the cheap-money ventures, would have disclosed as malinvest ments. The additional quantities of credit inundating the market make prices and wages soar. An artificial boom, a boom built en tirely upon. the illusions of easy money, develops. But such a boom cannot last. Sooner or later it must become clear that, under the illu sions created by the credit expan sion, business has embarked upon projects for the execution of which it is not rich enough. When this malinvestment becomes visible, the boom collapses. The depression that follows is the process of liq uidating the errors committed in 6 THE FREEMAN June the ecstasies of the artificial boom, is the return to calm reasoning and a reasonable conduct of af fairs within the limits of the available supply of capital goods.

It is a painful process, but it is a process of recovery. Credit expansion is not a nos trum to make people happy. The boom it engenders must inevitably lead to a debacle. If it were possible to substitute credit expansion (cheap money) for the accumulation of capital goods by saving, there would not be any poverty in the world. The economically backward nations would not have to complain about the insufficiency of their capital equipment. All they would have to do for the improvement of their conditions would be to expand credit more and more. No "for eign aid" schemes would have emerged. In granting foreign aid to the backward nations, the American government implicitly acknowledges that credit expan sion is no substitute for capital accumulation through saving. The failure of Minimum Wage Legislation and of Labor Unionism The height of wage rates is de termined by the consumers' ap praisal of the value the worker's labor adds to the value of thear ticle available for sale. As the im mense majority of the consumers are themselves earners of wages and salaries, this means that the determination of the compensa tion for work and services ren dered is made by the same kind of people who are recei ving these wages and salaries. The fat earn ings of the movie star and the boxing champion are provided by the welders, street sweepers, and charwomen who attend the per formances and matches.

An entrepreneur who would try to pay a hired man less than the amount this man's work adds to the value of the product would be priced out of the labor market by the competition of other entrepre neurs eager to earn money. On the other hand, no entrepreneur can pay more to his helpers than the amount the consumers. are pre pared to refund to him in buying the product. If he were to pay higher wages, he would suffer loss es and would be ejected from the ranks of the businessmen. Governments decreeing mini mum wagelaws above the level of the market wage rates restrict the number of hands that can find jobs. They are producing unem ployment of a part of the labor force. The same is true for what is euphemistically called "collec tive bargaining." The only differ ence between the two methods concerns the apparatus enforcing the minimum wage. The govern1965 THE GOLD PROBLEM 7 ment enforces its orders in re sorting to policemen and prison guards. The unions "picket." They and their members and. officials have acquired the power and the right to commit wrongs to person and property, to deprive individ uals of the means of earning a livelihood, and to commit many other acts which no one. can do with impunity.! Nobody is today in a position to disobey an order issued by a union. To the em ployers no other choice is left than either to surrender to the dictates of the unions or to go out of business.

But governments and unions are impotent against economic law. Violence can prevent the em ployers from hiring help at po tential market rates, but it can not force them to employ all those who are anxious to get jobs. The result of the governments' and the unions' meddling with the height of wage rates cannot be anything else than an incessant increase in the number of unemployed. To prevent this outcome the gov ernment-manipulated banking sys tems of all Western nations are resorting to inflation. Increasing the quantity of money in circu lation and thereby lowering the purchasing power of the monetary 1 Cf. Roscoe Pound, Legal Immunities of Labor Unions, Washington, D. C., 1957, p. 21. unit, they are cutting down the oversized payrolls to a height con sonant with the state of the mar ket. This is today called Keynesian full-employment policy. It is in fact a method to perpetuate by continued inflation the futile at tempts of governments and labor unions to meddle with the condi tions of the labor market. As soon as the progress of inflation has adjusted wage rates so far as to avoid a spread of unemployment, government and unions resume with renewed zeal their ventures to raise wage rates above the level at which every job-seeker can find a job.

The experience of this age of the New Deal, the Fair Deal, the New Frontier, and the Great So ciety confirms the fundamental thesis of British nineteenth-cen tury liberalism: there is but one means to improve the material conditions of all of the wage earn ers, viz., to increase the per-head quota of capital invested. This re sult can only be brought about by additional saving and capital accumulation, never by govern ment decrees, labor union violence and intimidation, and inflation. The foes of the gold standard are wrong also in this regard. u. S. Gold Holdings Shrinking In many parts of the earth an increasing number of people reaI8 THE FREEMAN June ize that the U. S. and most of the other nations are firmly com mitted to a policy of progressing inflation. They have learned enough from the experience of the last decades to conclude that on ac count of these inflationary policies the ounce of gold will one day be come more expensive in terms both of the currency of the U. S.

and of their own country. They are alarmed and would like to avoid being victimized by this out come. Americans are forbidden to own gold coins and gold ingots. Their attempts to protect their financial assets consist in the methods that the Germans in the most spectacu lar inflation that history knows called "Flucht in die Sachwerte." They are investing in common stock and real estate and prefer to have debts payable in legal tender money to having claims payable in it. Even in the countries in which people are free to buy gold there are up to now no conspicuous pur chases of gold on the part of financially potent individuals and institutions. Up to the moment at which French agencies began to buy gold, the buyers of gold were mostly people with modest in comes anxious to keep a few gold coins as a reserve for rainy days. It was the purchases on the part of such people that via the London gold market reduced the gold hold ings of the United States.

There is only one method avail able to prevent a farther reduc tion of the American gold reserve: radical abandonment of deficit spending as well as of any kind of "easy money" policy. ~ Multiplying the Error IF IT BE ADMITTED that a man, possessing absolute power, may misuse that power by wronging his adversaries, why should a majority not be liable to the same reproach? Men are not apt to change their characters by agglomeration; nor does their patience in the presence of obstacles increase with the con sciousness of their strength. And for these reasons I can never willingly invest any number of my fellow creatures with that unlimited authority which I should refuse to anyone of them. ALEXIS DE TOCQUEVILLE, Democracy in America THE C HAN DONALD WALTER SHOROCK WHEN A PERSON leaves the normal environment of our culture to serve a prison sentence, he ex periences many changes. Impor tant among these is the exchange of freedom for security. The pris oner no longer has a wide range of alternatives in his actions, but is limited to a certain extent in what he may do. He· is less free, but more secure, being reasonably certain of what is coming next.

The prisoner is a classic example of the man who receives security through the planning of others. The involuntary security, being contrary to the prisoner's desire for freedom, is met by various re actions, including the attempt to escape. The Bureau of Prisons of the United States Department of Justice has tabulated the attempts to escape from the Seagoville (Texas) Correctional Institution. A definite pattern can be seen in Mr. Shorock is a speech major in his junior year at Ottawa University in Kansas. the 102 escape attempts between June 25, 1945 and January 1,1960. Of these attempts, 16 were made by inmates who had served less than 30 days; 24 of the attempts were by inmates in the second month of a sentence; 20 were in their third month; 11 in their fourth; and 5 each in the fifth and sixth. In contrast with those 81 attempts in the first six months, only 14 were made in the second six months of sentences. And only seven attempts were made after the first year.

The urge to escape appears to decline ~ignificantly after the sec ond month. The exchange of free dom for security, while undesir able and rejected at first, becomes tolera ted. As can be seen in the cases of prisoners who purposely try to be recommitted to prison Iif e, the exchange can become ac cepted. When you stop to think of it, the systems offered by the various 9 10 THE FREEMAN June types of government intervention ists (be they fascist, communist, welfare-statist, or what have you) all make much the same offer: the exchange of freedom for security. Under any interventionist pro gram, you give up some alter natives in your choice of actions. In exchange, you are promised security. Government interven tionism is like prison. If we carry the analogy further, we see that there is a lesson to be learned from the declining pro pensity to escape. The loss of free dom eventually becomes tolerated and even accepted. The likelihood that people will want to try to escape from interventionism de clines as time goes by.

Persons with no desire for self control, anxious for the security of lives planned and controlled for them by others, may view with patient resignation the prevailing trend away from freedom in the United States and in most other lands. Things are going their way. But anyone who views with alarm the growing intervention ism will want to plan his escape soon. By tomorrow, or next month, or next year, he might have lost the will - and the capacity - to be free. The escape route, the path to freedom, lies in self-help, self control, self-responsibility, self reliance, self-improvement. And slow starters are unlikely to make it. ~ An Empty Title THE SAME LIBERAL CONSTRUCTION which is required for the pro tection of life and liberty, in all particulars in which life and liberty are of any value, should be applied to the protection of private property. If the legislature of a State, under pretense of providing for the public good, or for any other reason, can determine, against the consent of the owner, the uses to which private property shall be devoted, or the prices which the owner shall receive for its uses, it can deprive him of the property as completely as by a special act for its confiscation or destruction.

If, for instance, the owner is prohibited from using his building for the purposes for which it was designed, it is of little con sequence that he is permitted to retain the title and possession. JUSTICE STEPHEN J. FIELD'S dissenting opinion in Munn vs. Illinois, 94 U.S., 113, (1877) MUSICAL FORCED FEEDING WILLIAM HENRY CHAMBERLIN A VIOLATION of cultural freedom, of the right to reject as well as accept, is the sandwich type pro gram which has become standard for most American symphony or chestras. The sandwich takes the form of beginning and ending the concert with works of general ap peal by composers of the classical and romantic schools, for example, Beethoven, Mozart, Bach, Brahms, Wagner, Tchaikovsky. The sand wich effect is produced by inject ing between these acceptable com positions some outpourings of more or less raucous dissonance. The only way in which musical Though best known for his skilled observation and reporting of economic and political condi tions at home and abroad, Mr. Chamberlin also writes knowingly as a patron of music and the arts.

conservatives can avoid an un desired assault on their eardrums is to walk out in the middle of the concert, returning for the last work. They cannot dodge the mus ical forced feeding by arriving late or leaving early. The music commentator, Henry Pleasants - whose little book, ap propriately entitled The Agony of Modern Music, is a precious pos session for lay music-lovers who do not like predominant trends in modern music but lack the tech nical training and knowledge to know exactly why - hits off this sandwich method of programing very well. Quoting the modern composer, Honegger, as authority for the statement, "The contem porary composer is a gate-crasher, 11 12 THE FREEMAN June trying to push his way into a com pany to which he has not been invited," Pleasants continues as follows: "This penetrates to the essence of the matter. The familiar spec tacle of the contemporary work sandwiched between Beethoven and Brahms exposes the gate crasher in full silhouette. . . . It also shows the conductor's part in the conspiracy. There is Beetho ven on one side to make sure that the audience comes in. There is Brahms on the other side to make sure that it does not get out be fore the gate-crasher has been heard."

Twelve-Tonal and Atonal In order to understand why this musical forced feeding is an in fringement on the right of in dividual choice one should con sider, first, the predominant char acteristics of modern music and, second, the distinction between hearing music, on one side, and reading literature or viewing art, on the other. Early in this century the Aus trian composer, Arnold Schoen berg, discarded previous rules of harmony and melody by writing music in the so-called twelve-tonal scale. From this innovation many other modern composers have pro ceeded to complete atonality. I am not qualified to give a detailed musical analysis of the implica tions of these changes. But the effect is to take away from music the very characteristics .which historically have provided most of its emotional and aesthetic appeal: clear and precise rhythm, ordered continuity, and the golden gift of melody.

At best, twelve-tonal and atonal music is dry and austere, suggest ing an attempt to solve a difficult mathematical problem, not an ap peal to the mind and heart. At worst, it produces an unbelievable chaos of clashing, discordant sounds. The Boston Symphony Orchestra - the one with which I am most familiar because of my place of residence - in an evil hour gave a "first performance" of a symphony by an American composer named David Diamond, which produced on most of the audience the effect the bullock feels from a stunning blow of the axe. To paraphrase Shakespeare, it was full of sound and fury, signifying nothing. And, as the brass sounded ever shriller dis cords, one felt that the situation called for two Harvard cheer leaders, one on each side of con ductor Charles Munch, shouting at the tops of their voices: "Hit 'em again, Hit 'em again. Harder! Harder !" Twelve-tonal and atonal music bears no 'relation whatever to the 1965 MUSICAL FORCED FEEDING 13 great musical tradition, classical and romantic. Its exponents pre fer discords to chords, dissonance to melody, cacophony to harmony .

If it is argued that dissonance is sometimes found in the· works of premodern composers, Henry Pleasants has an appropriate an swer: "The difference between dis sonance then and dissonance now is that in Monteverdi, as also in Mozart and even in Wagner, the listener· is excited by the clash and quieted and rewarded by its resolution in what the listener feels to be a consonance. In mod ern music there is no resolution. Without harmonic order there are no tonal safe havens. Both compo ser and listener are left as help less flotsam on a sea of tonal discomfort." Of course, music, like other creative arts, is subject to the processes of evolution. And the composers of the eighteenth and nineteenth centuries are individ ual personalities with distinctive styles. Yet, as I know from per sonal experience, a music appre ciation broad enough to include composers of such differing types as Bach and Tchaikovsky, Wagner and Brahms, can reject, as intel lectually unintelligible and aes thetically repulsive, the works composed on the basis of twelve tonalism and atonalism.

Composer versus Audience Because they have chosen such difficult and uncongenial forms of expression, modern composers have created a tremendous rift be tween themselves and the lay au dience which is essential if music is to survive and flourish. So far as I know, there are no Gallup Polls on the subject of musical preferences. But there are enough ascertainable items of evidence to back up this statement, as the fol lowing list will show. 1. No opera of wide popular ap peal has been composed during the last fifty years, as a glance at the Metropolitan Opera repertory will show. With perhaps one or two exceptions (and no great box-of fice enthusiasm for these) the list of operas presented in the 1960's could have been presented in the 1910's. There is no twentieth cen tury Wagner or Verdi and this is more understandable because mod ern music, by its nature, is al most unsingable.

2. A New York radio station recently polled its listeners on their favorite composer and got the follo,ving result, as regards the first five preferences: Beetho ven, Mozart, Bach, Brahms, Tchaikovsky. Not an atonalist in the lot. 3. Every year the Boston Sym phony Orchestra gives a concert for the benefit of the Pension 14 THE FREEMAN June Fund of its members. Members of its audience who dQ not admire discordant music wish that every program might be chosen on the basis that dictates the selection of the Pension Fund concert pro gram, which is regularly domin ated by Beethoven, Brahms, Wag ner, and similar composers. If the probable financial consequences for the musicians would not be so disastrous, it would be interesting to see how many people would vol untarily pay higher than normal prices to listen to the works of Bartok, Stravinsky, Berg, Webern, and other exponents of discord.

The directors are not likely to risk the experiment. 4. Consider the programs of such eminent pianists as Artur Rubinstein, Rudolf Serkin, Van Cliburn, and other artists of like caliber. At least 90, perhaps 95 per cent of their selections were composed before 1900. The obvious inference to be drawn from this unmistakable fact is that pianists either do not consider contem porary works worth playing or know such works will have a re pelling effect on the audience. It is only the symphony orches tra, as a general rule, that engages in the musical forced feeding rep resented by the sandwich pro gram. And they are only able to do this because they have what is essentially a captive audience. With the wide growth of musical enjoyment and appreciation and the increase in the population, the concerts of every large orchestra are sold out by subscription in ad vance every season. A Vast Difference It may be argued that contem porary literature and art show off beat and "avant-garde" tendencies and that it is only natural that music should also seek new paths.

But this brings one to the point that there is an element of com pulsion in listening to symphonic music that does not exist in the case of literature and art. Suppose one doesn't believe in the po'pular equation: obscurity plus obscenity equals genius. One can simply ignore the books which are written on this principle. No one demands that one read Finne gan's Wake, The American Dream, and Tropic of Cancer as a condi tion for being allowed to read War and Peace, The Brothers Ka ramazov, and Vanity Fair. People who measure the impact of a novel by its number of four-letter words or intimate descriptions of sex relations can satisfy their taste. Those who have other stand ards can exercise their right of rejection. This same freedom of choice, of acceptance or rejection, applies in art. If one visits one of the famous 1965 MUSICAL FORCED FEEDING 15 European art galleries, the Uffizi or Pitti in Florence, the· Prado in Madrid, one doesn't face a jarring contrast between the works of Raphael and Michelangelo and Titian and Velasquez on one hand, and on the other the weird "ab stract" painting of the type easily imitated by a child or achimpan zee. Modern art is reasonably housed in separate. museums.

forced Integration But in music one enjoys no such freedom of choice. In music, alone among the arts, the pernicious dogma prevails that works of pro foundly different style and content must be "integrated," presented on the same program. The psycho logical effect of hearing, after a beautifully melodic symphony of Schubert or Schumann, some mod ern experimental work that sug gests a concrete mixer operating in high gear is jarring, to say the least. It is unfair to the listener of conservative musical .tastes. And it is entirely unnecessary. To dislike unmelodicmusic is not to be so arrogant or intolerant as to call for its suppression. All the musical conservative asks· is a kind of coexistence, a system of programing that would give the nonmelodic composers as much time and representation as the cond uctor may believe they de serve, .but not on the same programs as musical works con structed according to entirely dif ferent standards.

The writer recently had an op portunity to argue this case on a televised panel that also included Erich Leinsdorf, conductor of the Boston Symphony Orchestra, and Gunther Schuller, an American atonal composer. The reaction was surprisingly strong. I personally received scores .of letters, tele phone calls, greetings in public places from strangers, all favor able to my viewpoint. And on a subsequent television appearance Mr. Leinsdorf, although he did not agree with me, stated that his mail had also been strongly on the conservative side - one more proof of the gulf that yawns between the modern composer and his audience. Homogeneous programs, two or three all pre-Schoenberg, followed by one devoted to the newer ex perimental forms, seem the ob vious answer to the problem of how to take the curse of compul sory cacophony off symphony pro grams while giving full freedoln of expression to the nonmelodic schools of music. When some con ductor recognizes this truth and shapes his programs accordingly, hosts. of unwilling listeners who have put up with Bartok and Stravinsky and Bloch and Toch and Roy Harris and David Dia16 THE FREEMAN June mond and many others whose names are little known and will not be long remembered as the price of hearing the great classics and romantics will call him blessed. And the auditors who genuinely enjoy modern music - a much smaller number, one sus pects, than that of those who pre tend to enjoy it for fear of being considered "squares" or old fogies - could get their fill in concerts exclusively devoted to avant-garde compositions.

Appreciated by Their Contemporaries Two objections to this viewpoint should be fairly stated and frankly faced. First, there is the banal cliche - which, historically, is en tirely false - that truly great mu sic is never appreciated in its own time. The truth is, and can be verified by consultation of works on musical history and biography, that there was not a single com poser of the first rank who was not widely known and admired during his lifetime. The works of Haydn, Handel, Mozart, Beetho ven, Brahms, Schubert, Schumann, Chopin, Liszt, Verdi, and Berlioz were widely played and enthusi astically applauded, not after their death, but while they were alive. Chopin was the toast of Paris and of other musical capitals. The new performance of a Verdi opera was an occasion for Italian national celebration. Wagner faced more difficulties because of the scope of his operatic innovations and his exacting demands in staging. Yet, before he died, he was able to have a special opera house built accord ing to his specifications in Bay reuth, paid for by public subscrip tion, and to see the first of the festivals that still commemorate his works before packed audiences.

Is there any living composer who would be likely to receive such a tribute? The picture of the typical musi cal crea tive genius of the past starving in a garret and leaving a legacy of unpublished manuscripts for future generations to discover is unalloyed fiction. Henry Pleas ants notes that on the occasion of the first performance of Haydn's "The Creation" the Vienna police had to be mobilized to keep order among the crowds. And he asks whether one could imagine such an outpouring of enthusiasm at the first performance of an ora torio by Honegger or Stravinsky. The second argument for com pulsory cacophony, for musical forced feeding, is that modern composers like to have their works measured against those of the masters of the past. There would be validity in this argument if they were abiding by the same tra ditions and standards and trying to create music according to the 1965 MUSICAL FORCED FEEDING 17 same rules of composition. But this is definitely not the ease.

One could no more .compare David Diamond or Lukas Foss with Beethoven and Brahms than one could compare apples with oranges. It is not merely disparity of gifts; it is total difference of style and aim. The models of the atonalists are Schoenberg, Bartok, the later Stravinsky, Berg, Webern, surely not Beethoven, Mozart, Brahms, Wagner, and Tchaikovsky. It is against these models which they prefer that their works could most reasonably be measured. If homogeneous programs should become the rule, not the exception, three desirable results would be achieved: Musical conservatives would be spared the irritation and frustra tion of being placed under pres sure, through the "sandwich" type of program, to sit through works to which their reaction is aliena tion and rejection. A comparison of audience at tendance at the all-classical and all-atonal and twelve-tonal con certs would furnish an index of public appreciation of these two styles of composition. There is not much difficulty in foreseeing how this kind of plebiscite would come out.

Finally, music would be freed from its present invidious position as the only art where the right of rejecting what is unacceptable is denied, de facto if not de jure. The obvious motive of the mixed program is to coerce audiences in to listening to works which they would never attend of their free will and desire. Music that cannot stand on its own feet, on its intrinsic appeal in the market place of public taste and judgment, will not survive; and it does not deserve to survive. ~ .. . For His Own Good IN THE CONDUCT of human beings towards one another, it is necessary that general rules should for the most part be ob served, in order that people may know what they have to expect; but in each person's own concern, his individual spontaneity is entitled to free exercise. Considerations to aid his judgment, exhortations to strengthen his will, may be offered to him, even obtruded on him, by others; but he himself is the final judge. All errors which he is likely to commit against advice and warning, are far outweighed by the evil of allowing others to constrain him to what they deem his good .....

JOH N STU ART MILL. On Liberty (1859) DURING a recent hospitalization, some imaginative friends brought me a small bowl of goldfish. Some of the nurses appeared dubious at first, but the fish behaved quiet ly and were allowed to remain proving conclusively that nurses aTe human, after all. I was amused by their golden dartings and flirting tails (the fish, that is - not the nurses) and the condescending acceptance of food and the way they would ex change stares with me while open ing and closing their mouths obviously speaking noble thoughts which I was much too stupid to comprehend. One morning, how ever, after their water had been changed and we had fed them their scientifically balanced diet (feel ing so paternalistic and protective about the whole thing), it oc curred to me that here was a way Mrs. Westerholm is a Registered Nurse, housewife, and student of liberty of Gardena, California.

18 people ate not goldfi~h D. M. WESTERHOLM of life deemed ideal by many hu mans. You think not ? Well, consider: these little denizens of the not-so deep pay no rent or mortgages, do not have to work for their food, have all medical care provided, have no worries about old-age se curity, don't have to concern them selves about competition or self protection or, indeed, accept any responsibility at all. All is provided by a benevolent master. Is this not the utopian existence so desired by millions? Plainly, for my small finny friends, the war against poverty has been won - fins down. I'll admit that the life of a cap tive goldfish is not completely anal ogous with human paternalistic socialism, but it's close enough for some discomforting comparisons. Some folks might ask: "What's so discomforting about it? I should have it as good as those goldfish, and my worries would be over!" With my own worry and 1965 PEOPLE ARE NOT GOLDFISH 19 concern about the financial future, I can understand the question. The answer lies in another question, however: "What happens to my goldfish if I run out of fish food?

Or forget them 1 Or drop dead 1" Those fish haven't learned sur vival techniques, because their en vironment has not demanded such learning. True, they still have the survival instinct, but their arti ficial rather than natural environ ment will not long support them if unattended - not even if their individual initiative and knowl edge of self-responsibility and self-protection had not been atro phied by lifelong disuse. So, too, with a nationally so cialized environment for humans. Sound economics, in effect, is the "fish food" of human society essential to its life. Socialism is not economically workable. (Just ask the communists, who are somewhat clandestinely re-adopt ing various capitalistic methods, purely because socialism doesn't work.) A government can operate at a deficit, inflating the currency, draining the internal resources of tpe nation and the people, for just sb long. Eventually, inevitably, it will run out of fish food. When that happens, the only hope for the citizens will depend upon their own survival efforts - individual ly. They will have to find, or grow, or manufacture their own "fish food."

Individual initiative, resource fulness, full and efficient accept ance of personal responsibility these are the tools needed for hu man survival outside the goldfish bowl. And these tools are not easily forged, or preserved, in the stulti fying environment of pa.ternalis tic socialism or other varieties of collectivism. I, for one, have no desire for the deceptive, dangerous, goldfish bowl way of life. After all, people are not goldfish. People have the intelligence, the size, the physical and mental capacity to form their own environment. Why, then, should We be satisfied with an en vironment so precarious and dang erous as that forced upon my pretty, utterly dependent, little goldfish 1 ~ BUSINESS IMPLICATIONS OF THE lLNEW MORALITY" HAROLD O. J. BROWN "BUSINESS AND RELIGION! What does religion have to do with busi ness ?Theologians are not busi nessmen." Believe that if you will, but to do so you have to ignore basic historic facts. Religious ideas have a tremendous effect on the struc ture of society and thus on the scope and quality of business per mitted in it. What is communism itself if not a "religious" idea?

It is this-worldly rather than oth er-worldly, but it is basically a religion, making a dogmatic as sertion about the evils of private property which can never be proved but which must be taken on faith. This explains the hostil ity of communism to traditional religion: it is itself a competing religion. It is not necessary to look to the communists for examples of The Reverend Mr. Brown is Minister to Students of Park Street Church in Boston and a member of the United Ministry to Students at Harvard University. 9.0 ways in which religious ideas di rectly affect the conduct of busi ness. Prohibition and Sunday closing laws are examples from our own recent history. But over and above such specific legislation, which affects only segments of the business community, religion makes a basic contribution which is vital to business as well as to social and cultural life: the shap ing of the general moral consensus.

The Moral Consensus A society does not run on its statute laws alone. On the contrary, written laws can function only if there is a widely accepted moral consensus and if the written laws are in agreement with it. Law en forcement contributes to shaping this consensus, but religious ideas and the general moral feelings based on them make a much larger contribution. For example, there are laws against shoplifting, and supermarkets employ detectives to 1965 BUSINESS IMPLICATIONS OF THE "NEW MORALITY" 21 prevent it; but their task would be hopeless if there were not a tremendous moral consensus among the general population that shop lifting is wrong. If the fear of getting caught were the only de terrent, supermarkets could not keep the products on their shelves. When the moral consensus shifts, or when it is inactivated by some supposedly higher concern, as was the case with last summer's "civil rights" riots, the force of law and the presence of police is quite in adequate to prevent widespread looting and theft.

The IINew Moro/;'yll For several centuries, Western businessmen have been able to take the moral consensus pretty much as they found it, and all in all it has done them good service. It has provided an atmosphere where, in general, contracts were kept, employees were honest, and work was considered a holy duty rather than a burden to be shirked. This common heritage of Judaic Christian religious thought, with all of its desirable effects, has been taken for granted for a long time. Now it is under fire - and not only from the enemies of the Western world, but also from with in. A group of theologians and church leaders, some of them very prominent, have for some years been talking about a "new theol ogy." Only rather recently have the implications of this "new theol ogy" become clear in what is called the "new morality."l Right now the discussion is confined largely to academic circles - but so was the discussion of Marx's ideas in the 1890's, and things move faster in the twentieth century. To un derstand the trend, and its impli cations, it will help us to take a look at the "old" morality.

The Judaeo-Chrisfian Consensus The two main religious roots of Western civilization, Judaism and Christianity, have many differ ences, but in the moral and ethi cal sphere, they are agreed and together they have shaped our Western moral consensus, which up to the present time has proved so serviceable to economic prog ress. This consensus is typified in the Ten Commandments, which are important for two reasons: first, for what they are (or at least claim to be) , and second, for what they say. The Commandments 1 See Joseph Fletcher, "The New Look in Christian Ethics," Harvard Divinity Bulletin, October, 1959; John A. T. Rob inson, Honest to God, Westminster, 1963; Douglas Rhymes, No New Morality, Bobbs, 1964. British authors Sir Arnold Lunn and Garth Lean have spelled out the .deadly implications of the "new morality" for Great Britain in their joint work, The New Morality. Bland ford, 1964.

22 THE FREEMAN June are important because they claim to have been given to man by the ultimate Authority, Le., by God. For this reason they cannot be changed by men - one can accept them or disobey them, but not al ter them. This "given" quality about the commandments (which theologians discuss under the head ings of "revelation" or "the divine imperative") gave a sense of sta bility and permanence to the moral consensus. (It is precisely this givenness which the new theolo gians dislike: Bishop Robinson ridicules commandments received "second hand" from God.2 ) Its details were supplied by what the commandments actually say. Summarizing for the sake of brevity, we see that the Judaeo Christian consensus traditionally contains at least three elements which are crucial for the function ing of our economic life: (1) re liability or faithfulness in meeting obligations. No economic system could work if every contract had to be enforced by legal sanctions.

"Blessed is the man who sweareth to his own hurt, and changeth not." (Psalm 15 :4) (2) the duty to engage in productive labor: "Six days shalt thou labor and do all thy work." (Exodus 20 :9) St. Paul makes this point even more strongly when he says, "If any would not work, neither should he 2 Robinson, Ope cit., p. 106. eat." (II Thessalonians 3 :10) (3) and finally, there is the obligation to exercise personal concern for the unfortunate, and not leave them to the care of an impersonal state: "Lord, when saw we thee an hungred ... and did not min ister unto thee?" (Matthew 25: 44) This principle has until re cently minimized the social bur dens falling on the government. Economic and technological changes doubtless will increase the clamor for the state to take responsibility for the' poor, the old, and the infirm; but the situa tion will become a great deal worse if old principles of personal and social responsibility are allowed to disappear. In fact, in many re spects, the administration of wel fare is already becoming incre'as ingly burdened by the decline of the old consensus.

The Old Sanction This J udaeo-Christian consen sus was very useful to society, but it was never followed merely because it was useful. The ration ale behind it was that these things were right because they were commanded by one who had the authority to say, namely, by God. Even people who were not partic ularly pious were often influenced by the dim suspicion that above and beyond all human laws and sanctions there was a God to 1965 BUSINESS IMPLICATIONS OF THE "NEW MORALITY" 23 whom they would ultimately have to give an accounting. The obvious feedback from this view to prac tical affairs is suggested, for ex ample, by the fact that Jesus Christ often describes this judg ment in terms of a king examin ing his stewards' accounts. Wheth er or not one· firmly believes in a God who will ultimately judge all men, the conviction or even the suspicion that He exists has been a very valuable factor in restraining the human tendency to .unbridled self-interest. It is hard to imagine any other concept that will do the Job as well.

The New Idea Where the old morality had some positive, authoritative com mandments as its starting point, the "new morality" rejects this and even ridicules it, as Bishop Robinson does in deriding it as "second hand." We must reject such ideas, he says, and form a new morality on our own. The basis for it, in the words of Prof. Fletcher, is this: "Only one thing is intrinsically good, namely, love: nothing else."3 Now love is a very fine thing, and it is the principal part of the Two Great Commandments in both Jewish and Christian thought. 3 Joseph Fletcher, "The New Look in Christian Ethics," Harvard Divinity Bul letin, October, 1959, p. 8. From the traditional view, there is more to God than mere love, however: there is also holiness and justice. From the practical point of view, it is questionable wheth er any such idea of love will ever be as effective a stimulus to men to do their duty and to abstain from dishonesty as the old eon cept of a righteous Judge is. It is hard to rationalize one's way around the commandment, "Thou shalt not steal," especially if one suspects that one will one day stand before an omniscient Judge.

But if "only one thing is in trinsically good, namely love," one can always say, "I am not stealing if I am acting out of love." And indeed this theme is not only put forward, it is more or less taken for granted in much of the avant garde literature of our day. But you do not have to resort to the writers of existentialist fiction; theologians will be found who ad vocate the idea of "occult compen sation," which holds that a worker who considers himself underpaid can make up the difference with out being immoral simply by tak ing things from his employer on the side. According to the "new morality" nothing is ever right or wrong because of a specific commandment or principle. It is right or wrong because it is more or less loving. The implications of this for family 24 THE FREEMAN June and sexual morality are immedi ately obvious, and in fact the new moralists are willing to tolerate promiscuity and even perversions if a spirit of love is involved. 4 So far their discussion is in fact largely confined to sexual morality, but it will not be long before it spills over into areas of personal honesty (can't a lie be much more loving than the truth?), willing ness to work, and the obligation to help those who are less fortu nate. There will always be a cer tain amount of sexual looseness in any society, but when it becomes the pattern, it affects not only family happiness, but economic and even national survival-an cient Rome is only the most dra matic example from a history full of them.

One of the principles of the "new moralists" is that as long as sexual activity is self-giving instead of exploitative, it is mor ally unobjectionable, and will not adversely affect society. But the English sociologist, J. D. Unwin,5 and more recently our own Pitrim Sorokin,6 have shown that a high level of social energy and produc tivity in society is rapidly under4 Thus Douglas Rhymes in No New Morality, following Towards a. Quaker View of Sex, permits homosexuality, and H. A. Williams praises prostitution. 5 Sex and Culture, Oxford, 1934. 6 The American Sex Revolution (Ex tending Horizons Book), Sargeant, 1957. mined by the spread of sexual looseness. This does not need to be proved from ancient history, for the Soviet Union, which per mitted a great deal of sexual loose ness following the Revolution found that this was destructive of social values, and has subsequently retrenched and become more "Vic torian" than any Western country.

Implications for Business Business is not directly depend ent on religion, but it is certainly dependent on the moral consensus to which religious ideas contrib ute so greatly. Thus, the "new morality," which at the moment is more or less confined to the college campuses and theological seminaries, has frightening im plications for our whole social or der. Business and professional men, with rare exceptions, are not theologians or preachers, and they are not expected to be. But the vast majority of men who have accomplished something of value have done so only because they have a certain moral integrity, at least enough to enable others to trust them and to be influenced by them. This integrity is com patible with the old Judaeo-Chris tian moral consensus, and wins support and praise from it (quite apart from whether the men in question are believing Christians or Jews), but it cannot survive 1965 BUSINESS IMPLICATIONS OF THE "NEW MORALITY" 25 and coexist with the "new moral ity." Businessmen converted to Christianity in a society where Judaeo-Christian principles have not been part of the consensus frequently complain of. the tre mendous difficulty of trying to live by these principles in a society which does not recognize them.

In the twentieth century it does not take long for an academic fad to become universally accepted, and this is what will happen with the new morality, which is so pleasant, so agreeable, so easy to take, and so little demanding - if it is not checked. A Counter-Measure Business and professional men cannot be expected to herd their colleagues and employees into re ligious meetings to check this problem. Religion is seldom very convincing when it is advocated as a means to an end. Nevertheless, short of a national religious re vival, there is something which individuals can do: they can de cide where they stand .on moral issues, and make it clear, gently but firmly, to those about them. When Joshua was leading the Israelites into the Promised Land, he was faced with a mutiny. He gave the people freedom of choice: "Choose you this day whom ye will serve," but at the same time-and this is crucial-he gave a clear statement of his own po sition, "but as for me and my house, we will serve the Lord."

(Joshua 24 :15) One of the saddest stories to come out of my own work with college students was told by a psychiatrist on the Harvard fac ulty. He had as a patient a college girl, the daughter of a well-known surgeon. Troubled by the tempta tions to moral laxity all about her, this girl wrote to her father ask ing what he thought of pre-mar ital intercourse. His reply went like this: "My dear, you will have to make up your own mind; if you decide in favor of it, let me rec ommend a doctor who can supply you with the necessary contracep tives." The psychiatrist's comment was brief but apt, "That's a h-of a thing to tell your daughter." The girl had freedom of choice, indeed; but she had asked her father for his convictions on the subject, and he evaded the ques tion. Perhaps he had some, per haps he had none, but in any case the daughter had the right to an answer instead of an evasion. It was left to the psychiatrist, then, to help her achieve a worthwhile set of values where her own father had left a vacuum.

In the moral ambiguity of the present day, which is being ren dered more and more desperate by the "new morality," evasive26 THE FREEMAN June ness of people who do have stand ards is not modesty; it is an abdi cation of responsibility and a real crime against the rising genera tion. Like Joshua, we must recog nize that freedom of choice exists, but like him, we must have the courage and principle to say, "but as for me and my house ... " And we must finish that sentence and take our stand, not in pious hum bug, but in the fulI honesty derived from moral strength and convic tioo. • INEQUALITY-a Blessing RICHARD T. SCOTT OUR INHERENT inequality is a na tional blessing. It is not a curse to be exorcised as many moderns would suggest! Unhappily, we Americans have forgotten the source of our greatness as a na tion. We achieved a singular place in the family of nations by pro,;. viding an environment which al lowed man to reap the harvest from the unfettered function of his unequal capacities. When peo ple are left free to function to the limits of their abilities, the most able rise to the top and, of Mr. Scott is a high school teacher of English in Glens Falls, New York.

course, that means the least able filter downward. This is human inequality at work. Diversity of natural endo'w ments amounts to human inequal ity. On the other hand, it is im perative that treatment under the law be completely impartial or equal, for it provides optimum conditions for the full realization of our individual and very unequal inherent capacities. Accordingly, when our unequal human charac teristics such as intellect, ambi tion, and physique operate in a free society whose laws provide equal protection for all, vastly 1965 INEQUALITY - A BLESSING! 27 unequal rewards must result. This, though it maybe a bitter pill to swallow for some of the more mil itant "people manipulators," is perfect justice. Granted, it means some will be come millionaires and some will be paupers. Some will achieve, cre ate, and produce; others will bare ly exist, creating nothing, and producing next to nothing. How is this perfect justice? What could be more just than a man receiving rewards proportionate to his men tal and/or physical labors? The tradition of getting out of life what one puts into it has been the keystone of the American con cept of justice, both written and tacit - at least until recently.

Some may claim that, if this is justice, it is a cruel justice. Can true justice ever be cruel? It may be harsh at times, but can it be cruel? If by cruel one means im partial, there can be no argument. It is true that in a pluralistic so ciety, whose members have vary ing degrees of talent, those who have limited ability will reap lim ited rewards. It should be glar ingly apparent, however, that it would be cruel if reward were de termined by any other standard. And no one could argue that our system of justice is cruel if we define cruel to mean "desirous of inflicting pain and suffering." The pain and suffering exist, but not as a result of conscious effort on the part of more handsomely en dowed humans. Man-Made "Justice" While nature's justice may cause suffering, this is to be distin guished from the man-made suf fering brought on by social re formers in their version of the "just society." The "justice" of the "people manipulators" is a mean ingless concept, for it lacks the opposite values of good and bad rewards and all those which fall somewhere between the two ex tremes. Justice demands appropri ate and commensurate reward!

In one very real sense we feel compassion for those less fortu nate than we, but we do not feel guilty. Yet this brings cries of righteous indignation. They ac cuse us of not caring for our less fortunate brothers and remind us that tax money used for welfare purposes, for example, does not seriously hurt the taxpayer and certainly it goes for a just cause. True, it may not cause serious harm to the taxpayer. It is not true, however, that such use of tax money is a just cause. No cause is just if it rewards some one solely for his need. And for this reason, while the taxpayer is not always seriously harmed (though he sometimes is), he is always wronged. There are those 28 THE FREEMAN June who claim that the needy are de serving of our support. How so? To be deserving implies the right to some form of reward. Suffering, pain, poverty, no matter how dis tressing, do not entitle people to the fruits of other citizens' labors.

It should, therefore, be obvious that the suffering of others does not obligate the more capable in divid uals to provide any sort of aid to those in distress. They may wish to help, but they are not obligated. If we allow that the more fortu nate are obligated to help the less fortunate, we are, in essence, say ing that the less fortunate have a blank check on the resources of those who are better off. Un der such a moral code the only person with a clear conscience is the one who has nothing - mental, physical, or material. He can feel secure, secure in the knowledge that there is no one less fortunate than he to be obligated to. This is evil of the most debased kind. What is even more evil is that it robs man of his capacity to be charitable. How can one express his concern for unfortunates by offering material and inspirational gifts if the "haves" are obligated either by law or custom to give to the "have nots" who, of course, deserve these gifts?

We must be willing to pay the price of responsible individual freedom. And a nation is not free if its citizens are not free - free to choose whether or not they wan t to spend their money on a cause that others feel is good. Only when the individual is free can he exist as a truly moral be ing. If moral choices are not his to make, they cease to be moral for him. As he gradually sur renders the responsibility of mak ing moral and ethical decisions, these decisions are then assumed by the state. Man as a superior being ceases to be. He is reduced to a lower level of life, a lesser being of conditioned reflexes and programed responses. He, has adapted to an environment which he is no longer capable of shaping in even the slightest measure. All this in the name of social equality. Progress - or Mediocrity? Now to the point of our argu ment. We suggested earlier that inequality is a blessing. That it is!

Society could not have been more blessed than to have each of its members diversely endowed, both qualitatively and quantitatively. The individual differences among us have been responsible not only for man's ills, but for his great scientific, social, philosophic, ar tistic, and economic progress. Progress in· these areas has been fantastic in countries which have 1965 INEQUALITY - A BLESSING! 29 a great deal of personal freedom; infinitesimal in primitive, total itarian, and collectivist. societies. Where individual liberty prevails, man is free to satisfy his ambi tions, limi ted only by· his own capacities. He is free to create and produce. Where this happens, everyone benefits. In the United States,. where in dividual freedom has resulted in the highest productivity in the history of the world, even the poorest among us would attract envious looks from the majority of the population in such coun tries as India, China, Bolivia, and too many others to mention here.

Our poor are, with few exceptions, poor only in relation to our own national abundance. So long as enterprising and creative Americans are allowed freedom to prac tice their unequal talents we will all benefit. Bring the exceptional down to a median level in an effort to raise the Iiving standards of the below average and we all suf fer. Where would we be if we had brought Edison down a peg - to a level of mediocrity; if we had hamstrung the Wright brothers, Henry Ford, and thousands of others who possessed talents su perior in some respect to those of the average American? Reduce American incentive to an average or equal level and you will have an average or mediocre America - all of us equally medi ocre. Our inequality has made us what we are, and conversely, im posed equality can break our spir it, and outr nation. ~ Possessed We do not· take possession of our ideas But are possessed by them.

They master us and force us into the arena Where, like gladiators, we must fight for them. HEINRICH HEINE (1797-1856) v WELLINGTON LONG ON By CAR, bus, train, and bone cracking motorscooter, they plunged toward a village in Northern Germany that bright summer day, running with the fever of men heading for a new ly discovered gold field. The analogy was apt, or so many thought, for they were own ers of "People's Shares" which had trebled in price since issu ance six months earlier. Now they were gathering for their first shareholders' meeting. When all were jammed inside a factory hall in Wolfsburg, they numbered 7,000 of the new own ers of the great Volkswagen con cern, West Germany's and Eur ope's largest automobile maker, which the state had just sold to Mr. Long is Chief Correspondent in Germany for United Press International. 30 the people. It was the largest shareholders' meeting ever held anywhere.

In later years, the crowd at the annual meeting has dwindled to about 3,000. But the popularity of "People's Shares" in Volkswagen and other former state-owned en terprises is undiminished, and the West German government in tends to sell quite a lot more of its industrial holdings. Ludwig Erhard, who guided West Germany's economic destiny for 14 years before he became Federal chancellor, summed up the government's hopes for its "Property for All" program in these words: "It is hardly an exaggeration for me to say that now the era of the class war can finally be considered as having been over1965 "PEOPLE'S SHARES" IN VOLKSWAGEN 31 come, and a new socio-political image is recognizable according to which the care, the improve ment, and the expansion of pro ductive capital is no longer the duty of the entrepreneur alone, but the concern of all citizens. "If also the wage and salary earner and the small saver is better able to recognize that their fate, their social security, and the future of their children de pends on the maintenance of our productive powers, then it must almost inevitably lead to a change of attitude, in the sense of a higher consciousness of· responsi bility of the individual for the whole. And that appears to me to be the best basis for any demo cratic order."

State Ownership The conviction that German workers were hostile to the idea of owning property, other than perhaps their home, was widely held until the mid-1950's. Des pite the disastrous experiences of state ownership in Britain, many Social Democrats still be lieved that nationalization of basic industries would insure eco nomic prosperity and democracy. But it was clear from the way the votes were being cast in par liamentary elections that a con siderable number of workers had become disenchanted with Social Democratic dogma. The "social market economy" ideas developed by Erhard, as Chancellor Kon rad Adenauer's Minister for Economics, showed more results than the socialistic theories adopted in neighboring countries. The Social Democrats found themselves in a minority even in their traditional strongholds in the industrial Ruhr region. Some of the men who sup ported Adenauer and Erhard thought "Christian Democracy,"

as they styled their philosophy, ought, however, to go beyond simply providing wage earners with a relatively high standard of living. They also were con cerned over the dominant position the government had inherited in certain manufacturing industries as well as in mining and electric ity. As the legal successor to the Third· Reich, Bonn had ac quired several billion marks' worth of enterprises which the Nazis had seized or created or inherited from earlier fegimes. A few visionaries wondered if they couldn't put the little man in business while, at the same time, take the government out of it. Hermann Lindroth Calls Turn One such man was Hermann Lindrath, a banker and munici pal administrator from Halle, in 32 THE FREEMAN June what is now communist-controlled East Germany. Lindrath learned politics in the twenties, working alongside Gustav Stresemann, the leading liberal of the day. As Chancellor and Foreign Minister, Stresemann's attempt to bring po litical and economic democracy to Germany failed before the aggres sive tactics of the extremists.

From 1945 to 1951, Lindrath stayed on in Halle, trying to work with the Russians. First in the city administration, later as a tax consultant, he experienced at first hand the mass expropria tion of manufacturing firms .and the deliberate ruination of small businessmen, and watched the sluggish efforts of the economy to wade through a swamp of state control. What he endured there convinced Lindrath that collective ownership is a sham, and inef ficient. When his position in Halle became untenable in 1951, he fled to West Germany. There, he was elected to the Federal parliament in 1953, as a member of the Adenauer-Erhard party, and in 1957, was appointed Minister for Federally Owned Property. Ideas into Practice In his new job, Lindrath saw a chance to put his theories about individual ownership into practice. Chancellor Adenauer's government policy statement of October 29, 1957, promised "a wider distribu tion of the ownership of productive means." Lindrath told parliament "this socio-political goal is based on the experience of the past, in which the creation of private prop erty, the aspiration for individual ownership, for personal property, the desire for an independent ex istence has been shown to be the main driving force behind the re vival of the German economy."

With Germany moving into the Common Market, Lindrath argued, it was foolish to believe the government should continue to own manufacturing properties in order to influence price levels. "That," he declared, "is the func tion of competition in a free econ omy." Domestic prices depend on world prices, he pointed out, and a rise in German prices resulting from increased raw material prices on the world market could hardly be blocked by Federally owned enterprises. The government's holdings were organized as joint stock compan ies. Lindrath proposed to sell some or all of the shares of each to com pany employees or other low-in come groups. He was entering unexplored territory when he offered shares in the PREUSSAG (Preussiche Bergwerks und Huetten AG) on March 24, 1959. PREUSSAG em ployed 20,000 persons in the ore, 1965 "PEOPLE'S SHARES" IN· VOLKSWAGEN 33 coal, oil, and potash industries, and had an annual turnover of 800 million marks ($200 million).

Lindrath offered 30 million marks ($7,500,000) of shares, about one third of the total, to the public. 60,000 Anticipated, 200,000 Applied Even Lindrath was astounded at the reception his scheme re ceived. "We anticipated 60,000 buyers," he said. "More than 200, 000 signed immediately the lists were opened." The demand was so great that Lindrath promptly offered another 52 million marks ($13 million) of PREUSSAG shares for sale, so that the government wound up holding less than 25 per cent of the shares. Only persons with annual in comes of less than 16,000 marks ($4,000) - about 50 per cent more than a production line worker earns - could buy PREUSSAG shares. None could hold more than l/lOOth of the total issue, a pro vision thought necessary to pre vent speculators from gaining con,.. trol of the company. Lindrath kept part of the shares in the government's hands so it could gather experience. But he promised the remainder would be sold soon, too.

More confident than ever, after this initial success, Lindrath ex panded his philosophy. "True freedom," he declared," "is unthinkable without property. The possibility to dispose over personal property in its various forms assures the individual greater security and greater in dependence of the· vagaries of life than the Federal constitution is capable of doing. And it provides the basis for a special tie to and responsibility for the state and society. "Beyond that, experience teaches us that there is no real freedom which is not spiritual freedom and at the same time ma terial freedom. Freedom merely as a right guaranteed by the con stitution is not real freedom as we understand it. The Federal constitution alone is incapable of making men free in the exercise of their daily lives. Constitutional freedom requires a foundation, and we want to create this by mak ing the Germans a people of prop erty owners.

"But only if the shares come into the hands of those who so far have had an insufficient share of the economy's productive capi tal can this be considered prog ress along the road from class war to responsibility ... The class warrior of the past shall become an economic citizen." The most obvious property for the government to sell next was the Volkswagen works. Hitler had 34 THE FREEMAN June wanted a "People's Car" and tens of thousands of trusting Germans had paid their money to his "Labor Front" in anticipation of the day cars would roll off the lines in the sand hills of Lower Saxony for civilian instead of for military use. "People's Shares" After thewar, the Federal gov ernment in Bonn and the Lower Saxony state government became joint owners. Volkswagen now had annual sales of almost five bil lion marks ($1.2 billion), and was turning out 4,200 cars and trucks every day. A third of all new cars registered in West Germany each year were Volkswagens. They were a major export item and earner of dollars and gold. It was the hottest automotive property in Europe. And Lindrath reasoned that the factories making the original "People's Car" ought also to be owned by the people.

Lindrath died before the deal was closed. But his successor pro posed that of Volkswagen's 600 million marks ($125 million) capitalization, the government sell 60 per cent or 360 million marks ($90 million) in "People's Shares." The Federal government and Lower Saxony state govern ment would each retain 20 per cent. "People's Shares" in Volkswagen would have a nominal value of 100 marks ($25), but be sold for 350 marks ($87.50). The rule pro hibiting sales to anyone earning more than 16,000 marks ($4,000) a year was retained. But married men earning less than 12,000 marks ($3,000) per year would be given a 20 per cent "Social Dis count." Again the government under estimated the popularity of the scheme. It announced buyers would be limited to five shares each. But just as fast as the banks and brokers could record their names, 1,547,000 persons sub scribed for shares. After some fast reckoning, the government an nounced each subscriber would get two shares, and the right to par ticipate in a drawing for a third share. About one-third of the sub scribers received a third share.

The day after the shares were issued, their price was quoted on the official exchanges. Within a week, they had doubled in price. Dealing in VoIkswagen share's or at least following the course of their prices in the ne,wspapers, said one commentator, "has be come the national sport." By May, 1961, about two months after the shares were issued, they hit their peak of 1,108 marks ($277), 3lh times their original price. That first giant shareholder's meeting conducted by VW Gener1965 "PEOPLE'S SHARES" IN VOLKSWAGEN 35 al Director Heinz Nordhoff went off admirably, allaying the fears of those who thought it would be impossible for a crowd of that size to conduct business. A little later, he raised the price of the "beetle car." The daily Welt of Hamburg cartooned a cloth-capped worker looking at an announcement of the price increase, and explaining, "As a trades-union man I oppose, it, but as a shareholder I approve it."

Sales climbed steadily despite the price hike. But suddenly, public confidence in the Volkswagen shares faltered. Prices of the shares slipped, sagged, then nose-dived. On May 29, 1962, henceforth known as "Black Tuesday," the price hit bottom at 492 marks ($123). But it bounced, and by the time 3,000 shareholders gathered for their second meeting in July of that year, had again reached 550 marks ($142.50). In the years since, public confidence in Volks wagen shares has never wavered, and it has been among the steady leaders on the exchanges. Most significant to the men who followed in Lindrath's footsteps, however, was the tenacity with which original buyers hung on to Volkswagen shares. Four years after issue, 60 per cent of the first buyers still own their Volkswagen paper. And almost overnight, the nation had acquired two million new shareholders. In 1960, only 3 per cent of West German house holds owned shares. Three years later, the figure was 7 per cent, on a par with the United States, and is believed now to be even greater.

Other Sales Projected Trades-union leaders still argue against the "People's Shares" scheme, proposing instead that "excess profits" be siphoned off large corporations - both public and private - into a special gov ernment-managed investment fund in which workers could buy non voting stock. Probably because of official trades-union opposition, only 43 per cent of the PREUS SAG employees bought shares in their company. But factory work ers were soon infected by the gen eral enthusiasm, and 97 per cent of Volkswagen's hands ignored the union's exhortations and bought company shares. This summer, the government will sell "People's Shares" in the VEBA (Vereinigte Elektrizitaets - und Bergwerks AG), a govern ment-owned stock company capi talized at 450 million marks ($112.5 million). Among other things, VEBA produces 10 per cent of West Ger many's electricity and 9 per cent of its coal, and last year paid a 10Y2 per cent dividend, so its shares are expected to be hotly pursued. Initially, the government 36 THE FREEMAN June will sell 100 million marks ($25 million) of VEBA shares, but is prepared to let go another and equal amount if the demand is great enough.

And there is more being made ready for sale. Werner Dollinger, the Bavarian food wholesaler and and kiln owner who is now Minis ter of Federally Owned Property, reports the government still owns industrial properties with a nomi nal value of four billion marks ($1 billion), and an annual pro duction of 14 billion marks ($3.5 billion), including 28 per cent of the nation's coal production, 30 per cent of its shipbuilding, and 74 per cent of its aluminum pro duction. The Debate Continues The Social Democrats contend' the "People's Shares" give an il lusory sense of ownership. In par liamentary debate on the VEBA bill, Social Democrat Georg Kurl baum - himself sole owner of a Ntirnberg electronics manufactur ing firm - said it was foolish for a government to be at the mercy of shareholders in determining such sensitive matters as power rates. "Only in a minimum of cases," Kurlbaum contended, "does the small shareholder actu ally control the way his vote is cast. Large banks hold proxies for most of the small shareholders and the bankers actually vote." A more democratic system, he said, is for the government to be the sole owner and let the parliament representing all the people decide or supervise company policies.

"We believe that properly used, Federal enterprises can contribute to smoothing out economic bumps, to slowing the tendency of prices to rise and to improve competitive conditions," Kurlbaum declared. Anyway, the Social Democrat asserted, a wage earner doesn't want a voting share in a company as much as he desires security against creeping or sudden infla tion. Minister Dollinger challenged Kurlbaum's every point. In the first place, he said, the govern ment was concerned at the grow ing concentration of capital in the hands of the state' and a, few pri vate entrepreneurs. Conce,ntra tion of production was perhaps inevitable and necessary in the modern world, but the government wan ted to balance that process by deconcentrating capital owner ship. To Kurlbaum's anxiety that big bankers actually would control shareholders' votes, Dollinger said the government would insist that shareholders granting proxies state how they should be voted on each item of the ann ual meeting agenda.

1965 "PEOPLE'S SHARES" IN VOLKSWAGEN 37 The Social Democrat had said that for reasons of national de fense, the government should maintain important holdings in the basic industries. But Dollinger believed that "precisely in such an important area as defense require ments, a healthy competition of private companies for state con tracts is in the best interests of aU participants." Dollinger also objected to ap propriating funds when state owned corporations require fresh capital. "Public monies, whether they come from the Federal, state, or municipal budgets," Dollinger de clared, "are always tax monies. To use tax monies to fill the capital need of a Federally-owned under taking means nothing less than to make the citizen poorer, while making the state richer and more powerfuL" "The Federal government op poses such a solution," Dollinger reasserted. "Without personal, freely disposable property, the preservation of our personal free dom against collectivism is in the long run not possible.

"Free disposability is not exhausted in that one is able to sell his property at any time. Rather it also must include a right of co determination, which makes the people's shareholder a co-entre preneur. As a matter of principle, therefore, 'People's Shares' are provided with a complete vote. "Above all, we believe a man who owns something thinks dif ferently than a man who does not. A man thinks and reacts with more responsibility when a deci sion involves his own property." Even though some critics sug gest that many of the sharehold ers at the ann ual Volkswagen meeting are merely harassing the directors instead of sharing in de cision-making, Erhard and Dol linger really believe a change in the attitude of newly propertied workers is apparent whenever strike votes are called by the unions during wage contract ne gotiations. By Erhard's lights, shareholder-workers demonstrate more responsibility. The govern ment admits the battle isn't won yet, but is confident of eventual victory in the contest between col lective ownership and individual property. ~ 9.

The New Reality CLARENCE B. CARSON -H. STUART HUGHES, 1958 --KARL POLANYI, 1944 [T] he characteristic mood of our own age [is] that the historical con dition determines the human situation. Man's existence is history; or "life and reality are history, and history alone," as Croce said. -HANS MEYERHOFF, 1959 From the perspective of the post-Second World War era, the work of the generation of the 1890's can be viewed as a "first attempt" at accommoda tion to a "new conception of reality." ... In this process of concession and adaptation, the "activity of human consciousness" for the first time became of paramount importance. We invoked what we believed to be the three constitutive facts in the consciousness of Western man: knowledge of death, knowledge of freedom, knowledge of society The third revelation came to us through living in an industrial society It is the constitutive element in modern man's consciousness.

IT HAS BEEN SAID that man is in curably religious. It may be said with equal validity that man is in curably metaphysical in his thought processes. The flight from reality of intellectuals commenced with the cutting loose of ideas from their foundations in an un derlying order. This was an at tempt to slough off metaphysics, Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books. 38 for metaphysics is the philosophi cal study which treats of the un derlying order. In the course of time, it became (and still is) com monplace in intellectual circles to denounce conceptions - any that happened not to be considered worthy of consideration - as be ing "metaphysica1." In short, met aphysics was laughed out of court; scorn and abuse were heaped upon this mode of thought.

Pragmatists boldly proclaimed a philosophy that was supposed 1965 THE NEW REALITY 39 to be shorn of metaphysical as sumptions. They proposed to operate upon a basis of continuous experimentation to find successful methods within an ever shifting context. Rigorous adherence to pragmatism, however, would re sult in some surprises for prag matists. They would begin to dis cover that there are regularities, that actions' essentially the same will result in predictable! conse quences. In brief, if the pragmatists ad hered strictly to their method, they would begin to acquire knowl edge. If they probed a bit deeper, they would discover that there are laws which account for these reg ularities and predictabilities. At the point that they discovered and believed in laws and principles they would return most likely to a truly metaphysical outlook. In general, this has not hap pened. It certainly has not hap pened among ameliorative reform ers, and these generally like .to think of themselves as pragmatic.

The reason is not far to seek. At the time of the setting forth of pragmatism, thinkers were al ready coming under the sway of a "new reality." This new reality was based upon assumptions which served in lieu of and could be used in somewhat the same manner as metaphysics. This is not to say that the conceptions were indeed metaphysical. There is no need to corrupt the language by so denominating them. Rather, they served in this capacity; they rested upon conceptions of an un derlying order. Explanations were made in terms of this "order." Pragmatism became· largely a phi losophy to j uBtify the expediency of men operating on the basis of the "new reality." Though the conceptions drawn from this new reality are used metaphysically, the fact is not generally recognized. Moreover, they are not subjected to rational examination. The decline of philos ophy and the growth of irration alism have made this state of af fairs possible. Even ideologies in America have not usually been ex plicit. In consequence, assump tions have to be deduced from cas ually thrown phrases and the fag ends of ideas which one encoun ters. Still, the conceptions are there.

Three Basic Constituents: Change, Society, and Psyche There are three basic constit uents of the "new reality." They are: change, society, and psyche. These are not separate realities but interrelated parts of a single reality. Historically, each of them, as a metaphysic-like entity, can be traced back to its origins in nineteenth century European 40 THE FREEMAN June thought. Change was "reafied" in the thought of Hegel, Marx, Spen cer, and Darwin. Society was "thingified" by a line of thinkers that includes Burke, Comte, Marx, and Mosca. Psyche began to as sume its modern proportions for Schopenhauer, Nietzsche, Freud, Adler, and Jung. These ideas were picked up and extended by such Americans as Frederick Jackson Turner, James Harvey Robinson, William Graham Sumner, Charles A. Beard, Lester Frank Ward, J ohn Dewey, William James, Thor stein Veblen, and Oliver Wendell Holmes, Jr. The story of this transmigra tion of ideas - of Americans traveling to Europe, of their be coming enamored particularly with German thought, of the visits of European scholars in America, of the founding of schools in America based upon European ideas - is much too extended and complex even to be summarized here. Suf fice it to say that such events oc curred, and that American think ers frequently followed paths very similar to their European counter parts. As a· result of this inter change, American intellectuals embraced and expounded a "new reality."

Three sorts of explanations can be made from the vantage point of this new reality: historical, so ciological, and psychological. Three specialized intellectual "dis ciplines" were developed in the nineteenth and twentieth centur ies to make these explanations: history, sociology, and psychology. History a Tool for Change Of course, history was not new to the nineteenth century. It had been consciously written since the time of Herodotus in ancient Greece, and had in fact been writ ten and told long before that. Stu dents had studied and learned it through the ages - but not as a separate "discipline." Prior to sometime in the nineteenth cen tury, students learned history as a kind of bonus from the study of literature or "grammar," and men read and wrote it as the spirit moved them to do so. There was no distinct profession which had history in its keeping or was re sponsible for it. In the course of the nineteenth century, the study and writing of history was spe cialized and professionalized. And, as we have seen, in the ear ly twentieth century the older his tory was defamed and aNew His tory advanced. History was cut loose from its foundation in an enduring order and turned into an instrument for reshaping the so ciety for the future.

There was no problem of re making sociology. There had been no such study or discipline for 1965 THE NEW REALITY 41 traditional scholarship. It was only developed after some think ers began to believe in the reality of society. Its founding is usually ascribed to Auguste Comte, but it can be traced through a host of thinkers in its development. At any rate, sociology became the "discipline" to deal with society. Psychology was a traditional study; it was a branch of phi losophy historically. It has already been noted that the house of phi losophy fell apart in the wake of the labors of Hume and Kant. Even so, psychology had to be wrested from the hands. of phi 10sophers who tried to cling to it before it could be "independent." The assault was upon introspec tive psychology (which was, in turn, innate psychology) , and the effort was to make psychology sci entific, or so its proponents claimed. The New Psychology was shaped by Wilhelm Wundt, Sig mund Freud, William James, John B. Watson, and others. Many dif ferent schools of psychology e merged, but they all shared a com mon faith in the New Psychology.

The initial effort, then, was to make history, sociology, and psy chology separate intellectual dis ciplines, to get them recognized as a part of the curriculum of edu cation, and, usually, to get them recognized as sciences in their own right. But in the twentieth century there has been a consider able movement to "integrate" these studies. Those who want this have· probably had their greatest success in the public schools, where, in some instances, they have been merged into social studies courses. But where they have retained some separation, as is usual, a great deal of "inte1gra tion" has taken place. For ex ample, sociological and psychologi cal explanations now pervade much of the writing of history. There is a kind of inherent logic to this movement to merge these studies. If they could be joined, aNew Philosophy might emerge to deal with the "new reality." Actually, of course, this New Phi losophy has already emerged and is used to make explanations of developments. Such explanations are, of course, historical, sociologi cal, and psychological.

All Social Science Affected It may be objected at this point that history, sociology, and psy chology do not deal with the whole of reality for contemporary. intel lectuals, even if they are supposed to deal with part of it. There are, after all, a great many other stud ies and approaches to learning. The above named do not even in clude all of the "social sciences." What of economics, of political science, of anthropology?· It is in 42 THE FREEMAN June order to point out that these have been historicized, sociologized, and psychologized, if one may employ somewhat facetiously a barbar ized language. Note that this is precisely what Thorstein Veblen did to economics. My impression is that European economists regu larly write in a way that we would call sociological. The critic may observe that the economic tail often wags the sociological dog in practice. This is only a surface observation, however, for econom ics is first permeated with socio logical assumptions. Economic de terminism, for example, is a so ciological or psychological, not an economic, idea. As for political science, it is usually filled to over flowing with the above ideas. An thropology is largely the result of the application of historical, so ciological, and psychological meth ods to the study of primitive so cieties.

That group of studies known as the humanities may be disposed of quickly. Language has come to be thought of increasingly as an "instrument of communication." Literature is not only arranged chronologically but quite often taught historically. Philosophy, deprived of its content (except the history of philosophy and a few esoteric subjects such as ethics and esthetics) has tended to wither on the vine. My main point, however, is that the humanities or rather, those who teach and speak for them - do not speak authoritatively of any reality other than the historical, socio logical, and psychological. But surely, it may be argued, contemporary thinkers believe that the material realm, that realm with which the sciences are supposed to deal, is real. It is fre quently asserted, by those who dis agree with them, that reformist intellectuals are materialists. Nothing can be more readily dem onstrated than their perpetual con cern with material things, with better housing, with better diets, with higher standards of living, and so on. Yet these things are not real, in the sense we have been employing the word, to reformists.

The natural world has no endur ing form which would make it real. It is something brute, to be made over according to human will. The sciences are instruments to this end. Pseudo-Scientific Actually, the sciences have not been subdued as yet to this new conception of reality. The speciali zation that has occurred there plus the complex techniques now em ployed, make them largely terra incognita to nonseientists. The "social sciences" were born out of a desire to make the study of so1965 THE NEW REALITY 43 cial phenomena scientific. Prag matism was a more general ap plication of an abstracted scien tific method. The respect for the Sciences (personified) has con tinued, but there has been much talk of bringing them under con trol. But-the sciences, too, have been largely severed from their philosophical roots; and since they are restricted to the world of na ture, they pose no real threat to the "new reality." If and when reformist intellectuals achieve-so cial controis, they are, of course, in control of scientists, too.

The sciences have played a duel role within the framework of the "new reality." In the-first place, they are instruments for reshap ing the physical environment to the needs and purposes of man. Second, they provided the method which was to be used for reshap ing society and man. Lester Frank Ward, the American catalyst for so many of these ideas, stated the matter bluntly: . . . We saw in the last chapter that most individual achievement had been due to invention and scien tific discovery in the domain of the physical forces. The parallel con sists in the fact that social achieve ment consists in invention. and dis covery in the domain of the social forces.... If we carefully analyze an inven tion we shall find that it consists first in recognizing a property or force and secondly in making mate rial adjustments calculated to cause that property or force to act in the manner desired by the inventor ....

Now the desires and wants of men constitute the forces of society, com plicated, as they are in the higher stages, by the directive agent in all its manifold aspects. Social inven tion consists in making such adjust ments as will induce men to act in the manner most advantageous to society.! The story of the deactivation and instrumentation of the sci ences deserves a separate chapter, or book. It was one of the most momentous developments of the modern era. Unfortunately, it must be reduced here to a few sentences. The sciences were once conceived as a method for getting truth about the universe, truth which provided a key to the pur pose of God for man. 2 So conceived and employed, they provided much information about an underlying order in the universe. Techniques were instruments, within this framework, for the discovery of truth. 1 Lester F. Ward, Pure Sociology (New York: Macmillan, 1909, 2nd edi tion) , pp. 568-69. Italics mine.

2 See Edwin A. Burtt, The Meta physical Foundations of Modern Physi cal Science (Garden City: Doubleday, an Anchor Book, 1954), passim.

44 THE FREEMAN June But in the course of the nine teenth century, intellectuals (and everybody else, I suspect) began to confuse science with tech nology. When science came to be identified with technology, it had been "instrumented"; its truths became important as they were renderable into techniques. By the middle of the twentieth cen tury, there was much voiced con cern about the need for a revival of "pure" research. The j ustifica tion was that this would lead to the discovery of laws which would, in turn, be renderable into tech niques for technological purposes. In short, the sciences had become the handmaidens of technology. The point of this discussion needs to be spelled out so that misunderstanding will be avoided, if that is possible. Nothing said is intended to disparage technol ogy or to deny the connection be tween the sciences and technology. (Benjamin Franklin felicitously demonstrated the connection be tween science and technology around 200 years ago. He reasoned that lightning is electricity. He performed his famous kite ex periment to prove his hypothesis.

Since lightning is electricity, since electricity is a natural phenom enon, it behaves in predictable ways. In consequence of these con clusions, he made the technologi cal application - i. e., invented the lightning rod.) My point is that when the scientist became identi fied with technology, he ceased largely to speak authoritatively about the nature of the universe and, instead, provided means for manipulating things within it. He ceased to provide information about an enduring reality, or rather, he no longer made avail able information which was un derstood in this way. The treat ment of reality was left to the proponents of the "new reality." Instruments of Reform Not only were the sciences "in strumented," then, but also they provided the method by which so cial reform was to· be undertaken. Lester Frank Ward wHsenamored of the analogy between the social and the physical, and he treated the analogy as if it were a one-to one relationship. "The sociolo gist," he said, "who really believes there is such a science ha.s a right to claim that all the social forces may be utilized as the physical ones have been. He classes those who maintain the contrary along with those who once believed that the thunders were only engines of destruction, the winds powers of evil, and the gases demoniacal spirits."3 3 Lester F. Ward, Dynamic Sociology, I (New York: D. Appleton and Co., 1920, 2 volumes), 43.

1965 THE NEW REALITY 45 Ward's is the underlying pre conception of contemporary amel iorative reform. It should be noted that several strange equa tions were made: science with technology, the physical with the social, things with people-. Ward saw nothing untoward, at that point, in recommending· that peo ple be manipulated according to the prescriptions of sociologists, in the same manner as physical scientists prescribe the manipula tion of things. Neither has many another reformer. The Personification of History Before examining further the import of the "new reality," how ever, it is in order to give some demonstrations to substantiate the assertion that these conceptions of change, society, and psyche are used in a metaphysic-like man ner. What does it mean to treat change as if it were real? It means to treat it as if it were an entity, a being with properties, attributes, and characteristics. Actually, this has frequently been done-with change by personifying (thingi fying, reafying, anthropomorphi cizing) it as History.

Let us take a simple and not very significant example first. One often hears some such statement as this: History will decide whether so and so was a great President or not. This is palpable nonsense. There is no such being as History to render any such de cision. It may be objected that I am taking a figure of speech liter ally, that those who make such statements really mean that his torians will decide whether or not someone was a great man. If this latter were indeed the meaning to be attached to the initial state ment, it would make sense, but it would be in error. Historians do not assemble in a great parliament to render the final verdict upon the characters of the past (for which oversight we should all be grate ful). If they were to do so, they would only be playing at being gods. Those who have insufficient knowledge about such matters may suppose that historians come to a consensus about important figures of· the past. This is not really the case. Vigorous contro versies still go on about figures in the most distant past. In short, there is no reality which conforms to the view that History reaches final decisions.

But there is much reason to suspect that this usage is derived from a much more serious per sonifying of history. The usage to which I refer is the treatment of history as force or as a vehicle for a number of forces. The con ception involved is that the past shapes the future, that the past contains trends, movements, de46 THE FREEMAN June velopmental directions which act as forces upon the present and the future. These forces are thought of as acting ineluctably and in evitably to bring about certain developments. The most famous of such theses was that of Karl Marx and Friedrich Engels, but the idea in forms all reformist thought in the contemporary era. Progressiv ism is deeply embued with the idea of history as a progressive force. It becomes apparent in such notions as the following: you can't turn back the clock; the latest is the best; it is necessary to adj ust to changing times. Such words and phrases as the following, when they are used to refer to ideas, draw their sustenance from this view of history: reac tionary, backlash, neanderthal, anachronistic, and so on.

Sir Isaiah Berlin says, "The notion that history obeys laws, whether natural or supernatural, that every event of human life is an element in a necessary pattern has deep metaphysical origins."4 The matter goes deeper than this, however. When history is dealt with as a being, it has itself be come metaphysic-like. It has been made into a constituent part of un derlying reality. If anyone objects 4 Isaiah Berlin, Historical Inevitabil ity (London: Oxford University Press, 1954), p. 13. that the word "history" is only being employed as a metaphor, he should be ready to explain why we can't turn back the clock then. Surely, no metaphor would prevent it, or could cause, all that has oc curred. Whether History only stands for the forces or is itself the force is largely irrelevant. The forces themselves are treated by those who think in this way as metaphysic-like beings. Is Society Real?

The second ingredient of the "new reality" is society. The be lief in the reality of society was a precondition to the development of sociology, no doubt, and a con tinuing assumption of those who pursue the study. At any rate, that is the way it was and generally has been. But before going further with this analysis some distinc tions should be made. There are social phenomena. Such phenom ena include institutions, customs, traditions, folkways, habits, be havior patterns, and so on. More over, it may be descriptively use ful to refer to those who share a preponderance of these as Iiving in a society. The development with which I wish to deal hinges, philosophical ly, upon whether society is a phenomenon or a noumenon. Or, somewhat more familiar lan guage may be used in describing 1965 THE NEW REALITY 47 the basis upon which a distinction might be made: Is society an ap pearance or is it real? Is the word "society" a convenient designation for certain phenomena or does it refer to a re·al being in its own right? Do social phenomena stem from society or do they stem from people? Are individuals real or are they products (extensions) of society?

An Organic Whole The above questions may make the development to be ,described clearer than it would otherwise be. My point is that thinkers began to treat society as if it were real. This does not mean that they explicitly treated it as a being distinct from those who were supposed to com pose it. Lester Frank Ward said, "Society is simply a compound organism whose acts exhibit the resultant of all the individual forces which its members exert." Yet he went on to say,"These acts, whether individual or collective, obey fixed laws. Objectively viewed, society is a natural object, present ing a variety of complicated move ments produced by a particular class of natural forces."5 But, one may ask, whence come these laws? Do they come from individuals? Strictly speaking, this would have to mean that individuals create 5 Ward, Dynamic Sociology, I, 35. laws. This could not be, for such would not be laws.

Actually, Ward's confusion arose from the contradictory premises upon which he was ope'r ating. On the one hand he· treated society as if it were real, spoke of social laws and forces, and worked to develop a sociology that would describe these laws of society.6 On the other, he wanted men to take over the direction of society and control the forces to desirable ends. For example, "The social forces only need to be investigated as the rest have been, in order to discover ways in which their utili ty can be demonstrated. Here is a vast field of true scientific ex ploitation as yet untracked .... To just what extent the present evil tendencies of society may be turned to good, under the man agement of truly enlightened legis lation, it is impossible to predict."7 What does social force refer to, if not to men? And if they are forces acting upon men, how can men act upon and direct them?

Ward's thought lies athwart the· path of two different modes of thought - the deterministic and melioristic - at the point of di vergence. It was filled with the conclusions of nineteenth century deterministic thought - the talk of forces, progressive laws, social 6 See ibid., pp. 1-2. 7 Ibid., p. 43.

48 THE FREEMAN June evolution-which were the intel lectual currency of the time. He suggested the idea that mentality had evolved to the-point that men could consciously guide further evolution. But his position was philosophically vague and intern ally contradictory.8 These contra dictions have gone into reformist thought, for explanations have continued to be made in terms of social forces; whereas, reformers have exhorted their followers to conscious reformist efforts. Ward was the fount of this confusion. Society was real to Ward, as it was to John Dewey, and as it has been to a host of other reformers. They speak of society as if it had a distinct being and use the word "social" as derived from it in this sense. The following usages by Ward, taken from the second vol ume of Dynamic Sociology, will illustrate the point. He refers to "social forces" (p. 161), "social progress" (p. 161), "social ad vancement" (p. 163), "the life of a society" (p. 163), "state of society" (p. 165), "protection of 8 Note his embroilment in the contra dictions. "Although every act must in strict science be recognized as the re sultant of all the forces, internal and external, acting upon the agent, still it remains true that achievement is the work of individuals thus acting .... "

(Ward, Pure Sociology, p. 41.) With about as much sense, one may say: The spokes only turn when the wheel turns; still it is the spokes turning. society" (p. 214), "social growth" (p. 224), "will of society" (p. 230), "servant of society" (p. 242), "Society, possessed for the first time of a completely integrated consciousness" (p. 249), "agencies of society" (p. 250), "duty of society" (p. 251), "duties of so ciety toward itself" (p. 467), "how to bring society to consciousness" (p. 467), "members of society" (p. 544) , "superficiality of society" (p. 552), "the exclusive work of society" (p. 571), "the welfare of society" (p. 583), "responsible solely to society" (p. 589), "better for society" (p. 591) "society" as having "burden on its shoulders" (p. 595), and a "sphere prescribed by society" (p. 617). If phrase ology be accepted as a good indi cation of underlying assumptions, and it should be, there should be no doubt that Lester Frank Ward believed in the reality of society.

John Dewey followed a similar pattern in his language. The fol lowing instances are taken from his Problems of Men. 9 He refers to "socially necessary" (p. 32), "social control" (p. 35), "mem bers of our society" (p. 37), "so cially helpful" (p. 49), "social forces" (p. 52), "society" as "de prived of what they might contrib ute" (p. 61), "the interests and activities of a society" (p. 62), 9 New York: Philosophical Library, 1946.

1965 THE NEW REALITY 49 "social enterprise" (p. 76), "so cial pressure" (p. 85), "social breakdown" (p. 90), "social au thority" (p. 94), "socially justi fied" (p. 101), "benefit to society" (p. 102), "social vacuum" (p. 104), "society ... itself" (p. 131), "so cial power" (p. 132), "social knowledge" (p. 179), "social ma terials" (p. 180) "society" as "suf fering" (p. 182), and "socially au thorized" (p. 185). These are, of course, metaphysic-like usages. Such usage deri ves most of its meaning from the conception of society as an organism, which be came common after the presenta tion of Darwinian evolution. The Emphasis on feelings The third ingredient in the "new reality" was the psyche. More specifically, it was psychic phenomena thingified, made into positive active forces. Lester Frank Ward referred constantly to social forces. One may well won der where these forces come fr:om.

They are operative in society, ac cording to him, but they do not come from society. Instead, they arise from within men. Ward put it this way: "The motive of all ac tion is feeling. All great move ments in history are preceded and accompanied by strong feel ings."IO Again, "Feeling alone can drive on the social train, whether 10 Ward, Dynamic Sociology, I, 11. for weal or woe."ll Moreover, "Egoism is the feeling which de mands for self an increase of en joyment and diminution of discom fort. Altruism is... a kind of feel ing which results from the con templation of suffering in others . . .."12 Ward indicates in the following that feeling is his fundamental conception: The root-idea to which I will here confine myself is the true supremacy which must be accorded in any just system of philosophy to the feelings as the real end toward which all ef forts designed to secure the advance ment of society must be directed. Al though it is upon the intellect that we can alone rely to secure such a control of the social forces as shall successfully harmonize them with human advantage, it is feeling that must be alone consulted in deter mining what constitutes such advan tage. Every true system must regard intellect as the means and feeling as the end of all its operations ....

The practical work which soci ology demands is, when reduced to its lowest terms, the organization of feeling. The hUlnan body is a reser voir of feeling which, when wholly unobstructed, is all pleasurable. 13 The concentration upon the psy chological has led in many direc tions in the twentieth century. 11 Ibid., p. 12. 12 Ibid., p. 14. 13 Ibid., pp. 67-68.

50 THE FREEMAN June Some have followed Ward's lead in emphasizing the primacy of feeling. Need and desire have been virtually deified as realities by some writers. Others have focused upon motive as the most important area for knowledge and in terms of which to make explanations. Professional psychoanalysts have focused attention upon removing the obstructions to free expression and action. The arts and educa tion fell under the spell of "self expression." Many people came to believe that intention was more important than action. Taken together, change, society, and the psyche provided a new conception of reality. The psyche provided the impetus, or force, so ciety the framework within which and upon which the force was ex erted, and history the plane upon which movement took place. This attributes greater clarity to these ideas than they have, however. By the early twentieth century, Amer ican thinkers were sloughing off the framework of natural (or so cial) law within which Ward cast his thought. They continued to use concepts, such as environmental ism, drawn from this framework but quite often without avowing it. The theoretical framework be came much vaguer than it had been, even though this might not appear possible.

Most American reformist intellectuals have adopted a pragmatic stance, disavowed conscious the ory, and ostensibly acted in terms of each situation as it arose. They have not really done this, and it is doubtful whether anyone could. They have, instead, acted on the basis of assumptions and ideolo gies. Both of these are founded, insofar as they are founded, in the "new reality." Men who have no theory, metaphysics, or principles generally act upon the basis of the fag ends of those they picked up unawares~ Constantly Changing The most important feature of this new reality is that it is con stantly changing. Change is em bedded in it as one of its con stituents. The other constituents change, too. Few things can be more readily demonstrated than that social structures are greatly altered during the passage of time. As for the psyche, it is the root or origin of important changes, ac cording to the above formulation.

It is a force for change. There was an article of faith that re formers brought to the new con ception of reality, namely, that it is changeable. The point of Ward's work was to establish the proposi tion that social change can be con sciously directed, that it can be planned. He asserted it over and over 1965 THE NEW REALITY 51 again, from a great variety of angles. He called .the conscious planning of social action meli orism. "Now, meliorism," Ward said, "is a dynamic principle. It implies the improvement of the social condition through cold cal culation. . . . It is not. content merely to alleviate present suffer ing, it aims to create conditions under which no suffering can ex ist. It is ready even to sacrifice temporary enjoyment for greater future enjoyment - the pleasure of a few for that of the mass."14 He proposed that this should be ac complished by legislation. "Legis lation (I use the term in its most general sense) is nothing else but social invention. It is an effort so to control the forces of a state as to secure the greatest benefits to its people."15 He admits that gov ernments have usually made a mess in most of their interventions in society. But this has been oc casioned, he declares, by the ig norance of those who made the laws heretofore. The science of sociology will change all this.

Before progressive legislation can become a success, every' legislature must become, as it were, a polytech nic school, a laboratory of philo sophical research into th~ laws of society and of human nature. No leg islator is qualified to propose or vote 14 Ibid., II, 468. 15 Ibid., I, 36. on measures designed to affect the destinies of millions of social units until he masters all that is known of the science of society. Every true legislator must be a sociologist ... .IG The means by which the changes in society should be brought about, according to Ward, were social in vention and collectivization. So cial invention will be devoted to discovering ways of exercising so cial pressure by legislation for the good of society. "Social invention consists in making such adjust ments as will induce men to act in the manner most advantageous to society."17 He did not hold with prohibitions and punishments as a rule. These things restrict the liberty of some of the people. "But the contention is that only the most obdurate offenders require to have their liberty restricted, since they, too, have wants, and the social inventor should devise means by which such wants shall be spontaneously satisfied through wholly innocuous or even socially beneficial .action. "18 These actions were to be taken by the collective action of the pop ulace (whatever such ideas may mean). The great collective prob lem, Ward thought, was of the proper distribution of goods.

"This is an exclusively social prob16 Ibid., p. 37. 17 Ward, Pure Sociology, p. 569. 18 Ibid., p. 570.

52 THE FREEMAN June lem and can only be solved by so cial action. It is to-day the most important of all social problems, because its complete solution would accomplish nothing less than· the ,abolition of poverty and want from society."19 19 Ibid., p. 571. The "new reality," then, was the metaphysic-like foundation for social reform. It was, to speak metaphorically, the space station built by intellectuals on their flight from reality from which to launch their reformist experi ments upon the earth. ~ The next article in this series will treat of "The New Creativity." DANGER to a Free Press JOHN C. MERRILL ALTHOUGH isolated journalists, statesmen, and academicians had long toyed with the term "respon sibility" as well as "freedom" for the mass media, it was not until 1947 when the Commission on Freedom of the Press (headed by Robert Hutchins) brought out its A Free and Responsible Press that the concept gained much of an ideological foothold in the United States. Earlier, it had somehow been assumed that reDr. Merrill, Associate Professor of Journalism at the University of Missouri, offers, among others, a graduate course on "Basic Issues in the News."

sponsibility was automatically built into a libertarian press; that a "free press" in the Western sense was responsible per se to its society. But the Hutchins group thought differently. Noting what they called a clear danger in growing restriction of communications outlets and general irresponsibil ity in many areas of the press, the group offered this ominous warning: "If they (the agencies of mass communication) are ir responsible, not even the First Amendment will protect their 1965 DANGER TO A FREE PRESS 53 freedom from governmental con trol. The amendment will be amended." Since 1947 there has been grow ing discourse about the: respon sibility of the press and less and less about its freedom to react in dependently in a democratic so ciety. Undoubtedly many would. be "definers" of responsible jour nalism are among us who are ready and willing to turn our press in a new direction: toward "consen sus" journalism hewing to some predetermined line which the "re sponsibility" proponents see as progress.

What Is IISocial Responsibilityll? At first it would seem rather strange that modern liberals are in the forefront of the "social re sponsibility" advocates and thus opposed to our traditional plura listic press philosophy. However, when one thinks of their skepti cism as to the value of the individ ual, it is not too difficult to see them projecting this rationale to the press. Just as "liberals" are opposed to "laissez faire" econ omics, they are also opposed to "laissez faire" journalism. Inevit ably, if they have their way, the American press can expect a great amount of control in the name of "responsible journalism" and a minimum of individual· publisher freedom. The social responsibility "theory" implies a recognition by the media that they must perform a public service to warrant their existence. Facts must be reported accurately and in a meaningful context. Responsibility, instead of freedom, must be the watchword.

Such thinking leads to the advo cacy of a regulatory system de signed to keep the press "socially responsible." This so-called theory of social responsibility, seriously embraced in "liberal" circles, has a good ring to it and, like "love" and "motherhood," has an undeniable attraction for many. There is a trend throughout the world in this direction, which implies a suspi cion of, and dissatisfaction with, the libertarianism of Milton, Locke, and even Jefferson. Implicit in this trend toward "social re sponsibility" is the argument that some group (obviously a govern mental one, ultimately) can and must define or decide just what is socially responsible. Also, the implication is clear that publish ers and journalists acting freely cannot determine what is socially responsible nearly as well as can some "outside" or "impartial" group. If this power elite decides that the press (or portions of it) is not responsible, not even the First Amendment will keep pub lishers from losing their freedom.

54 THE FREEMAN June This would appear to many as a suggestion of increased power ac cumulation at the national level, a further restriction of a plura listic society. Government Supervision Few would deny that the press, in one respect, would be more "re sponsible" if some type of gov ernmen tal supervision came about; indeed, reporters could be kept from nosing about in "criti cal" areas during "critical" times. The amount of sensational ma terial could be controlled in the press, or eliminated altogether. Government activities could al ways be supported and public pol icy could be pushed regularly. The press could be more "educational" in the sense that less hard news (crime, wrecks, disasters, and the like) would appear, while more news of art exhibits, concerts, speeches by government person ages, and national progress in general could be emphasized. In short, the' press .would stress the positive and eliminate, or minim ize, the negative. Then, with one voice, the press of the nation would be responsible to its so ciety; and the definition of "re sponsible" would be functional defined and carried out by the gov ernment.

Some persons may object to this line of analysis, saying that to guarantee "social responsibility" of the press does not necessarily imply government control. It is not difficult, however, to project control ultimately to government, since if left to be defined by vari ous publishers or journalistic groups the term "social respon sibility" is relative and nebulous. It is obvious that in the tradi tional context of American liber tarianism no "solution" that would be widely agreed upon or enforced could ever be reached by nongov ernment groups or individuals. Social responsibility proponents insist that government would in tervene "only when the need is great and the' stakes are high." They assure us that the govern ment should not be heavy-handed. The question arises, however, as to just when is the need great enough and the stakes high enough for government to inter vene. And just how much inter vention by government is enough to be "heavy-handed"?

IISocial Responsibilityll Implies Pluralistic Communication The American press has been proceeding on unregulated initia tive up until now. But its "lib eral" critics do not think that a pluralistic information system is good enough. Under the diversi fied system we now have - includ ing much nonconformist journal1965 DANGER TO A FREE PRESS 55 ism - the citizen does get infor mation and a we'alth of it. Admit tedly, there are gaps in it, but anyone vaguely familiar with in formation theory and semantics knows that there will always be gaps, and if different reporters observe and communicate it, there will always he variant versions. It is certa.inly not contended here that all information coming to the public from all mass media is reliable, honest, complete, fair, and "socially' responsible" (what ever that means). Nobody really knows just how much of it is - or if any of it is. Since, in a nation such as the United States, there is .no ready definition for "social responsibility," there is really no standard to which our media seek to conform - even though, with out a doubt, they would all con ceive of themselves as "socially responsible.' , Their very pluralism - their very diversity - is the base of their nebulous idea that in our society they are responsible. Responsibility to our society implies a continuance of this very pluralis tic communication, with all of its virtues and evils, and a constant guard against any encroachments by any group on any level to "de fine" what is "responsible," there by further aligning the press to its definition.

This "press pluralism" concept seems much sounder· and certain ly more meaningful, than "social responsibility." All press systems can claim to be responsible to their societies, but the ide'a of a pIuralistic media system inj ecting a variety of opinions and ideas in to the social fabric is one which only the libertarian system can reasonably claim. The U.S. press should fight all attempts to cast all of its units in the same mold; the right of, or at least the possibility for, some press units to deviate from others must persist. If that be irresponsibility, we had better be content to continue living with it. ~ ,/! ,./;;.... ''', ii,····,· )Ii More LesSO~~i ,~ of Lost Weekends MELVIN D. BARGER IN MY FIRST FREEMANarticle, "The Lessons of Lost Weekends" (March, 1961), I related my ex periences as a recovered alcoholic to many of the social and economic conditions of the world. For ex ample, I noted that the tippler's mistake is not unlike the error of those who see no harm in gradual doses of monetary inflation. The alcoholic's drinking starts with "taking only a few." He has no intention of letting it get out of hand, and he is more surprised than anybody when it does. In somewhat the same way, inflation begins rather innocently, but soon "hooks" its victims before they're aware of their danger. The same analogy was extended to other practices, such as deficit spending, foreign aid, and monetary controls.

As I review my article, four years later, I see no great weakMr. Barger, a public relations representative in Jackson, Michigan, is a frequent contributor to THE FREEMAN and other journals. 56 nesses in the arguments made then. My modest conviction that the world is on a continuous bender of staggering proportions has, if anything, increased with the passing years. I am certain that a colossal "hangover" is wait ing somewhere down the road. This causes me no joy, no hang over ever did. I hope I am wrong and that a miracle or some unex pected turn of events softens the blow or deflects it completely. But I suspect that in social affairs, as in alcoholism, the hangover is still a great unsolved problem. In some ways, this concern over the drift of society became my o,vn undoing, causing me to for get my own "lessons of lost week ends." I remain a grateful fugitive from John Barleycorn's house of bondage. But this is not to say that I have always behaved wisely or have avoided emotional benders.

Some of these "benders" followed 1965 MORE LESSONS OF LOST WEEKENDS 57 the publication of "Lost Week ends." A listing of some of these traps might be helpful to others. They may benefit the person who wishes to think clearly about· the free market philosophy, and to cham pion it effectively, without being led down dead-end byways. At the same time, it's good to remember that alcohol is not equally perni cious to all men, and the same ideas that "hooked" me will not be equally dangerous to all. In any case, here they are: Treating Symptoms as Causes. One difficulty that attends the pre vention or treatment of alcoholism is that many people try to stamp out the drinking custom itself rather than the underlying prob lems. National prohibition was an attempt of this sort, as is the practice of imposing harsh punish ments on alcoholics. In the same vein, many well-intentioned people try to rehabilitate alcoholics by yanking them away from their drinking cronies. Such solutions usually fail because they focus on "effect" rather than "cause."

In the past few years, I may have made a similar error in fret ting over means of changing dis turbing social trends. My own knowledge of the nature of things tells me that the drift into increas ing statism goes on because people think in certain ways and enter tain certain ideas very deeply. Un til this thinking changes, in an entirely voluntary manner, it is all but impossible to stop the spread of statism. It is like trying to stop an out-of-control fire sin glehandedly or trying to gather up the waters of a dam that is already breaking up. This can be justified on the grounds that "we have an obligation to do something, to take action, not just to sit and let dis aster happen!" The result can be an emotional bender of consider able dimensions, in which we fight a savage battle against effects long after the cause is lost for the time being. Personalities before Principles. Another characteristic of the al coholic's life in the shadowy bar room circuit is that he tends to think in terms of "personalities"

rather than "principles." He for gi ves all .things in those he likes (his drinking buddies, for exam pIe) and condemns all things in those he hates. Who is right is al ways more important, to this per son, than what is right. It is said that alcoholics, as a group, are more or less emotionally imma ture, and nothing proves it more than this tendency to think largely in terms of personalities. In the arena of social contro versy and strife, this matter of 58 THE FREEMAN June putting "personalities before prin ciples" is becoming a disconcert ing and ugly thing. No political faction seems to be immune from it. And I found myself drinking the same heady juices as I read the literature on "both sides" and came to identify certain positions with specific individuals. Before long, I had formed lists of "good guys" and "bad guys" in my own mind. This did not help make me an effective advocate of free mar ket ideas; if anything, it inhibited good thinking.

It's quite true that I still share most of the views of those whom I identified as "good guys" and oppose the views of those I saw as "bad guys." But lowe it to the goddess of Truth to sympathize with the "good guys" only when I perceive that a worthwhile prin ciple is involved. There are times when the "bad guys" may be right on certain issues, and if one's thinking is based on principles which be believes to be sound, he'll know when these times are. He'll be standing on the rock of princi ple rather than on that shaky plat form which, for want of a better term, we could easily label "per sonalities on the rocks." Violence. The dismal world of alcoholism is often a violent one, and one of the hazards of being a bartender or simply an innocent patron is the likelihood of getting caught up in a sudden fight or brawl. Even -the most respectable saloons sometimes become the scenes of knockdown, drag-out matches. This is because people in their cups are prey to anger and frustration, and when other meas ures fail to solve a conflict or forestall a threat, they seize -upon violent action as a last resort.

Today I see growing violence in the social order around me, and I can well understand how such things happen. Caught up in the vortex of concern over the drift of things, and being unable to take effective action against it, it was amazing how often I was tempted to think dark, even violent, thoughts about those whose poli cies I opposed. I joined no mobs, I wrote no hate letters, I mounted no soapboxes to denounce my op ponents. But at. the same time I found myself feeling occasional resentment or c'~ntempt toward those with whom I disagreed. Such malicious thinking is, of course, the source of violence. This is dangerous wine, indeed, and even a little of it produces an aw ful hangover. And like the wine of the drinking world, it never solves the problem. Fear. One final malady that often caught me up was a grow .. ing sense of fear concerning the 1965 MORE LESSONS OF LOST WEEKENDS 59 future of our society, of life itself.

On every hand, I saw institutions and ideas that se'emed to threaten all that I cherished. On the world scene, for example, I saw militant communism making its way stead ily and with the apparent coopera tion of many men who professed good will. On the dome·stic scene, I sensed that there was apathy toward this menace as well as in difference to the essential injustice implicit in communism. At the same time, there was a growing materialism and cynicism that had weakened the moral fiber of many, and had left countless others with no real principles to live by. Peering down the tunnel of time, I could see only eventual dis aster. There were times when I felt real despair. Sometimes, for example, a magazine article would paint such a hopeless picture that it would leave me reeling with worry. At other times, a particu 1arly arrogant and fatuous utter ance by a high-placed government official would destroy what fragile confidence I had in our own lead ers. I was, in a very real sense, terribly afraid.

Yet fear is no friend of free dom, and it has its role in "lost weekends." When the malady of alcoholism is thoroughly examined, fear is found to be the root illness. Fear drives men to the slavery of the bottle, and· it is also fear that keeps them in political bondage. In dangerous times, fearful men do not protect freedom, they throw it away. Fear put Hitler at the head of the German nation, and it's fear that keeps most of the world in servitude today. Any stu dent of freedom has, as his first duty, the job of banishing fear from his own mind, heart, and soul. I've released much of my fear today, though it's clear that the world conditions which caused me so much concern are getting worse, not better. Beyond the shadow of a doubt, mankind is in real trouble in a number of ways. Growing forms of strife seem to be the rule rather than the exception, the eco nomic structure is shaky at its foundations and the world itself lives on the edge of instant holo caust.

But why should I fear these things, when I have lived through personal defeat and disaster that, in a small way, is certainly no less severe than the evils that might descend upon the earth on a grand scale? I survived the inferno of alcoholism, lived for years in the purgatorio of occasional loneliness and self-doubt, and finally moved into the paradiso of some self knowledge and self-assurance. If the world passes through an in ferno, I am convinced that there is a purgatorio and a paradiso on 60 THE FREEMAN June the other side of the flames. I am also convinced, as I wasn't fully convinced in my hour of fear and alcoholism, that we are guarded by a Love, a Power, and an Intel ligence able to see solutions that have not yet passed into our own field of vision. In short, I believe that the world and freedom and justice will be saved in God's own good time. So I would urge my friends to share these additional "lessons of lost weekends." I would urge them to focus more on causes and less on effects, to think in terms of prin ciples rather than personalities, to think understandingly and toler antly of all men, and to believe, above all, in a Supreme Justice and Love that knows no fear. They may be surrounded by people who think otherwise. But like the re covered alcoholic who must main tain his own equilibrium even when immersed in cocktail parties and liquor advertisements, they must know that they are on the right path and that someday they will shine as the sun in its strength. Sometimes they may be outvoted, and they may be tempo rarily in eclipse. But Truth was never established by a show of hands. ~ Inflation Du'ring the French Revolution THE JACOBINS' FINANCIAL POLICIES were guided exclusively by one principle: to employ everything for present satisfaction and not to worry at all about the future. The tomorrow did not count for them. Every day the public administration was conducted as if it were the last day. This was the characteristic feature of all the acts of the Revolution. This was also the secret of its astonish ing duration. In a rich and powerful nation the daily squandering of the accumulated reserves of wealth provided an unexpected amount of resources.

The assignats - as long as they still retained a minimum of purchasing power - inundated the country in continually increas ing quantities. The prospect of bankruptcy did not even for a moment slow down the flood of new emissions. Their emission stopped only when the public absolutely refused to accept any sort of paper money. RENE STOURM. Les Finances de l'Ancien Regime et de la Revolution. Paris 1885, II Vol., P. 388.

A REVIEWER'S NOTEBOOK A GENERATION AGO the,re were many who could identify William Graham Sumner's "forgotten man." The "forgotten man" was the sober, hard-working, frugal middle-class citizen who patiently obeyed the law when the politi cians fleeced him via taxes to pay for all manner of "humanitarian" schemes. When Franklin D. Roose velt falsely identified Sumner's "forgotten man" with the reliefer who made no money and paid no taxes, he was quickly corrected in magazines like Mencken's Ameri can Mercury. In recent ye,ars, however, it is Sumner himself who has become the "forgotten man." He has no real present-day successor at his own university of Yale', where the late Albert G. Keller and Maurice Davie once carried on in his name. It is doubtful that one in a thou sand undergraduates today knows much about Sumner beyond the fact that he wrote Folkways, a book about the origins of human customs which has been taken to justify a complete relativism in the fields of ethics and politics.

The Folkw'ays misrepresents JOHN CHAMBERLAIN Sumner, who was a ~tern moralist in economics and social theory and who was perhaps further away from the theory of "anything goes" than any other publicist of the la.te nineteenth century. Because of the misrepresenta tion and neglect of this "forgotten man" who pioneered the study of sociology in the United States, it is good to welcome Murray Pol ner's selection from Sumner's speeches and magazine articles that is published as ·The Conquest of the United States by Spain and Other Essays (Regnery, Gateway paperback, $1.45). This little book is astoundingly alive, and students who encounter Sumner as a writer on social problems for the first time will be amazed to see how di rectly he speaks to our own e'ra. Sumner opposed what he took to be the U.S. adventure in im perialism in 1898, when we drove Spain out of Cuba, Puerto Rico, and the Philippines. Since he was aiming his shafts at people who really wanted our country to be come a colonial power in the ex ploitative mold of Great Britain, France, Germany, and Spain it62 THE FREEMAN June self, his essay on the "conquest of the United States by Spain" was relevant to its time and place. His peroration to this essay has a glorious ring. "My p.atriotism," he wrote, "is of the kind which is out raged by the notion that the United States never was a great nation until in a petty three months' campaign it knocked to pieces a poor, decrepit, bankrupt old state like Spain. To hold such an opinion as that is to abandon all American standards, to put shame and scorn on all that our ancestors tried to build up here, and to go over to the standards of which Spain is a representative."

The True Causes of Decay In the course of time the U.S. decided that Sumner was right in his excoriation of imperialism. We restored Cuba to its own p.oliti cians, we freed the Philippines, and we permitted the Puerto Ricans their own choice of govern ment under a loose arrangement that ties them to Washington no more onerously than Canadians and Australians are tied to Lon don. Sumner would have been pleased by this development, though he would probably be startled to see what a mess Fidel Castro has made of Cuba. Sumner was not a particularly good prophet when he argued that our militaristic spree of 1898 would turn us into a France, a Germany, or a Spain. If the "old American republic" which Sumner defended has collapsed, it is for many reasons other than our in dulgence in a three-months war that was fought, after all, by a volunteer army and navy. Real militarism in America didn't start until the draft was made compul sory in World War 1. However, in other essays that are reprinted in Murray Polner's volume, Sumner hits accurately at all the true causes of decay. Such essays as "Discipline," "Legislation by Clamor," "The· Absurd Effort to Make the World Over," "War,"

"Economics and Politics," and "Advancing Social and Political Organization in the United States" abound in truly profound prophet ic insights. The Academic World In "Discipline" Sumner takes a poke at his own academic col leagues for failing to see that "the academic world is a little com munity by itself in which the great natural forces which bind older men to sobriety and wisdom act only imperfectly." The man who is "trained in chemistry," Sumner said, "will become a strict analyst ... but he will be likely also to rest content with this destructive work .... The man who is trained on history will be quick to. discern 1965 FORGOTTEN PROPHET 63 continuity of force or law ... but he will be content with broad phases and will not be a strict analyst The man who is trained on rnathema ties, will have great power of grasping purely concep tual relations .... but he will be likely to fastenuponasubordi nate factor in some other type, of problem. . . . The man who is trained on the science of language approaches the continuity ... of history with 'a guiding thread in his hand but the study of language always threatens to degenerate into a cram of gram matical niceties and a fastidious ness about expression, under which the contents are forgotten."

In recent years Sumner's listing of the defects of academic quali ties has become all too obvious. Great scientists and mathemati cians (Linus Pauling, Bertrand Russell, even Einstein) have talked enough nonsense about poli tics to fill thel shelves of the British Museum. Historians who grasped the threat of Fascism have failed to trace' its a,ncestry to Bolshevist variations on Marx ist philosophy. And academicians of all types do not seem to know the difference between a true law, a hypothetical theory, and an. in genious assumption. To use Sum ner's phrase, "they would put a saving clause in the multiplication table." The lack of academic common sense has produced our modern political economy of perpetual in flation, which has been sanctioned by economists who come properly under the heading of men "trained on history" who are "quick to dis cern continuity of force . . . but will not be strict analysts."

The Prophetic View Sumner knew what was coming, all right; he said "the next gen erations are going to see war and social calamities." In the essay on "The Conquest of the United States by Spain" he remarked that "the field for dogmatism in our day is not theology, it is polit ical philosophy." In his essay on "War" he prophesied that the "race difference" in our Southern States "may prove worse and more fatal to the internal integrity of the peace-group than such old an tagonisms of interest as disturb Ireland, the n~tional antagonisms which agitate Austria-Hungary, or the religious antagonisms which distract Belgium .... No one has yet found any way in which two races, far apart in blood and cul ture, can be amalgamated into one society with satisfaction to both." In the essay on "Economics' and Politics," which was optimistic about the economic future but pes simistic about the political clash between doctrinaire democrats 64 THE FREEMAN June and "plutocrats," Sumner let ar row after arrow of prophecy wing to the mark. "The discovery of the radio-active substances," he said, "may prove to be the greatest of all discoveries yet made by man."

(This was uttered in 1905.) At tacking the Interstate Commerce Commission, he-said "we are only at the beginning of ... what has been written on that page headed 'Interstate Commerce.' ... We know there is no commerce which is not, or may not at any moment become, interstate commerce." The New Dealers and the Great Socie tarians have since shown us how practically everything, from the drug store trade to a twenty-mile intrastate commuting run, can be handled under the commerce clause of the Constitution. And as for recent political events, listen to Sumner as of 1905: "The un animity of the vote proves nothing as to the convictions of congress men ... but only as to the excel lence of the party discipline." And then there is the final stinger, again as of 1905: "The victorious party in an election is regarded as having conquered the country." If you want wisdom and a guide to the future that is still ahead of us 55 years after Sumner's death, The Conquest of the United States by Spain and Other Essays is your book of the year. ~ Force or Reason Do YOU NOT SEE, first, that - as a mental abstract - physical force is directly opposed to morality; and, secondly, that it practically drives out of existence the moral forces? How can an act done under compulsion have any moral element in it, seeing that what is moral is the free act of an intelligent being?

If you tie a man's hands there is nothing moral about his not committing murder. Such an abstaining from murder is a mechanical act; and just the same in kind, though less in de gree, are all the acts which men are compelled to do under penalties imposed upon them by their fellow men. Those who would drive their fellow men into the performance of any good actions do not see that the very elements of morality - the free act following on the free choice - are as much absent in those upon whom they practice their legislation as in a flock of sheep penned in by hurdles. You cannot see too clearly that force and reason - which last is the essence of the moral act - are at the two opposite poles. AUBERON HERBERT (1838-1906) Tom Rose 3 Stanley Yankus 11 James E. Blair 13 John C. Sparks 22 Wendell J. Brown 28 William Henry Chamber/in 37 Clarence B. Carson 45 JULY 1965 Why Automation? The Threat of Competition .

Regarding the Minimum Wage . ... If I Had the Power . Defining Liberty . The Great Communist Schism . The Flight from Reality 10. The New Creativity. Books: John Randolph of Roanoke Other Books . John Chamberlain 58 61 OUTSTANDING,ADVANTA;GISFOR COAST FEDERAL SAVERS FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS-Current rate 4.95 % per year, compounded semi-annually. MAIN OFFICE 9th & Hill. Los Angeles SAVE-BY-MAIL - We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California 5-56A-l ~ A business economist-from Mis 'souri-shows why automation is nec essary to stretch the supply of labor and other scarce resources to meet the market demands of consumers ........ p.3 yI In Australia, as most everywhere, Stanley Yankus finds competition pop ularly acclaimed as something good for others ..... p. 11 yI A scholarly critique of the theory of minimum wage legislation and a sur veyof the consequences of such laws .. p. 13 .~ Those who dream of how they would redistribute the affluence of. industry are prone to neglect the essentials for a productive economy p. 22 yI A prominent attorney defines lib erty in terms of its goals, procedures, and underlying faiths p. 28 "" William Henry Chamberlin steps in for a careful examination of the breach between Moscow and Peiping and the implications, both favorable and dangerous, for free men p. 37 ~ In this chapter 10, Clarence Carson examines how The Flight From Reality has manifested itself in modern art and literature, and especially in the social studies by the Romantics, Evo lutionists, Existentialists, and other deviationists ....p. 45 "" John Chamberlain here reviews the contributions of John Randolph as re ported by Russell Kirk... . .. p. 58 "" If You Don't Mind My Saying So is Joseph Wood Krutch's approach to man, reviewed in this issue, along with Richard Gummere's The Ameri can Colonial Mind and the Classical Tradition. . .....p. 61 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

JULY 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.7 President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except lIDefining Lib· erty," and liThe Flight from Reality." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

WHY AUTOMATION TOM ROSE Concerning the relations of prices and customers to wages and employees AUTOMATION is a popular topic of discussion. Almost everyone is willing to express an opinion about it. Union leaders claim auto mation causes mass unemploy ment. Businessmen welcome it as a way to remain competitive. And social reformers use the "threat" of automation to plan new welfare programs. The purpose of this article is to bring into focus some of the little known aspects of automation and to stimulate' and help crystallize thinking about automation and its ever-present twin, technological change. Mr. Rose is Director of Economic Education, Associated Industries of Missouri. Some years ago a young man was hired to turn small boxes at right angles on a conveyor belt. After a few days he found that, by holding his finger at a certain angle, the boxes turned .properly when they came in contact with it. The next day he brought a stick to work, clamped it to make proper contact with the boxes, and thereby "automated" his job!

One definition for automation is "the use of" machinery to control machinery." But this is simply a refinement of the practical con veyor example given above. When a person views computers and automatically controlled machines in this way, he is apt to gain a 3 4 THE FREEMAN July new perspective of automation especially when he recognizes that the human energy that is replaced can be either physical or mental. Automation, then, is simply a new name for an old process: the transfer of work from people to machines in order to lighten man's burdens and to increase his out put. What Isn't Automation? Actually, automation is blamed unjustly for effects it has not caused. It has become the public whipping post for a bigger thing called "technological change." Technological change is change that is brought about by advances in the application of skills or methods of production or, even more importantly, change brought about by the discovery of new products that have new uses. For instance, the introduction of tele vision dealt a tremendous blow to the movie industry.

Private companies have invested millions of dollars in research on a "new" metal called Titanium. It weighs about twice as much as aluminum but has some superior characteristics, so is preferred for some uses in aircraft and space craft. Cost has been a barrier to its use, but the millions of dollars invested in research have paid off by drastically lowering production costs. Soon it may compete with aluminum on a cost-weight basis. When this happens, lost aluminum sales could cause lowered employ ment in the aluminum industry. If so, the drop in employment would also be a direct result of technological change - not of au tomation. However, aluminum pro ducers might turn to increased automation in an effort to lower production costs and thereby win back lost customers. This distinction between tech nological change and automation is one that more people should un derstand. And that better under standing may come through study of some basic economic principles.

Basic Economics As a Benchmark When a man buys a telescopic sight for his rifle, the first thing he does after installing it is to "sight it in." Fire control men in the Navy also "sight in" a ship's guns to make sure they aim true. To assist· in doing this, they se lect a fixed point somewhere on the ship as a "benchmark." Measurements are made from this mark to insure an unchanging point of reference. When talking about automation and changes in production or products, we can refer to similar benchmarks. Such reference points can be found in the follow ing unchanging economic prin ciples: 1965 WHY AUTOMATION? 5 PRINCIPLE #1 Man's Material Welfare equals Natural Resource.s plus Human Effort times Tools. Man determines his material welfare (standard of living) by taking natural resources and ap plying his human effort to develop them with the aid of tools. This is an absurdly simple state ment of fact, yet how many peo ple forget it when thinking about automation? If we remember the simple rule that man's standard of living is· directly dependent on both the amount of effort he ex pends as well as the number and quality of tools he uses,. it's easy to see that automation (Le., better tools) can't possibly cause unem ployment. Automation (better tools) can only increase produc tion. Therefore, ,the real cause of unemployment must be found else where.

PRINCIPLE #2 Man's wants are unlimited. Some people claim automation increases production so much that overproduction results. This idea sounds plausible until we remem ber that man's wants have never been completely satisfied.· Regard less of how many products there are, consumers always seem ready for more new ones. For example, if we could go back 100 years and list all the things people could possibly want, the people of that day couldn't begin to name the thousands of wonder ful new products that have been invented during the past century. If the list were up-dated every 25 years, people's wants would grow each time by leaps and bounds: from coarse black stockings to sheer nylon hose; from molasses and sulphur to modern antibiotics; from food cellars to automatically defrosted refrigerators. Yes, there's no· doubt that people's wants always exceed the possi bility of satisfying them. So, over production isn't the cause of un employment either.

PRINCIPLE # 3 All employment comes from cus tomers-when customers are lost, unemployment results. Once the truth of this state ment is understood, the real cause of unemployment begins· to rear its ugly head, and it's not· "auto mation" or "changes in products or production." It's simply the re fusal of customers to buy what is produced. A totalitarian govern ment might possibly force custom ers to buy, but in America we rely on voluntary persuasion. And the best customer persuasion is usually a reduced price tag. This leads to the next bench mark and to what brings about 6 THE FREEMAN July automation and changes in prod ucts or production (technological change) . PRINCIPLE # 4 W hen a customer buys some thing, he pays these five costs: • Cost of goods and services pur chased from suppliers • Cost of tools wearing out (depreciation) • Cost of taxes • Cost of human energy (wages) • Cost of using tools (interest) In the long run these five costs make up the per-unit cost of everything produced. And pay ment for them, if a company is to operate successfully, must come from the people who buy its prod ucts or service'S - its customers.

The important word "if" con stitutes the intriguing challenge of being in business: can a com pany recoup its costs of produc tion from its customers? A his tory of business fa.ilures could pro vide many interesting, but sad, experiences of entrepreneurs who have personally faced the sad real ization that costs do not deter mine prices that consumers are willing to pay. Rather, it is the other way around: market prices limit the costs that can go into producing an article for sale. If a producer is to operate profitably, he must stay under the costs the market is willing to cover. The Difference Between Interest and True Profit Perhaps it might be well to di gress a moment to explain the above designation of interest rather than profit as the "cost of using tools." First, the question of profit as a cost. In its true economic sense, profit doesn't add to the market price. It is residual. Profit is the reward a producer gets for keep ing his cost of production below the price his goods will bring on the market. When considered thus, profit certainly isn't a cost of pro duction. It is extremely flexible,. It might be very great or very small, and even negative if a. business operates at a loss. The fact is that not very many businesses in a keenly competitive situation earn a true profit over and above in terest costs.

Next, the-designation of inter est as the "cost of using tools." This is also logical and practical. By "tools" we mean not only our plant and machinery, but all assets owned and used by the business. This also includes ideas that have been patented, temporary cash bal ance held to pay the other four costs of production, and the like. Without these tools, our business wouldn't exist. Unless a. business earns interest on investment, it will soon lose its investors. Now, to get back to the signifi1965 WHY AUTOMATION? 7 cance of the five costs of produc tion mentioned above. We've noted that costs do not determine mar ket prices. Thus, when customers refuse to buy a product because the asking price is too high, pro ducers must reduce the price to sell it. This reduced price will cur tail future production of the item (with corresponding unemploy ment) unless· total costs can be brought in line with the price ceil ing set by the free market. If ways can be found, the product can be produced and sold, and unemploy ment thereby will be prevented.

Now we begin to see the real cause for unemployment which is wrong fully blamed on automation: Fail ure to reduce the five costs cus tomers must pay each time they make a purchase. From the financial data con tained in the 1964 annual report of a large U.S. auto manufacturer, we see that its income dollar was distributed like this: 1. Cost of goods and services purchased from suppliers .. .... .. ..... .. ... .. ... ... 57¢ 2. Cost of tools wearing out (depreciation) ........".. .. .. 5¢ 3. Cost of taxes........................ 6¢ 4. Cost of human energy (wages) 27¢ 5. Cost of using tools (interest) ....,................... 5¢ $1.00 How to Cut Costs Now, suppose this is our com pany, and that customers stop buying our cars because they are priced too high. What do we do? We look to see where costs can be cut. Our first three production costs shown above total 68¢. There is little chance to cut them very much. Competition determines the price we pay for our goods and services. Taxes and depreciation are fixed by government, and our accountant will vouch for the fact that present depreciation rates won't cover the cost of replacing our machines when they wear out.

Next, we look at the, two re maining cost items. We, find that only 32¢ remains to be divided be tween tool owners (stockholders) and tool users (employees). Here's how this 32¢ has been divided: 84 per cent was paid to employees 27¢ 16 .per cent accrued to owners 5¢ If savings have to be made in these two cost areas, the greater potential for reducing the cost of our cars, then, is the 84 per cent of divisible income paid to em ployees for the cost of human en ergy (wages) . We can achieve this savings (remember, the need to lower costs is forced upon us by our customers) in two ways: 8 THE FREEMAN July By paying fewer employees at existing wage rates, or By paying the same number of employees at low'er rates. The goal we· must reach to stay in business is clear: reduce our per-car cost to the point where customers start buying them again. If an inflexible wage contract prevents us from employing all of our present workers at lower pay, we are forced to reduce wage costs by replacing some of them with machines (assuming that we can raise the necessary investment funds). If we don't, we will have to close up shop. Then everyone will be unemployed. It would not be right to blame the resulting loss of jobs on automation, since the real cause would stem directly from the problem of inflexible wages. (This is why many em ployers claim the decision to auto mate is forced on them. They are forced to replace people with ma chines in order to keep total wage costs from going too high.) Customers in Control In summary, then, we see that all jobs in our company are created by the customers who buy our cars. If the five costs which we ask each customer to pay get too high, we start to lose custom ers to our competitors. To win them back, we must cut the price we ask for each car. This gives us less money to pay toward the five costs of prod ucing each car.

Whether our choice is increased automation at existing wages for some employees, or lowered wages for all employees, the need to re gain customers is the cause that forces our decision. Automation on one hand, or lower wage rates on the other, are only the effects caused by the un avoidable need to meet the price demands of customers. This fact should be stressed and stressed by businessmen until employees, stockholders, and the general pub lic understand it. Once the direct relationship be tween prices and customers to wages and employees is widely un derstood, a new basis for em ployee-employer understanding and cooperation will be opened. Employees will more readily rec ognize that the common interests of tool users and tool owners can be simultaneously achieved by conforming to the dictates of con sumers. Such an understanding, in the long run, is the only hope to achieve the necessary high degree of labor-management cooperation to make our free enterprise sys temwork at peak efficiency~ So let us now consider some illustrations of the way in which automation serves to expand the market and regain lost customers.

J965 WHY AUTOMATION? 9 How Automation Helps Expand Markets and Regain Lost Customers The Coal Industry. After World War II, coal lost its competitive advantage to oil and gas.· This was caused by two contrasting factors: Excessive wage demands had in creased the price of coal, while new methods of production de creased the relative cost of gas and oil. Naturally, consumers spent their dollars where they got the most for their money.· Domestic and foreign use of coal dropped. Production slipped from 688 mil lion tons in 1947 to 439 million tons in 1962. Employment in the coal industry fell with production, and thousands of miners were left without jobs. Now, coal has· made a comeback through the combined help of au tomation and technological change. Automated machines mine more coal at less cost. Unitized trains and more effi cient loading docks made lower freight rates p()ssible. Larger coal ships have reduced the cost of overseas ship ments.

Big utility companies have in creased coal purchases. Foreigners have, too, because U. S. companies can now mine and deliver coal in Europe at a lower cost than Euro pean coal companies. As a result, coal industry employment has risen in the United States. Electronics Industry. The radio business in the United States suf fered a serious blow in 1959 when Japanese-made transistors were introduced. They were of excellent quality and cheaper, so .consumers again spent their dollars where they got the best value. By 1962, Japanese producers had captured two-thirds of the transistor radio market in our country. The result ing decline in U. S. production caused a decrease in employment. Recently General Ele.ctric an nounced it was selling transistor radios in competition with J ap anese radios - not only in the United States, but even in far-off Japan! Again, it was automation and technological change - along with intelligent worker coopera tion - that made the necessary savings in costs possible. Stream lined assembly lines, swift con veyor systems, more productive machines, and redesigned products all combined to produce quality products at competitive prices.

The Steel Industry. Widespread destruction in Europe and Japan during World War II provided op portunities to build efficient steel mills from scratch. Enterprising investors installed oxygen convert ers, computer-controlled systems, and other devices to increase effi10 THE FREEMAN July ciency. These cost-saving tools, in conjunction with low wage rates, lowered the production costs of foreign steel mills tremendously. As a result, steel producers in the United States lost not only foreign customers, but also domestic cus tomers. Within a few years the dollar value of our steel exports dropped almost 45 per cent while imports increased almost 250 per cent. Lost foreign customers and increased imports meant fewer jobs for American steelworkers. Better tools of production and lower wage rates in foreign coun tries stole away customers who pay the wages of American steel workers. To meet the foreign competi tion, our mills are installing auto mated equipment at a faster rate.

For instance, one company is plan ning a new plant that will use three major advancements of re cent years: the basic oxygen fur nace which turns out steel five times faster, vacuum degassing to remove impurities, and continuous casting which eliminates one pro duction step. The benefits will be better steel at lower costs. These savings mean more customers and increased employment. Every day we can see new ex amples of how automation and changes in production and prod ucts provide higher -quality and lower prices to consumers - with increased employment resulting. The key points in gaining a better understanding of automa tion, as we see it, are these: All changes in production and products, all automation is aimed at winning customers. If all segments of our economy will cooperate in meeting the quality and price demands of consumers, they will become customers. All payroll dollars have only one ultimate source: the customer.

The key, then, is to concentrate on doing what is necessary to win customers. If this is done success fully, the jobs will follow. ~ Equality of Opportunity WE IN AMERICA have had too much experience of life to fool our selves into pretending that all men are equal in ability, in char acter, in intelligence, in ambition. That was part of the claptrap of the French Revolution. We have grown to understand that all we can hope to assure to the individual through government is liberty, justice, intellectual welfare, equality of opportunity, and stimulation to service. HERBERT HOOVER, American Individualism (1922) IN ENGLAND, the direct sale of gasoline to passing motorists from mobile tank trucks is an estab lished business practice. So, an Australian businessman decided to try it. The company's first tank truck parked in an area alongside the road, advertising gasoline at a 5-pence discount per gallon. The lower price reflected his lower overhead costs, and motorists rec ognized the bargain. One sale fol lowed another in swift succession.

However, a nearby service sta tion operator, upon learning of this new competition, jumped in his car and sped to the scene. First, he threatened to set the gasoline truck on fire. When this failed to scare his competitor, he threatened shooting, but· the tank Mr. Yankus moved to Australia from Michi gan in protest against government suppression of competition in agriculture. STANLEY YANKUS trucker stood his ground. Eventu ally, two other service station operators arrived and the three of them parked their cars to block the access of passing motorists to· the tank truck. Finally, the police arrived, and the service sta tion operators were told to vacate the-premises. If all the service station opera tors had been allowed to vote to pass a law prohibiting the sale of gasoline from tank trucks to re tail customers, that law would surely have been passed. When ever someone has an advantage over us in our means of making a living, there is a particularly strong temptation to squash that competitor's advantage by force.

Thousands of socialistic laws orig ina te in this manner. Here is a typical example of so cialistic laws already in effect. 11 12 THE FREEMAN July Doctors who migrate to Australia are prohibited from practicing their profession unless they re peat their studies in Australian medical schools. In one glaring in stance, a migrant doctor wrote a textbook which is in current use in Australian medical schools. Yet he was prevented from earning a living as a doctor by restrictive law. The evidence is clear. Local doctors aren't worried about the competence of migrant doctors; they do not want the competition. They personally find it distasteful to their conscience to threaten competitors with fire, shooting, or other forms of violence. So a law is passed empowering the police to fine, jail, or shoot the competitors who disobey. Few individuals would person ally attempt to stick a pin in another person, or. give him a kick or a punch. It is· clear that such violence has a way of quickly turn ing upon its instigator. It is not so easy to see that passing laws to suppress competitors would have the same effect. Suppose you had the police power to. impose re strictions on another person. And for every restriction you imposed on him, he was empowered to im pose a restriction on you. In such a simple situation,· it's easy to see that the harm done to others by restricting their creative ac tions will return to those who in flict it. There would be as little appeal in imposing restrictions un der such conditions as there would be in cutting off another man's finger, .knowing that your own finger would be cut off the follow ing day. Yet the list of laws sup pressing competition is long in deed, simply because few individ uals believe there will be a re taliation. The retaliation is often devious and not readily seen or understood. But, it is always there, and eventually will manifest itself one way or another. ~ A Postscript from Stanley Yankus "OUR LOCAL government officials hired a dog catcher. One of the first dogs to be caught was the Mayor's kelpie. The Mayor and other dog owners complained that the dog catcher was 'too efficient.' He who passes laws for others seldom realizes that the others include his wife, his children, and the friends he cherishes most of all."

I. 25 1.00 7S¢ 50¢ 25~ • I I I I 1938 1939 1945 1950 1956 1961 1963 REGARDING THE MINIMUM WAGE JAMES E. BLAIR GOVERNMENT REGULATION of wages is, of course, an .. old prac tice. In Western Europe there ex isted a wide range of wage regu lations prior to the rise of classi cal liberalism in the nineteenth century. TheN orth American continent was largely free from government manipulation of wages during the, period which saw wages here become the highest in the world; however, from 1912 to 1923 a humanitarian concern for the poor resulted in the estab lishment of minimum wage laws in fifteen states, Washington, D. C., and Puerto Rico. These laws, when tested in .the courts, were declared unconstitutional as violaDr. Blair is a research chemist in New Jersey. tions of the .Fourteenth Amend ment. The idea of a minimum wage law was revived with the Fair Labor Standards Act of 1938, based on the Federal government's power to regulate interstate com merce. The legal minimum wage was set at 25t an hour in October, 1938. This was raised to 30t in October, 1939 and to 40t in 1945.

The rate went from 40t to 75t on January 25, 1950, then to $1.00 on March 1, 1956, and was raised to $1.15 on September 3, 1961 at the same time extending coverage ·to additional persons at $1.00 an hour. In September, 1963 the minimum wage was increased to $1~25 in all jobs covered prior to 1961 and to $1.15 in jobs added 13 14 THE FREEMAN July in 1961. New York City unsuccess fully attempted to establish a $1.50 minimum wage law in 1964, and "progressives" today are ad vocating a Federal minimum of $2.00 an hour. Indeed, if it is possible to raise wages to any desired level by governmental de cree, one wonders why large seg ments of the population, espe cially those in lower paid jobs, are usually excluded from mini mum wage coverage, and also why the level is held down to what a typical low income worker is thought to need. Theory Before presenting the results of empirical studies made on the effect of minimum wage laws, it is desirable to review the results predicted by the classical theory of economics, to know what to look for in the mass of data pub lished by the Department of La bor's Bureau of Labor Statistics.

Let me hasten to assure the reader at this point that it is scientifi cally sound to use theory as a guide in the interpretation of data. Indeed, I hope to show that failure to consider data deemed impor tan t by theory has led many peo ple to overlook some of the harm ful consequences of our present minimum wage law. Simple application of the law of supply and demand suggests that employers forced to pay higher wages will employ fewer workers. This indicates that the industries affected will respond to minimum wage incre'ases by either laying off existing help, or hiring fewer new workers than they otherwise would have done. As a consequence of reduced employment opportunity in indus tries "protected" by the minimum wage coverage, one would expect an influx of workers into indus tries not covered by the, law workers who would "normally" have been employed in the pro tected industries. Thus, theory predicts that unprotected indus tries should show increases in employment, or unemployment, or both, depending on the particular industry's ability to absorb the new workers as the minimum wage is raised. As a result of the increased competition for jobs one would also expect that wages in the nonprotected industries would either fall, or else rise more slowly than normal, when the Federal minimum wage is in creased.

As the legal minimum is ex tended to more workers, or is raised higher above the market value of the worker as determined by his productivity, the nonpro tected industries will be less able to absorb the workers precluded from employment in the protected 1965 REGARDIN'G THE MINIMUM WAGE 15 industries. Hence, one would ex pect (all else being constant) an increase in the number of persons structurallY unemployed. This should be greatest among persons with little skill, or those who are for one reason or another likely to seek .employment in the low pay jobs most affected by the law. In the normal operation of the market economy, if unemployment develops in a given location (due, for example, to decreases in the demand f or a product produced in that area), wages paid in that region tend to be reduced. The lower wages serve as an induce' ment for industry to move into the area, particularly industry such as textile and light manu facturing plants which do not re, quire highly specialized skills in their workers. .Insofar as mini mum wage laws tend to reduce the wage differential between "de pressed areas" and areas of nor mal employment, they would be expected to retard the movement of industry into depressed areas.

The IIRicardo Effed ll Another consequence of mInI mum wage laws (discussed by Ludwig von Mises in Human Ac tion, pp. 767-769 of the 1949 Yale edition) is the "Ricardo effect," Le., a high minimum wage causes employers to substitute machin ery for labor because of the increased cost of labor. It has been suggested by some that the' Ri cardo effect is desirable because it promotes automation. But this neglects the' fact that it is usually lack of capital which checks a businessman's endeavor to im prove the equipment of his firm. Since the minimum wage law does not create additional capital, the forcing of more capital expendi tures in one industry leaves less for other industries, where it would have been employed. more efficiently, Le., would have yielded a higher return on investment. Thus, the economy as a whole does not benefit from the Ricardo effect. And while, the worker' in the pro tected industry who has higher pay benefits from the' law, the worker who is laid off or replaced by a machine may see things in a different light.

The Consequences of Intervention To summarize, classical eco nomics predicts reduced e,mploy ment opportunity in protected in dustries, lower wages and in creased employment in nonpro tee ted industries, and more un employment in both types of in dustries than would have other wise been the case. In addition, a shift of capital expenditures from the rest of the economy into some protected industries would be ex pected. If the unprotected indus16 THE FREEMAN July tries could not absorb the influx of workers precluded from the protected ind ustries, the decreased employment opportunity in the latter would cause an increase in structural unemployment contrib uting to the development of "de pressed areas." The classical the ory does not claim that no worker will benefit, or even that wages in the protected industries cannot be raised for those workers fortunate enough to remain employed.

Proponents .of minimum wage laws, or at least all of them that I 'have read, base their support on the assumption that the classi cal theory is invalid (if indeed they indicate having thought about it at all) and that employment opportuni ty will not be affected. In addition, they like to stress the humanitarian purpose of the law. On this point I offer two observations: (1) Since a law is not animate, we should rather talk about the purpose of the legislators who supported it. But this is impossible to determine without telepathy or a truth se rum. Perhaps a congressman voted for it because he thought it would help the poor, or because it would aid in his re-election, or because he wants to reduce the likelihood of industry moving into depressed areas instead of into his state or district. (2) The "purpose" is not relevant to the actual effect. The Data to Prove It When the Federal mInImum wage law was passed in 1938, there were no data available, from this country at least, on the effects of such a law. One could claim that he "knew in his heart" the classical theory is wrong. Now, however, there are both· theory and data.

It is sometimes suggested in jest (and even in earnest) that since average wages in this coun try have increased, and the legal minimum wage rate has increased, the latter caused the former. This argument does not even qualify as post hoc, ergo propter hoc since the increases •in the legal minimum in each case followed the average wage increase. I, for one, find it difficult to believe' that the national average wage rose past the 75ft per hour mark in the 1940's due to the minimum wage boost to 75ft per hour in January of 1950. Studies on min imum wage law impact have to be done a bit more carefully than this. For one thing, since most work ers are not directly affected by any given boost in the legal mini mum, either because they already earn more than that level or· be cause they are excluded from coverage, the effect can be seen only by studying those industries or geographic areas where a rela1965 REGARDING THE MINIMUM WAGE 17 tively large portion of .workers receive low wages. An intelligent study must consider employment as well as wages, and must study the effect on industries excluded from coverage of the law as well as those included.

Support for the law comes from studies printed in the Department of Labor's Bureau of L.abor Sta tistics' publication, Monthly Labor Review', so let us consider these carefully. The May, 1960, Monthly Labor Review' (v. 83, no. 5, pp. 472-83) contains the most recent such study entitled "Effects of the $1.00 Minimum Wage in Six Areas 1956-59." The six areas were selected in low-wage regions of the South where the law has a measurable eff'ect. The survey re ports average hourly wages in the areas before and after the legal minimum was raised to $1.00 on March 1, 1956, and shows that in the industries covered by the law, average hourly wages jumped by around 10 per cent in most of the six regions. But no data are given on employment and unem ployment figures in these regions at this. time, and nothing is said about possible reductions in the worK ferrce. Indeed, the average wage in an industry can ·be raised by simply firing the lowest-paid employees. Hence, this Bureau of Labor Statistics' study is· almost completely useless as an attempt to test the predictions of classical economic theory.

The study does contain some interesting figures,however. Wages in the industries in these six areas which were not covered by the minimum wage law showed an average reduction in one of the areas (Dothan, Alabama) , and they either stayed the same or increased by only a per cent or two in the other five areas. This was during an upswing in the economy as a whole, when wages would normally be expected to rise. Thus, the· theoretical predic tion that wages in unprotected industries will either fall or· rise more slowly than usual appears to be supported. It should also be noted that this study shows that in all six areas wages in covered industries were already higher than in uncovered industries be fore the $1.00 legal minimum went into effect. Thus the law produced an even greater differ ence in wages between the "high" and "low" pay jobs. Higher Wages-fewer Jobs As a consequence of studies such as the above, Monthly Labor Review in an article on the "Re sults of U. S. Minimum Wage Laws" (March, 1960, pp. ·238-42) concludes that we know from ex perience that .it is possible to raise the average pay for workers 18 THE FREEMAN July in low-paying industries by mini mum wage laws. Classical eco nomic theory doesn't dispute that.

A merica magazine (April 4, 1959, p. 8) at least deals with an actual prediction of the theory when the editors observed: "In the halting progress of the legal minimum wage from 40¢ an hour in 1939 (sic) to $1.00 today, none of these dire predictions has been fulfilled. There has been no erosion of jobs .... " It should be noted in connection with this observa tion, made with no evidenc,e cited to support it, that since World War II, with the Federal minimum wage la,w in operation, successive business cycles have each left an increase in unemployment. This pattern has been interrupted only recently, probably by the tax re duction. We have also witnessed a "depressed area proble,m." Both are in accord with the theoretical predictions of the effect of mini mum wage laws, but since there are many factors working in the economy we cannot conclude with out detailed studies that these problems are caused by the law.

However, detailed studies of the law have been made and I will present some of the results. Effect on Low-Wage Industries The effect of raises in the legal minimum on employment in var.. ious low-wage industries covered by the law is summarized in Man power, Produc!tivity, and Costs by Professor Yale Brozen of the University of Chicago. In the two years following the establishment of the 25¢ per hour minimum wage rate in October, 1938, 14 per cent of the workers in seamless hosiery plants lost their jobs. Likewise, when the rate was raised to 75¢ an hour employment in southern pine saw mills dropped by 17 per cent. Similar employment drops occurred in the cigar, fertilizer, shirt, footwear, and canning industries. The Bureau of Labor Statistics found an 8 per cent decline in total employment dur ing the year following the in crease to $1.00 in the five low wage industries it chose for de tailed examination. The applica tion of the $1.00 minimum wage in 1961 to a certain sector of retail trade brought an 11 per cent de cline in employment to that part of retail trade, while' retail trade employment in the other sectors and in the nation rose. In each of these cases cited above, while em ployment in the protected low wage industries dropped, sales, production, and employment were rising in the United States as a whole, because these figures were compiled during a cyclical up swing.

Another study of the economics of the minimum wage law is the 1965 REGARDIN'G THE MINIMUM WAGE 19 Ph.D. thesis of David E. Kaun, Stanford University (1964), which is summarized in Dissertation Ab stracts, 25, no. 2, p. 881. Kaun studied fourteen low-wage indus tries, with large segments located in the South (where the direct effects of the minimum wage are greatest). He considered· the be havior of wage distributions, em ployment, and labor force compo sition, among other things. His list of findings include "relative adverse employment effects occur ring where the impact of the min imum wage is greatest," and "in creases in the minimum wage ap pear to have adversely affected em ployment opportunities for cer tain classes of labor, namely, Negroes, females, younger work ers, and workers living. in rural farm areas." He concludes that his analysis "results in conclusions generally in agreement with the implications derived from the com petitive hypothesis," Le., classical theory.

A Cornell University study of the $1.00 minimum wage law on New York retail trade, some of the results of which are given in Monthly Labor Review, March, 1960, pp. 238-42, found that the law resulted in • lower profits to stores • reduced hours for part-time help • the laying off of workers, especially "inefficient" ones, which, the study explains, means elderly, handicapped, and part-time help • reduced store hours, and • "more careful recruitment of employees," which is ex plained to mean exclusion of the elderly, Negroes, and other "less acceptable" em ployees. The Ph.D. thesis of M. A. Malik, University of Michigan (1963), summarized in Dissertation Ab stra,cts, 25, no. 3, p. 1616, reports that of twelve low-wage industries studied in the United States, eleven experienced employment declines in the immediate period of two or three months after the establishment of the $1.00 mini mum (remember this was during a general economic upswing). Of these, ten continued to show em ployment declines a year later.

Since there are many other con stantly changing factors which in fluence the employment situation in any given industry, Malik tried to find alternate explanations for the employment reductions in these industries. But in at least five of the industries he could find no other reasonable explanation the employment decline must be due to the minimum wage law. As expected, the industries where the law had the greatest impact regis20 THE FREEMAN July tered the largest declines in em ployment. The final study I shall cite is the effect of minimum wage law increases on a noncovered indus try, household workers, by Yale Brozen in the Journal of Law and Economics, 5, pp. 103-109, Octo ber, 1962. Studying the period from 1950 to 1962, Professor Bro zen's figures, from the Depart ment of Labor and Bureau of the Census, show that in each instance when the minimum wage rate rose, then umber of persons em ployed as household workers rose.

The rise was· not the result of un employed household workers find ing .jobs, since there was also a rise in the percentage of house hold workers unemployed in each instance (except 1961-62, when the decline in unemployment percent age accounts for only 15 per cent of the rise). This increase in both employment and unemployment in the noncovered industry with raises in the legal minimum wage is exactly as predicted by classical economics, and indicates that workers driven or precluded from jobs in covered industries by the law must seek work in noncovered industries (like household work). Figures given on wage rates in household employment indicate that the wages are lower than they would have been without the Fair Labor Standards Act. Other Reasons Offered, But They Are Invalid As evidence of curtailment of employment in low wage indus tries resulting from the minimum wage law has mounted, some pro ponents of the law have adopted a new rationale for their posi tion; they say the law is good be cause it helps to eliminate "sweat shops." Since some industries are covered and some exempt from coverage by the Fair Labor Stand ards Act, if some "sweatsh ops1' have been eliminated, it has caused people employed in them to find jobs in others, generally at even lower wages. If the law covered everyone in the economy, (includ ing babysitters and the like) those who were "saved from sweat shops" would have nowhere to go to find jobs. It is all very well for the "liberal" theorist to claim that a man is better off unemployed than working in a "sweatshop,"

but shouldn't the decision rest with the man in question? One additional observation on this point: often a low-paying job gives a person the chance to learn the business or demonstrate his ability, and can lead to a higher paying position. Consider the number of company presidents and high officials who started their careers in low-paying jobs, and imagine where they might be to day if they had been "protected"

1965 REGARDIN'G THE MINIMUM WAGE 21 against being offered their first job by a minimum wage'law. Thus, we see that the minimum wage law can raise average wages in an industry by reducing the employment of low-wage help. In some respects the effects are like that of a, tariff - it is easy to recognize those who benefit from the law, but harder to determine those who suffer from it. We can see the worker who is given a raise because of the increased minimum, but the worker who is laid off when he otherwise would not have been, and the man who is not hired who otherwise would have been, are harder to identify. But while the harmful effects of the tariff are spread over the whole economy, those harmed by the minimum wage law are most ly the very poor, the unemployed, the elderly, and the unskilled. ~ This article previously appeared in the January 1965 issue of Insight and Outlook, a conservative journal published by students at the University of Wisconsin.

Grossly Underpaid, AN INVESTIGATOR for the Anti"Poverty Commission was recently asked to check on reports that a farmer was pay ing his help below-standard wages. He went out to the farm and was introduced to all of the hired hands. "This here is Gordon," said the farmer. "He milks the cows and works in the fields and he gets $45 a week. "This is Billy Joe, the other hired man. He works in the fields and tends the stock and he gets $40 a week. "And this young lady is Sue Ann. She cooks and keeps house and she gets $30 a week, room and board." "Fair ,enough so far," said the inspector. "Is there any one else?" "Only the half-wit," answered the farmer. "He gets $10 a week, tobacco, room and board." "Aha," said the inspector. "I'd like to speak to him." "You're talkin'to him right now," replied t~ farmer.

JOHN C. SPARKS A CLASSROOM DISCUSSION con cerned a successful and wealthy industrial leader who had donated most generously to parks, muse ums, educational institutions, and other worthy endeavors during his lifetime, while expanding his com pany and the local job opportuni ties in the, community at the same time. Then the teacher posed an interesting que,stion to his high school students. How would the students have spent this man's wealth if they had had the op portunity; and further, was it proper that the spending of such a great amount of wealth should have been decided by' one man? Written answers were requested. There were· a fe,w exceptions, but generally the students failed to acknowledge the hard work, long hours, and ingenious ideas that were required over so many Mr. Sparks is a businessman in Canton, Ohio. 22 years to create, the wealth now theoretically in the hands of e'ach student. Instead, only the second half of the old saying, "easy come, easy go," was evident in the' imag inative spending spree,. Unaware of the responsibility of creating wealth, they also lacked an aware ness of the responsibility of us ing it. Obviously, most of the students thought they could have "spread" his wealth in a manner that would have accomplished more than the good achieved by the industrialist. Many suggested that the government could better have spent his wealth than he did.

One student, however, whose wisdom belied her years, wrote that the wealthy leader, who had built up such a successful com pany, produced good jobs, and amassed a substantial fortune, evi dently knew better than others how to use, his wealth. Besides, 1965 .••IF I HAD THE POWER 23 she added, no matter what others thought about his use of his rich es, it was no concern of theirs. It was his property, and· he alone had the right to decide its use. At one time or another, most of us doubtless have daydreamed about what we could do with a million dollars - not how we would study, learn, work, sweat, labor, and save to create the for tune - but only how we would spend it if we were suddenly to come into possession of it. If I were king - if I were pres ident - if I were rich - if I were manager of the Yankees baseball team - if I were calling the plays for the Cleveland Browns' profes sional football team. . . . What self-entertainment it is to specu late in this manner!

While it may be tempting to imagine oneself qualified to as sume one of these positions of honor, it is convenient to forget that one has not paid the exacting toll to get there; and further, that one is not actually responsible for the consequences of decisions made only in fantasy. Dividing the Pie In a similar fashion, the gov ernment interventionist. (socialist, collectivist) tries to enter the pic ture, at the top, after the goods have been produced by others. In this case, the speculation is not innocent, passive fun but a vicious form of covetousness that would project the "if-I-had-the-power" ideas into reality. These advocates of compulsory collectivism seldom find fault with the prod ucti ve prowess emanating from a private-ownership, free enterprise economy. There is no suggestion from them how the owners of factories can produce more. No idea is presented that will improve quality, lower costs, and shorten production time. Not one of them comes up with the plan that encourages a worker to make his actual output equal the potential of his ability and effort.

The collectivist has no objection to the unbelievably huge quanti ties and varieties of material goods and services pouring out of the factories and into the mar ket places of the nation every day. Compared with the quality and quantity of a century ago, or even a decade ago, he will concede the fantastic abundance flowing from a free economy. This is not his quarrel. More-than likely, how ever, it is his attraction. A nation of great wealth has greater at traction to the collectivist than a poor nation where little is available to divide. Given a choice between two pies of different sizes, he prefers to divide the larger pie. Not at all concerned with making the pie larger, he wants only to 24 THE FREEMAN July divide it in a manner he thinks just; and the bigger the pie, the more powerful and important he feels. All Were failures One might wonder why the modern twentieth-century collecti vist does not try to introduce his ideals to his fellow men by pro viding true-life illustrations of the wonders of collectivism, in ex perimental communities. Almost any up-to-date manufacturing company that develops a new prod uct will first test the product and its acceptance by the public in a limited. number of marketing areas before attempting to sell it on a nationwide· scale. Failure had best be ascertained sooner rather than later if disastrous losses are to be avoided by the company.

On the other hand, successful pro motion can better be planned for national introduction after expe riencing satisfactory results in the test markets. The only sen sible way, according to these man ufacturing leaders, is to test the prod uct on a small scale first. Not for the modern collectivists, however! Collectivism, wherein the individual is pushed asid.e for the common good, has been tried repeatedly over the centuries in great variety - monarchies, em pires, socialist states, welfare states, fascism, people's democracies - to name a few of the forms of political despotism that have repeatedly deprived man of his full heritage of freedom. To day's collectivist is not about to show his wares in anything re sembling a test market. And with good reason. The collectivist is bored with the' hard facts of eco nomic life. He does not want the responsibility to ere,ateabundance. Production tires him, and well it might, because the collectivist principle - from each according to ability, to each according to need is not an incentive for anyone to work harder or strive for the bet ter idea or the method that will produce more material goods.

During the •. nineteenth century, numerous voluntary experimental collectivist communi ties were tried, and failed. Many of these experiments in the United States were primarily religious in na ture, including the earlier Ply mouth Colony. The economic. as pect was usually secondary and of concern only as a means to fulfill the spiritual objectives of the members of these societies. Never theless, after initial zeal, the good producers soon tired ofbeirig ill fed. They left. They chose not to be responsible for feeding those who would rather be idle. In those communities where the experi ment was primarily economic rather than religious, the com1965 ••.IF I HAD THE POWER 25 munes folded after only two or three years. It should be remembered that under these experiments of volun tary collectivism, no walls or cur tains of iron preve~ted the skill ful and ambitious producers from packing up their families and leav ing. No guards stood armed to shoot those who had enough of collectivism. They simply left. The collectivist officials, the zealous members, the idlers, and the un skilled who remained thus were faced with a choice' - collectivism and poverty on one hand, to which the older members sometimes did not object, or a return to individ ual ownership. and responsibility.

Two Reasons Why the Local Experiments Could Nol Su~ceed It would be pointless for the modern collectivist to attempt to prove the glowing dreams derived from a voluntary experimental community, because none has worked successfully in the past and none will work in the future - for two reasons. Membership in such an experimental commun ity is voluntary. A member can dissociat~ himself with. the mini mum of inconvenience. And if he is worth his salt, he will. Obvious ly then, the modern collectivist cannot afford to permit any liber ty to choose. Too few would pre fer collectivism if they actually understood the system. Therefore, the people who do. not like it can not be allowed to quit the national program. Good producers must produce for the benefit of the un skilled, indolent, and lazy - as well as for those administrating the entire system. The other reason why the ex perimental collectivist communi ties folded was the ready compari son between the results of collec tivism and the results of private ownership, as seen in neighboring towns and cities' perhaps only a few miles away. This detrimental comparison can be avoided only when the collectivist principle is adopted nationwide on a compul sorybasis. The collectivist cannot afford to let the public seethe re sults of his ideas at work, com paredside-by-side with the results of private ownership and individ ual initiative. The comparison would reveal the collectivist short comings all too quickly. There fore, collectivist laws must be adopted· throughout the nation so that no comparisons exist.

People Can Be Misled It seems unlikely that any peo ple would accept a form of gov ernment in their communities that embraced collectivist principles. Would the populace of any civil ized nation accede willingly and knowingly to despotism and reg26 THE FREEMAN July imentation, particularly after hav ing tasted freedom? One would expect them to be on guard, es pecially against any tendency to drift in that direction. Yet, para doxically, what is impossible for the collectivist to achieve on a small scale in an experiment seems to be more readily attainable on the broad scale of an entire na tion. This does not mean that col lectivism can successfully bring about an abundant, happy, crea tive life. It cannot any more do this on the larger national scale than on the smaller community scale. But the public can be misled into it, especially when no com parison is readily available to show up the defects in a nation of complete collectivism.

This is freedom's great danger. This is collectivism's peculiar op portunity. Persons are attracted by the paternalistic-government promises even though they are not achievable. Strangely enough, many of the advocates of these programs are not schemers or conspirators at tempting to hoodwink the people, but sincere persons with the best of intentions. They honestly be lieve their system of compulsion will benefit mankind. They are frightened by the imagined "chaos" of millions of people, each one making hundreds of decisions every day of his life. Let us once more be reminded that the collectivist does not like comparisons. Even in a country such as ours that suffers a milder case of the collectivist disease, the comparison of a government en terprise with a private enterprise of like nature will be carefully rigged to favor the former. For example, TVA electric power is represented as being less costly to produce than the electricity of private companies, although the TVA pays few, if any, of the tax costs for governmental "services."

L.ow-interest or interest-free fi nancing are simply' ignored in the comparisons. Eliminating Competition The next step beyond a "rigged" government - private comparison, is the elimination by law of the private method altogether. The post office is an example. Only the government postal system is law ful; none other is permitted to deliver mail. Government educa tion has not yet reached this point, although there have been sugges tions to ban private education be low the college level. In certain states, private insurance com panies are prohibited from sup plying workman's compensation insurance to employers. Only the state insurance "company" is per mitted to operate. Thus, no one can justifiably ac1965 •••IF I HAD THE POWER 27 cuse a collectivist of being a good sport. He wants the rules of the game rigged so that no others can show up collectivism as the weak, incapable, unproductive, and im moral system it is. The system he advocates will not permit a contest on neutral ground and un der uniform rules if it can be helped. The collectivist wants four strikes, while he restricts the pri vate ownership competitor to two strikes, or one, or preferably none! It is not surprising then that no comparison at all is the preferred position. After six years of Castro, some Cubans are losing the sense' of comparison. One Cu ban parent says: "Despite what we parents tell them, the young people are beginning to forget what life was like before 1959.

They don't remember what it's like to live well - or what freedom really means."! In order to guard against col lectivism, it must be revealed for what it is, a system that removes 1 "What Castro Is Doing to Cuba," U.S. New8 & World Report, LVIII (March 1, 1965), 70. freedom of individual choice, that gives great power to a group of despots, that erodes the mind of accurate historical experience, and that will cause mankind to de generate rather than climb toward greater material and spiritual levels. Politically - elected officials in their government capacities can not produce abundance. The most powerful political office of the world is incapable of producing a high level of material wealth, or of waging successfully a so-called war on poverty. Yet people, like sheep, are still swallowing these absurd claims of the political med icine man. Increased prod ucti vity is the only antidote for poverty. To achieve such increase, all men must be free to be creative with their ideas and efforts. The free market stands ever ready to re ward and provide' the incentive to any who would achieve power purchasing power - by the honest sweat of his brow and the inven tiveness of his mind. ~ Equality No SOCIETY can rightly offer less than equality before the law; but there can be no equality of condition between youth and age or between the sexes; there cannot be equality even between friends. The rule is that each shall act where he is strong; the assignment of identical roles produces first confusion and then alienation, as we have increasing opportunity to observe.

RICHARD M. WEAVER, Ideas Have Consequences DEFINING LIBERTY An Analysis of Its Three Elements WENDELL J. BROWN Abraham Lincoln said the American people were much in want of a good definition of the word liberty. Mr. Brown has accepted that challenge, and to define what liberty is he divides it into three elements and analyzes each. He writes of the goals liberty seeks to achieve, the procedures by which it moves, and the underlying faiths that sustain it. SOCRATES thought that trial law yers were too much in a hurry to be good philosophers. True enough, there are witnesses and documentary evidence to be ex amined. Trial lawyers do not have much time for the creation of philosophical systems. A priori thinking is usually confined to what we do when we guess what the law is before we take down the books to see what it is. Lincoln was a trial lawyer. He used abstract exposition, but not for its own sake. Rather it proA member of the Illinois Bar since 1926, Wen dell J. Brown received his legal education at the Northwestern University School of Law and has practiced in Chicago since. He is a member of the American College of Trial Law yers.

This article is reprinted here, by permission, from the April, 1965, issue of the American Bar Association Journal. 28 vided him with a sense of direc tion during a period when there were enough hot heads around to satisfy the most belligerent. Dur ing that period one hundred years ago he took time to say: "The world has never had a good defini tion of the word liberty, and the American people, just now, are much in want of one." Different from other forms of life, Homo sapiens does occasional ly have use for concepts. Liberty is one of them. The word liberty is its symbol. Of late, I have not seen the word identified by its basic elements in one short piece. That is the intent of this short excursion. In the context of a free society there are three, elements in the 1965 DEFINING LIBERTY 29 concept of liberty. One of these is what liberty seeks to accomplish. The second is how to accomplish it procedurally. And the third is its underlying faiths.

I. WHAT LIBERTY SEEKS TO ACCOMPLISH In terms of· what a free society seeks to accomplish, liberty is five freedoms for each individual: (1) freedom to come and. go, (2) equality and justice before the law, (3) security of property, (4) freedom of speech, and (5) free dom of conscience. There are many other names for these five individual freedoms - freedom of the press, freedom of expression and opinion, freedom of religion, freedom of association, right of habeas corpus, right of assembly, right of jury trial, etc. But these five individual freedoms are the "blessings of liberty" that con stitute the first element of the word. The active and politically minded members of a free society may use a "more or less" liberal or an absolute "either-or" approach, but these five individual free doms are what a free society seeks to accomplish. The intent of a free society is to keep the use of allman-made power within the periphery .of these five individual freedoms.

This requires that the activities provided for in our laws have to be limited by the inherent give and-take requirements .contained in each of these five indi vid ual freedoms. We do not expect either these five indi vid ual free .. doms or their conflicts with each other to "wither away," and we know that we could not have them where the state is every thing, or where. there is no state. II. PROCEDURAL WAYS TO REACH THE GOALS Liberty is a political sense of direction. Therefore, liberty is also a current process based on its procedures and underlying faiths. The second element in the concept of liberty is identified in the debatable area of the best procedural ways to accomplish it. When I was a boy in a small Indiana town, the statement was made with impunity by one of our articulate statesmen that, "what this country needs is a good five-cent cigar." The popular in ference intended by that otherwise irrelevant comment was that we could leave the processes of liberty alone and still have it. Today we are forced not to expect our pro cedures to work that perfectly. At every turn there is the require ment that an overwhelming num ber of us accept· the responsibility 30 THE FREEMAN July our procedures impose; at every turn we have learned to expect that some will not.

Universal Suffrage and Majority Rule There is no one procedural for mula applicable to all nations alike for the attainment of the five in dividual freedoms of liberty. The newborn of each nation come into a society which has institutions, mores, laws, and habits which they could not choose. The people of each nation have to custom-build their own procedures and institu tions. They are not conceived in a cultural vacuum. In a. nation that would have them, there must be a dominant number who have already made the convictions, mor als, and habits of free men their own. The force of public opinion con trols. Different from the military practices and propaganda power of totalitarianism, communistic or other, it would be a contradiction of terms to say or think that lib erty could be thrust upon the peo ple of a nation. Physical power can be thrust upon the people of a nation, but not the power of lib erty. Men are not persuaded, save they persuade themselves. The in spiration and perspiration that create and maintain a free state must ultimately move from within or not at all.

During the 2,500 years of recorded history there has never been a dominantly free society without some form of self-govern ment. Historically, self - govern ment has been a common denom inator of all dominantly free so cieties. The statement that the perpetuation of the five freedoms of individual liberty requires uni versal suffrage and majority rule is of such persuasive power that even though we know that the ma jority has to be a responsible ma jority, I believe that we have to take that gamble. Procedurally we take that gamble aided by a. writ ten constitution. A Written Constitution In the United States our politi cal procedures are realistically grounded. Many years before Cas tro, Hitler, and Mussolini, and in fact many years before Lord Ac ton said it, our Founding Fathers were a.ware that "power tends to corrupt and absolute power cor rupts absolutely." Accordingly, un der our procedures we seek to ac complish the five freedoms of in dividual liberty by a representa tive republic under an organic written law. By its terms and in fact our Federal Constitution is the "supreme Law of the Land."

It provides for a diffusion of dele gated power into judicial, execu tive, and legislative branches, a system of checks and balances, a 1965 DEFINING LIBERTY 31 coordination of Fede'ral with state rights and a Bill of Rights, all with the power to amend by or derly procedures. We have set up these procedural odds in favor of a free, society. Other free societies may prefer an unwritten constitution, but we believe that a written one is the best procedural way for. us to ac complish the five freedoms of in dividual liberty. When we make it work for us, we avoid a concentra tion of arbitrary power, both pri vate and public. Thus far, we have found that when our written Constitution is interpreted by use of the cardinal rules of construction applied to legal instruments, it is a •powerful tool in the maintenance of the five freedoms of individual liberty and the right to an equal ballot.

This attitude toward our Constitu tion does not result in. complete agreement, but that does not per turb me. On the contrary, I do scare easily when I read a maj or ity opinion of our United States Supreme Court which shows an attitude toward our written Con stitution that allows it to be' in terpreted without any real use of the cardinal rules of construction of written instruments. For ex ample, such is the accusation of Justice Harlan in his dissenting opinion in Reynolds v.Sims, 377 U. S. 533 (1964), when he writes: ... It is meaningless to speak of con stitutional "development" when both the language and history of the con trolling provisions of the Constitution are wholly ignored.! Our procedure's to maintain a free society do not allow for that attitude to become a habit. In the same dissenting opinion Justice Harlan says why this is so: ... The Constitution is an instrument of government, fundamental to which is the premise that in a diffusion of governmental authority lies the greatest promise that this Nation will realize liberty for all its citizens. This Court, limited in function in accord ance with that premise, does not serve its high purpose when it ex ceeds its authority, even to satisfy justified impatience with the slow workings of the political process. For when in the name of constitutional interpretation, the Court adds some thing to the Constitution that was de liberately excluded from it, the Court in reality substitutes its view of what should be so for the amending proc ess. 2 In actual litigated controversies there have been more' than 4,000 decisions authored by our United States Supreme Court which have interpreted and applied its less than 7,000 words - more than 50, 000 pages of interpretative deci sions. Some of these controversies 1 377 U. S. at 59!.

2 377 U. S. at 625.

32 THE FREEMAN July have stemmed from the use of leg islative power, some from the use of executive power, some from the use of judicial power - and -all from a claimed usurpation of pub Hcor private power. But in each new justiciable controversy we, the people:\ return to our written Constitution for the tools of advo cacy of political liberty, including the five freedoms of individual liberty. The periphery of separate legal controversies has thus been procedurally set. The .advocates of liberty are alert to the interpretative fact that the "interstices" in our Constitu tionare it part of that document in the same way that the inter spaced cracks in a sidewalk are a part of a sidewalk. It is an entity and its parts are to be interpreted and applied in that way. The proc ess of staying on the sidewalk, even for the sane and sober, is not uncontroversial. Still, I prefer having a written constitution to doing without one.

An Independent Judicial'Y A paradox in our procedures to secure liberty is that an indepen dent judiciary, our United States Supreme Court, without purse or sword, has a limited power of coercion. Justice Jackson reminds :3 Including trial lawyers and the mem bers of the United States Supreme Court in most instances. us that decisional law could not exist except "where men are free ... and judges independent." This interdependence makes it doubly clear that (1) the zeal that a judge feels for what the law ought to be has to be tempered with a zeal for what the law is; and (2) a practi cal test of a free society is the will ingness of its administrators to lend the judges their aid, and of its people to obey their constitu tional decisions until changed by the court itself under its two edged, self-imposed weapon of stare decisis or by amendment of the Constitution. LBarned Hand once wrote that "liberty lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it."" The underlying issue, I believe, for a free society to face head on is· one of the acceptability or nonacceptability of a faith that there are progressively higher laws that can be merged into man made laws under orderly proce dures. When Charles Evans Hughes, a great trial lawyer, stated that the Constitution is what the Supreme Court says it is, he merely stated the hard fact that the trial lawyer has to face once the Supreme Court has spo4 HAND, THE SPIRITOF._L.mERTX.144: ...

(1944) .

1965 DEFINING LIBERTY 33 ken unequivocan,. In a free society the procedural adaptation of liber ty is not the sole responsibility of the three branches of our govern ment. The supreme power and, therefore, the supreme' -political responsibility for the· attainment of liberty resides in the -people. There, too, are its underlying faiths, without which the five free doms of liberty are unattainable with any procedures that we may devise. III. THE UNDIRlYING FAITHS OF LIBERTY The third element in -the con cept of liberty is its underlying faiths. My quest at this point is not for absolute certainty, but to understand, the best I am able, the underlying faiths of liberty. I..-n ture to think that a more ambi tious quest would fade away into a copiousness of words. The why of liberty is too deeply related to the why of life for me to expect to do more. When I think of ultimates for the human race or for just me, there is no certainty. Harold Mac millan, former Prime Minister of Great Britain, recently made the comment that the only thing of which-he is sure is that there is a God. Justice Holmes reminded us, "Every year if not every day we have to wager our salvation upon some prophecy -based on an imperfect knowledge."5 This mix ture of ego and humility is not an uncommon asset of the advocate of liberty; it could never be found in an advocate of any political faith that it premised on infallibil ity.

There is a spirit of conciliation between reasonable' men when we consider the finer reaches of the five individual freedoms which liberty seeks to accomplish. Also, there is a spirit of conciliation be tween reasonable men when we think of the best procedural ways to achieve liberty. But t~ere can be no spirit of compromise in its underlying faiths. We believe in them or we do not believe in them. If we believe in -them, we cannot be diverted from them or allow them to be destroyed. The strength, the compassion, the courage and the Jlrtelligence behind the concept of liberty evolve from its -underlying faiths. These underlying faiths either move from within ourselves or not at all. There is no formula for them and there is no certainty. The creed of'liberty leaves all sup posedly final philosophical formu las with an open end. It does not answer the why of life. Partly for that reason it has a. chance to sur vive without changes in the sense 5 Abrams v. United States, 250 U. S.

624 at 630 (1919) (dissenting opinion).

34 THE FREEMAN July of direction that is its underlying essence. The creed of liberty, I believe, can be stated in one fairly short paragraph as: A living organism differs from any mechanical device that man can con ceive in that it forms itself and keeps itself in working order and activity. Man is a living organism. Biological and psychosocial cultural man is dif ferent from most or all other living organisms. Man has an inner power of choice that has to be kept alive or he ceases to live as such. With lib erty he keeps himself in working or der and activity. Without it he does not. It is, therefore, an operational need in the process of living of a hu man entity. This is the basic approach to the underlying faiths of liberty. But I cannot stop with a state ment which depends upon the word liberty itself. The more than se mantic question persists: "What are the underlying faiths in the concept of liberty?"

In the United States it is our cultural habit to take it impatient ly for granted that we know the answer to that question. Not mere ly that we, would rather be thought blase than to be thought naIve. Rather we feel that we have an intuitive sense of liberty that needs no further identification. We impatiently sense that when we refer to liberty, we refer to that essential element in social, economic, and political life by which man is enabled to keep him self in working order and activity. This is essential, but it is not, I believe, the totality of our faiths in a free society. After seve'ral "pace-offs," John Dewey decided that one fairly ac curate way to conceive of the hu man mind is by reference to its ability to "resolve doubts as such." Human beings are endowed with the power to see, that doubts are doubts, and to resolve some of them, rightly or wrongly. The first doubt for me to resolve in my search for all the! underlying faiths of liberty is to determine what a faith is. I shouldn't take it for granted that I know what faiths in general are.

A faith is a "rule of conduct," but that answer is a part of the objective effect of a faith that we already have and does not com pletely identify what a faith is. Different from a mathematical proposition, a communicable' faith, before it can limit and govern our group actions, I suggest, must have an emotional appeal as well as a valid rational appeal. Liberty makes good use, of the feelings of courage and compassion, for liber ty begins when the weak become strong and ends when the strong lose their sense of compassion. The statement that e'motion and 1965 DEFINING LIBERTY 35 reason are a house divided is only a metaphor. Man functions as an entity. He is at once an emotional, instinct-packed, volitional, physi cal, and sometimes rational entity. The underlying faiths of liberty, like all faiths, must be a part of all of these characteristics func tioning together, inasmuch as each man has to function that way if he functions at all.

Liberty is not a mathematical formula. Much less is it an arti fact, a product of human work manship that we can pick up with our hands and examine for color, size, and content. We cannot point to it, weigh it, or count it. To prove it we cannot explode it over the deserts of New Mexico. It is a belief system in the process of biological and psychosocial living, and a belief system requires a meeting of the minds about a faith which we have in common and which each of us has made his own. Before we can say that our faiths in liberty are a part of us, we must be able to say that "we feel them," "we think them," and "we act them." That is what faiths are. Liberty Lies Within the Man The core of individual liberty is a matter of faith, a faith that there is an inner life for each in dividual, the liberation of which will produce results, the only resuits over which we human beings have any control. These results are a part of a stream of life, but the advocate of liberty believes that they can be credited or debit ed to an individual account - an account without an infallible book keeper.

The advocate of liberty believes that by the use of the individual inner drives of compassion, cour age, reason, and intelligence, man kind need not inevitably destroy itself and that the course of man kind can continue. He believes that liberty, if he has it, is in the proc ess of living and never at the end of a rainbow of wishful thinking. He believes that it is complemen tary of the orderly laws of cause and effect, of probability and of chance, of which man is not com pletely informed. It is complemen tary of them because it rests in part upon the faith that each in dividual is endowed by his Creator with some power of individual choice. The great contempory contribu tions of others in his scientific field caused Einstein to question what he could claim for his own. But with all his skepticism or humility, he never lost faith in his sense of selfhood. Each advocate of liberty believes that the responsive and positive chords in his life must be struck by him.

What are the underlying faiths 36 THE FREEMAN July of liberty? A faith in the God-giv en and yet spontaneous spark of creativity in each of us which makes us different from all others; a faith that this spark of creativ ity can be preserved in its totality by just laws applicable to all equal ly; a faith in the worthiness of its preservation; a faith in the practicality of its preservation by the people themselves - these are the underlying faiths of liberty. The division between scientific thought and critical philosophical thought, between observable ob j ecti vi ty and value j udgmen ts, though useful, does not cause one to think that man, individual man, does not have to function as a separate entity of energy if he is going to function at all, or that any political system can evade that fact and· survive. The discoveries of nuclear phy sics make it imperative that we, all mankind, use value judgments that are universal. We cannot throw senseless rhetoric or elim inative bombs at each other and expect the species Homo sapiens to survive in perpetuity.

More than Mere Words Although there is easily observ able evidence to the contrary, po litical liberty is not a mere play on words that each side of current controversies uses for its rhetori cal effect. Rather, by its three specific elements it is a synthesis of thought and action, a concept tha t can be accepted or rej ected. It is not as certain, perhaps, as the concept that God made Iittle green apples, but thus far the only perceivable bridge between science and philosophy and between na tions and between men that will preserve the life and hopes of the indi vidual and of mankind, is the concept of liberty - the grand con cept of the dignity and brother hood of man under a just and cosmic God. "Where liberty dwells, There is my country." These words, uttered by John Milton, the blind poet who yet could inwardly see, may have been words of pride or words of yearning. For mankind today they are optimistic words - words of hope. They suggest a sense of direction based on the three ele ments of liberty in the context of a free society. In a world in which man must seek his salvation with imperfect knowledge, could there be a better way?

It is the only way that I can see tha twill give my grandchildren a chance to decide for themselves the course their lives shall take in a free society. Right now they kick about going to bed at night, but I think they are tough enough to handle their share of responsi bility in a free society when their time comes. ~ THE GREAT COM M U N 1ST WILLIAM HENRY CHAMBERLIN BETWEEN 1917 and 1949, within the span of a generation, com, munism achieved a leap from the status of the small, little-known political sect in the Russian revo lutionary movement to a system that dominated the lives of one third of the popula tion· of the world, including the Soviet Union, mainland China, and the consider able area in Eastern and Central Europe which had been subjected to communism as a result of So viet military invasion and occupa tion. Not since the early sweep of the Mohammedans from the des erts of Arabia over the Near and Middle East and North Africa had a new doctrine acquired Mr. Chamberlin is a skilled observer and reporter of economic and political conditions at home and abroad.

power so swiftly on such a large scale. What made the success of com munism seem more formidable was its apparent concentration of power and authority in Moscow. Stalin had only to whisper a com mand and it was translated into action not only in the countries under Russian military and police control, but also by the communist parties in America and Western Europe, where they had not yet gained power. An article in a French communist publication was sufficient to cause the American communists to discard the com paratively moderate leadership of Earl Browder and substitute the more violent, intransigent William Z. Foster. The communists seemed to have 37 88 THE FREEMAN July discovered and applied, first in Russia, then in the satellite coun tries of Eastern Europe: and in China, a magic formula for hold ing power, once a successful revo lution had been brought about, whether by internal collapse, civil war, or military intervention from outside. This formula, which also served Hitler, Mussolini, and les ser fascist dictators very well (it was by no means the only feature common to communism and fas cism in 'practice) might be sum marized as follows: unlimited propaganda plus unlimited terror.

After a communist takeover, all means of information, enter tainment, and instruction - the schools, the· press, the radio, theater, and the arts - we·re pressed into the service of glorify ing the all-powerful state and the ruling Communist Party . It was expected that this would prove especially effective with a younger generation that had no knowledge of foreign countries, no knowl edge of previous conditions. And, for those who did not ac cept the propaganda, there was ruthless unrelenting terror, rang ing from loss of a job, denial of the right to publish writings, to the more extreme measures: ar rest, exile to forced labor, execu tion before a firing squad. Dia bolical as this technique was, from the standpoint of the' freedom and dignity of the individual human being, it was also diaboli cally effective as a means of or ganizing and regimenting people and repressing and discouraging any organized resistance and dis sent.

Dissension Sown Abroad, But Prohibited Domestically So, while the communists used every conceivable trick and device to extend their sw:ay by setting class against class, race against race, group against group in non communist lands, they insulated themselves against movements of protest and revolt in the countries they ruled by this steady a,pplica tion of the method of propaganda plus te'rror. With this were linked two characteristics of all com munist regimes, regardless of other differences: one-party polit ical dictatorship and economic collectivism in the sense that the state, in one form or another, be came the sole employer, operating through various agencies all mines, factories, farms, store·s, and other economic enterprises. It is difficult for one who has not lived under it to imagine the crushing weight of concentrated power represented by a state which combines the political power of the most absolute despots of the past with the economic mastery represented by a monop1965 THE GREAT COMMUNIST SCHISM 39 oly of possession of all economic enterprises.

Imagine a government operat ing without any of the safeguards for the individual written into the United States Constitution, di recting the contents of every newspape'r, of every radio broad cast and, on top of this, managing all the economic production facili ties, with the functions of man agement and lahor organization alike controlled by the single rul ing party. That affords a fair pic ture of what the communist state is like and of how difficult it is to organize opposition or resis tance to its monstrous grasp. Signs of Internal Weakness Yet, with communism, as with Mohammedanism and other world conquering movements, internal schism among the communist states has clearly set in, creating difficulties which were not fore seen in the first years of the Rus sian Revolution which Lenin, Trotsky, and Stalin envisaged as merely the-first step toward world domination through world revolu tion. The first breach in the gran ite fa~ade of international com munism occurred in 1948, when Josip Broz Tito, the communist dictator of Yugoslavia, seceded from the overlordship of Moscow.

Tito's breach with Moscow did not mean that Yugoslavia ceased to be a communist dictatorship. But the Yugoslav dictator re sented the idea that his power, even his life, might depend on the reports of the Soviet agents whom Stalin sent into Yugoslavia to spy on and supervise his activities. A veteran of the communist move ment, he had built up such a tightly organized political machine in Yugoslavia that he was able successfully to defy Stalin's efforts to destroy his regime by all means short of war, including economic blockade and incitations to subver sion. Sitting on the fence politi cally between East and West, al though maintaining a generally "anti-imperialist" attitude in for eign rela tions and .retaining a somewhat modified, maverick com munism at home, Tito received large quantities of United States aid (considerably reduced in re cent years). He also extracted some Soviet help when Stalin's successors decided to restore more normal state relations between Moscow and Belgrade, although continuing to censure Tito as a revisionist more or less severely when matters of communist theory were under discussion.

Stalin's death in 1953 was fol lowed by several signs, in the So viet Union and abroad, that com munism was not the impregnable frozen fortress it had seemed tc be. There were anticommunist reo 40 THE FREEMAN July volts in East Ge'rmany in 1953, in Poland and in Hungary in 1956. These were all put down, the one in Hungary after a heroic, tragi cally uneven struggle by the ma jority of the Hungarian people, with workers and students taking a leading part, against the' su perior arms of the Red Army. But at least the myth of happy acquiescence of the' peoples under communist rule was destroyed. And the Poles, who proceeded more discreetly than the Hun garians and did not push matters to the point of an armed crash, obtained the elimination of some of the more unpopular Soviet agents and of some of the cruder signs of Russian domination, es pecially distasteful because of bit ter Polish memories of Russian oppression before the First World War.

Moscow vs. -faeiping Then, gradually but unmistak ably, came the rift between the two communist giants, the Soviet Union and Red China. Because relations between Moscow and Peiping were like an iceberg, mostly concealed from public view, and because there were intermit tent efforts, on the Soviet side, to coax the Chinese back into· the orthodox communist fold, it is hard to set a definite date for a breach that also produced important repercussions in the satellite sta tes of Eastern Europe'. Perhaps the exclusion of the Soviet Union, as a "white" nation, from the Bandung conference of Afro-Asian countries in 1955 marked the· beginning of the dis agreement. Khrushchev's belated repudiation and denunciation of Stalin in 1956 did not appeal to the Chinese communists. When the latter, by bombardment and threats, attempted to oust the Chinese nationalists from the: off shore islands of Quemoy and Mat su in 1958, Khrushchev offered only verbal support.

With the passing of time, dif ferences of national interest and even of interpretation of commu nist ideology between the Soviet Union and China became more and more evident. In two ways the forme'r is a "have," the latter a "have not" country. The Soviet Union today controls, directly or indirectly, far more' territory than the Empire of the Czars. There is no unredeemed area with a Russian population. And, although economic well-being is far below the standards of the United States and Western Europe, the Soviet Union has built up a considerable industrial plant, which it would not like to expose to the hazards of nuclear war. So, apart from lapses like the threat to West Berlin and the injection of mis1965 THE GREAT COMMUNIST SCHISM 41 siles into Cuba, both of which ended in failure, Khrushchev and his successors so far have dis played a tendency to avoid sha.rp collisions with the United States and to rely on such methods as subversive propaganda and build ing up what they believe will be a superior economic system (not a likely prospect in view of the results to date) to sap and finally overthrow the capitalist order.

China is a much poorer country than the Soviet Union, probably at least a generation hehind in economic development. It regards as a major foreign policy objec tive the reconquest of the island of Formosa, seat of the Chinese Nationalist government of Chiang Kai-shek. This objective, howe'ver, cannot be realized so long as For mosa is guarded by United States sea and air power. With less to lose in war, the Chinese, at least in words, are much more militant in preaching the doctrine of war against imperialism. And they· re sent Soviet unwillingness to "share the wealth" by giving them liberal economic aid, and Soviet unwillingness to back them up in military adventures against For mosa and India. By 1960 Moscow-Peiping rela tions had become so strained that the Soviet .government abruptly pulled out of China hundreds of Soviet scientific and technical advisers who had been helping with many new Chinese industrial in stalla tions. These were left in var 'iOllS stages of incomplete, con struction; the Soviet advisers packed up their blueprints and departed, leaving the Chinese to cope with the situation as best they could.

Heated Words It would go far beyond the bounds of a brief article to cite all the polemical exchanges be tween the two big communist powers. But two quotations show how envenomed the tone, had be come in recent years. A Soviet message to Peiping of October 18, 1963, read as follows: "Serious differences are being used in Peiping to unfold a cam paign against the fraternal par ties, unprecedented in its scope, which is sharply hostile in tone. ... All the resources at the dis posal of a large state have' been set in motion to wage a struggle within the communist movement. ... Enormous harm is being done and every communist is obliged to do everything possible to stop the development of events in the di rection Peiping wants to give them. If this is not done in time, the consequences for the entire communist movement may be ex tremely grave." The Chinese response took the 42 THE FREEMAN July form of contemptuous personal abuse of Khrushchev: "The United States imperialists have not become beautiful angels in spite of Khrushchev's Bible reading and psalm-singing. They have not turned into compassion ate Buddhas in spite of Khru shchev's prayers and incense burn ing. However hard Khrushchev tries to serve the United States imperialists, they show not the slightest appreciation. . . . They continue to slap Khrushchev in the face and reveal the bankrupt cy of his ridiculous theories pret tifying imperialism."

Here one comes close to the root of the feud. The Chinese are claiming for themselves the role of champions of Leninist commu nist orthodoxy and accusing the Russians (the charge is spelled out in detail in many other Chi nese publications and communica tions) of slackness in the revolu tionary cause, of "revisionism," the most insulting word in the communist political vocabulary. A Maior Cleavage What has happened is more seri ous than a dispute between the two largest communist parties. It is a schism in the whole interna tional communist movement, some parties siding with the Russians, some with the Chinese. The Chi nese appeal is especialIy strong in Asia, whe're the, communists of In donesia, Japan, North Korea, Bur ma, and New Zealand are in the Chinese camp. This is apparently also true for the majority of the Indian communists. And the Chi nese seem to be ahead in a bitter struggle for influence in North Vietnam. China has also acquired a European satellite' in tiny Al bania and has launched splitting movements in the parties of Italy, France, and Belgium. The Chinese have also been very active in Africa, competing with the Soviet Union in attracting students and bribing African government offi cials in the ne·wly independent states. In Africa the Chinese em phasize the color line, pointing out that the Russians are, after all, a white people.

Most of the European commu nist parties have remained loyal to Moscow, but have taken advan tage of the Moscow-Peiping rift to win more political and economic autonomy. Khrushchev was un able, despite many efforts, to con vene an international conference for the purpose of excommunicat ing the Chinese Reds from the international communist move ment. In Stalin's time Moscow's position as the sole center of the international communist move ment was unchallenged. Now the conception of "polycentrism" put forward by the recently deceased 1965 THE GREAT COMMUNIST SCHISM 48 Italian communist leader, Palmiro Togliatti, has made considerable headway. Rumanian Deviation Because the Soviet communist leaders are under heavy pre,ssure from the schismatic Chine,se, they are in no position to impose strict discipline on. the East European satellites. The liberalization of living conditions in Hungary, the sweeping departures from rigid state planning in Czechoslovakia"

most of all, perhaps, the. de,mon strations of increased political and economic freedom from Moscow in Rumania are all significant straws in the wind. Indeed, Rumania has put on a pretty good exhibition of the role of "the mouse that roared." Rich in salable oil and wheat, the Ru manians pressed on with steel de velopment and trade with the West, despite Khrushchev's at tempts to persuade: the,m to hold back on industrial development and remain a supplier of raw materials to other communist ruled countries. And about a year ago, in the spring of 1964, the Rumanian Workers (Communist) Party published a remarkably in dependent manifesto, which would have been unthinkable in the Sta lin era. This manifesto began by offer ing a number of criticisms and recommendations to the Soviet and Chinese parties, with the pro fessed objective of mediating their conflict. Then it repudiated in strong language the idea that some supranational planning body, such as the' COMECON (the eco nomic association of the commu nist-ruled states) should dictate to these states their proper lines of economiC' development and as serted Rumania's economic inde pendence in the following terms: "It is UPI to every Marxist Leninist party, it is a sovereign right of each socialist state, to elaborate, choose or change the forms and methods of socialist construction .... No party has or can have a privileged place, or can impose its line or opinions on other parties."

Dangers to the West Polycentrism doe,s not change the nature of communist regimes. These continue to deny political and civil liberties that are taken for granted in free countries. They retain strong political and economic ties with Moscow. They may be expected to continue vot ing with the Soviet Union and against the United States on most issues that come up in the United Nations. The governments in the East European states remain alien, imposed from without, and, in a big crisis, would look to Mos44 THE FREEMAN July cow for support against any in surgent movements of their own peoples. Nor is the. effect of the dispute between Moscow and Peiping cer tain in all circumstances to work out for the benefit of the free societies. The pressure of Chinese competition in revolutionary prop aganda could conceivably push the Soviet Union into steps which are not in line with its true interests and desires.

Yet, after making all due allow ance for these possibilities, the great communist schism, on bal ance, seems advantageous to the cause of freedom. The nightmare of a monolithic communist bloc of almost one billion people, stretching from the Baltic to the Pacific Ocean, has been dispelled. We may be seeing only the be ginning, not the concluding phases of the disintegration of the huge empire which Stalin, exploiting the moral and political weakness of the Western powers, carved out after the Second World War. It is better that the Soviet Union and China should be at odds than tha t their resources should be combined for subversive ends. Provided there is no weakness, no appeasement in the face of threats emanating from Peiping or Moscow, provided that commu nist aggression is held in check, it is possible that in the course of time the hostility between Mos cow and Peiping may advance from words to blows. The free nations muffed a promising diplo matic opportunity when they failed to direct their prewar diplomacy to the end of insuring that, if war must come, it should involve only the Nazi and communist tyrannies.

If another such opportunity should arise, one may hope that experi ence will teach more insight and realism, that the free peoples will remain enthusiastically disengaged in the event of a clash between the two totalitarian giants. ~ Protectorate A PROTECTORATE was an arrangement by which a strong country agreed to protect a weak country from all tyranny. Except from the strong country itself. From a child's exam paper cited by Art Linkletter 10. The New Creativity CLARENCE B. CARSON Divine am 1 inside and out, and 1 make holy whatever I touch or am touch'd from. -WALT WHITMAN, 1855 ... In fact, we philosophers a-nd "free spirits" feel ourselves irradiated as by a new rosy dawn by the report that "the old God is dead",. our hearts thereby overflow with gratitude . ... At last the horizon seems. once more unobstructed . .. ; our ships can at last start on their voyages once more . ••. -FRIEDRICH NIETZSCHE, 1882 . . . Now this empirical knowledge has grown till it has broken its low and limited sphere of application and esteem. It has itself become an organ of inspiring imagination through introducing ideas of boundless possibility ... irrespective of fixed limits . ... It is convertible into creative and con structive philosophy. -JOHN DEWEY, 1920 THE TWENTIETH CENTURY abounds in paradoxes. Not the least of these is the dispari ty between technological developments on the one hand and developments in arts, politics, and social arrangements on the other. No other century in history can match what has al ready taken place in the twentieth in technological inventions, im provements, and devices. It stagDr. Carson is Professor of American History at Grove City . College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books.

gers the imagination to survey what has been wrought in the last hundred years, to extend the sur vey back into the previous century a few years. Some will· not con sider all the innovations unquali fied blessings, but everyone must marvel at what has been provided: electric lights, automobiles, me chanicalrefrigerators, phono graphs, airplanes, radio, televi sion, typewriters, calculators, and so on through an ever-increasing list-of contrivances. It has not been many years since a hospital 45 46 THE FREEMAN July was usually a way station to the funeral parlor. A revolution - to use the word dubiously - has oc curred in the last generation in medicine. Scientific developments have taken place which have rend ered the doings of scientists into something beyond the ken of out siders. Technological progress has gone forward at an unparalleled pace. By contrast, there has been a decided retrogression in the arts and literature. The techniques for purveying the arts and literature have kept pace with technological developments elsewhere. For ex ample, the invention of recording and of phonographs has made pos sible, the reproduction of musical programs in the home with great fidelity to the original playing.

But the quality of music composed in this century is generally far inferior to that of the preceding century. It is true that audiences will now tolerate a selection from a twentieth century composer from Stravinsky, Bartok, Ives, or Copland - if it is surrounded in the program by pieces composed in earlier centuries. Contemporary painting and painters apparently flourish, but the art of careful drawing and painting is largely kept alive by commercial requirements. The nov el has degenerated into barely dis guised biographical accounts of the doings of bohemians, or into thinly coated historical recrea tions. Contemporary poetry con sists of jingles on the one hand and jumbles of words without form or rhyme or reason on the other. If the case of architecture is somewhat better, it can prob ably be attributed mainly to the taste of those who pay the bills, not to those who purvey the serv ices. Such exceptions as occur to the above generalizations only serve to highlight the general con dition.

Objections Anticipated The usual objections to the above critique need to be dealt with, at least summarily. It can be objected that the evaluation of the arts and literature is a matter of taste. This amounts, however, to saying that there are no standards by which to judge the arts. The belief, and the prac tices that follow from it, that there are no standards is just an other instance, as well as a cause, of the deterioration in the arts. Another frequent objection to the above critique goes something like this: Every age and time has its mediocre and inferior artists. In the course of time, these are f or gotten, and only the giants remain. Such is undoubtedly the case, but it is largely irrelevant as a ref utation of the above contention.

1965 THE NEW CREATIVITY 47 My point is not simply that the twentieth c~ntury has no musical master of the caliber of Beethoven, or that not every writer has reached the heights of Mozart; it is rather that the composers rated as first rate are inferior to first rate composers of earlier centur ies, that the second rate are infer ior to the second rate ones, and that the caliber of music being produced does not measure up to past standards. I read somewhere that a composer had a scholarship for a year, I think it was, in which he composed a violin concerto. Mozart composed five concertos for the violin between April and De cember of 1775. If it be objected that Mozart was a genius, one should still note that like geniuses are missing from among us. In short, there is no evidence of prog ress in the arts commensurate with that in the sciences and tech nology. Political and Social Deterioration Political and social develop ments a're not quite so difficult to evaluate, nor the positions taken quite so controversial as those about the arts. The evidence for positions taken is more readily assembled and more nearly appar ent. The indications of political deterioration in this century are abundant and conclusive. In the political realm, the tendency almost everywhere in the world has been toward totali tarianism, dic tatorship, arbitrary government, the police state, the rounding up and imprisoning of political dis siden ts, the overthrow of older orders, and political experimenta tion and manipulation. The belief in and observance of lawful modes of operation by agents of govern ments has fallen below what it was generally in the seventeenth century. (There are, of course, countries in which this is not yet the case.) Socially, the breakup of the authority of the family evinces itself in divorce rates and juvenile delinquency.

Many would object to the par ticulars of the above formulations, but there is widespread agree ment that there is great disparity between developments in science and those elsewhere. In academic circles the disparity is acknowl edged backhandedly by some such analysis as this: The. humanities and social sciences need to catch up with the physical sciences and technology. Knowledge about hu man beings has not kept pace, it is alleged, with that about things. In Proper Sequence Such a way of putting it almost completely obscures the roots of the untoward political and artistic developments. It puts the best pos sible face on what has occurred 48 THE FREEMAN July and allows the very men and ideas which have wrought the conse quences to go free of responsibil ity for it. Historically, politics and the arts were not behind technol ogy in the application of ideas drawn from science. If anything, the reverse was the case. The ar tistic, political, and social implica tions of modern science were being generally pointed out and applied by the eighteenth century. (It will be remembered that modern sci ence emerged in the seventeenth century.) By contrast, the tech nological implications are still un folding, and this is largely a nine teenth and twentieth century de velopment.

It does not follow, of course, that the social studies and human ities are ahead of technology now. They are neither ahead nor be hind. What has happened cannot be fitted into a nice progressivist formulation at all. Politics and the arts have been cutoff from real ity; the proponents and develop ers of them have been engaged in a flight from reality. By contrast, technology is still rooted in its scientific foundations, and prac ticing scientists appear to be closer to reality than do other in tellectuals. If technology should follow the path of the social studies and the humanities it would be cut loose from its founda tions in laws and might be expected, subsequently, to degener ate. Creature or Creator? The key to understanding what has happened in the humanities and social studies (and from them to the arts and to politics) is. the new conception of creativity. The way has been partially prepared thus far in this study for under standing the New Creativity, but before pointing out the connec tions to it of positions already es tablished it may be well to ex amine the idea of creativity from an historical point of view.

So far as I can tell, the use of creativity to refer to something that man does or can do is a re cent innovation. Certainly, this usage has no foundation in the main Western tradition of thought. Traditionally, creation was what God did when he brought the universe into being, or, following the account in Gene sis, gave the universe its form and brought beings into existence. One unabridged dictionary gives this as its first meaning of the word "creation." To wit: "The act of creating from nothing; the act of causing to exist; and especially, the act of bringing this world into existence." On the other hand, the American College Dictionary drops this particular meaning to third posi tion, and deals with it as a 1965 THE NEW· CREATIVITY 49 special phrase. It says, "theCrea tion, the original bringing into existence of the universe by the Deity." The most absolute view of creativity imaginable was held by St. Augustine concerning God's creation of the world. He held that it was created ex nihilo, out of nothing.

How, 0 God, didst Thou make heaven and earth? Truly, neither in the heaven nor in the earth didst Thou make heaven and earth; nor in the air , nor in the waters, since these also belong to the heaven and the earth; nor in the whole world didst Thou make the whole world; because there was no place wherein it could be made before it was made, that it might be; nor didst Thou hold anything in Thy hand where with to make heaven and earth ... .1 There were differences among philosophers, of course, as to the extent and character of the Crea tion. Aristotle did not even believe that the universe had been cre ated; it has always existed, he thought. Probably a more usual view was that the universe was created, but that this consisted of giving it form and order. Be that as it may, what man does was not conceived ·of as creativity. Plato and Aristotle conceived of the artist as imitating reality. For ex1 Quoted in W. T. Jones, A History of Western Philosophy (New York: Har court, Brace and Co., 1952), p. 354.

ample, Aristotle said: "Tragedy, then, [by which he meant a tragic drama) is an· imitation of an ac tion. . . ."2 They did not neces sarily, or particularly, mean a lit eral imitation of things as they appear to the sight. Conveying the Ideals. Traditionally, the arts have been imitative of an underlying order. They have evoked ideals, caught the essence of man, or of a man, captured and set forth that which the most sensitive perceive in a thing. In short, the artists, too, labored in a metaphysical frame work. They did not create; they imitated, but this was by no means a lowly task. Few things could be more worthy of doing than to make visible by painting and sculpture, to make audible by music, to communicate by drama and poetry, or to cast in concrete form by architecture the under lying order in the universe and the ideals of justice, honor, truth, beauty, and piety by which men should live. That the artist did not create these was no reproach; it was enough that he should con vey them. In this context, if the artist were to create, he would be committing a fraud, for he would be deceiving men as to the nature of the underlying reality.

Nor were other kinds of activity 2 Ibid., p. 250.

50 THE FREEMAN July conceived of as being creativity. Social thinkers were not supposed to be creating social and political relationships, but rather discover ing them and setting them forth. Morality was behavior in accord with the order in the universe and/or Divine injunction. Notice the language in which the work of authors and inventors is de scribed in the United States Con stitution in the phrase which em powers Congress "to promote the Progress of Science and useful Arts, by securing for limi ted Times to ,Authors and Inventors the exclusive Right to their respec tive Writings and Discoveries." Even the inventor was apparently thought of as a discoverer. Something New But a change has occurred. Nowadays, all sorts of undertak. ings are described as being crea tive. There are courses in creative writing in colleges. There are books on creative thinking, re searches into the sources of crea tivity, articles on creative group thinking, and public expressions of concern about how to foster creativity. Invention, discovery, innovation, artistic endeavor, and social thought are now conceived of as being creative. The follow ing definitions and examples of usage indicate the scope of the word as it is now employed. One writer approves this definition heartily: "Creativity is the imag inatively gifted recombination of known elements into something new."s Another writer says: My definition, then, of the creative process is that it is the emergence in action of a novel relational prod uct, growing out of the uniqueness of the individual on the one hand, and the materials, events, people, or circumstances of his life on the other. 4 He points out that his definition embraces all sorts of activities: Creativity is not, in my judgment, restricted to some particular content.

I am assuming that there is no fun damental difference in the creative process as it is evidenced in painting a picture, composing a symphony, devising new instruments of killing, developing a scientific theory, dis covering new procedures in human relationships, or creating new form ings of one's own personality as in psycho-therapy.5 Dictionaries have come to in clude these new meanings of cre ativity. The American College Dic tionary offers as one definition of 3 Harold F. Harding, "The Need for a More Creative Trend in American Edu cation," A Source Book for Creative T kinking, Sidney J. Parnes and Harold F. Harding, eds. (New York: Scribner's, 1962), p. 5. 4 Carl R. Rogers, "Toward a Theory of Creativity," in ibid., p. 65. 5 Ibid.

1965 THE NEW CREATIVITY 51 "create": "to evolve from one's own thought or imagination." An other defines Hcreation"as "any thing produced or caused to exist, in mechanics, science, or art; es peciallyan unusual product of the mind; as the master creations of art." It could be objected that this is all a matter of semantics, that the word has come to have an addi tional meaning, that at most there is some ambiguity in such usuages. But the loose use of language is not something to be taken lightly, even if this were all that is in volved. We think and express our selves in words. We may not be conscious of the connotations and overtones of language; these nev ertheless influence our thinking and color what we say for those who hear or read it. But what is involved here is not simply a. matter of semantics. A new conception of creativity has been developed. Many have come to think of man as a creator. In vention, discovery, innovation, and origination have come to be thought of as creation. The frame work within which this occurred has already been set forth. It in cluded the cutting loose from re ality, the sloughing off of the past by denying repetition in history, and the positing of a new reality a reality consisting of change, so ciety, and psyche. The impetus to social creativity was provided by the visions of utopia that could be created, and a new pseudo phi losophy - pragmatism - provided a substitute philosophy which al lowed free play to the imagination.

The Role of Romanticism Several lines of thought con verged to buttress the new con ception of creativity. Romanticism was the first of these outlooks to appear. Romantics exalted the im agination, the will, desire, feeling, and subjective experience. They tended to withdra.w inward to dis cover that which was most impor tant to them. Romantics tended to exalt literary and artistic ac tivity, to see in it a means of con tact with the Divine, or, depend ing upon the thinker, a divine ac tivity itself. The poet, or other artist, was thought of as having a particularly high calling, for he could transcend the limits of or dinary experience by intuitions and grasp things of the greatest importance. The artist, at least, became a kind of demigod to many thinkers. Evolutionism A second strain in the New Cre ativity came from what can be called evolutionism. If it is proper to speak of revolutions in thought, then it is no exaggeration to say that the theory of organic evolu52 THE FREEMAN July tion was the basis for a profound intellectual revolution. All sorts of hypotheses were spawned inthe wake of the spread of this idea.

If accepted in all its implications, Darwinian evolution fundamental ly altered conceptions of creativity. Christians had generally believed, prior to the latter part of the nineteenth century, that Creation was a completed act of God. But now some thinkers began to con ceive of creativity as an ongoing process, something that had oc curred in time and might be ex pected to continue in time. The crucial point for creativity, as it is being considered here, was whether or not man could actually participate in this evolutionary creativity. Social Darwinists, such as Herbert Spencer and William Graham Sumner, held that he could not. The course of evolution was determined by "forces." Per haps the most influential philo sophical theory that man partici pates in evolution is the theory of Creative Evolution. It was set forth in 1907 by Henri Bergson, a French philosopher. Bergson held that evolution cannot be ex plained by the operation of me chanical forces. There are mo ments of "spontaneous originality in nature, and especially in cer tain activities and experiences of mankind. The work of a great poet or painter clearly cannot be explained by merely mechanical forces. . . . This kind of activ ity... , resulting in something new, is typical of creative evolution."6 Man Participates There has been a variety of ap plications of the notion that man participates in evolution creative ly. The most important, from the point of view of this study, is the one known as reform Darwinism, a doctrine advanced particularly by Lester Frank Ward. Ward held that by social invention man could direct and control the course of social evolution. That is, he could create instruments for doing this, and, indeed, had been doing so for ages. Man participates in evolu tion by developing means for co operating with the process of evolution. The idea would seem to be this: one may by study discern the evolutionary trends. He can then work with them to bring about desired ends. Ward thought he discerned a rising social con sciousness in his day, that the time when society would take over the direction of affairs collectively was at hand, and that the acqui sition of knowledge would be for the purpose of fostering this de velopment. He said, "If it can be shown that society is actually mov ing toward any ideal, the ultimate 6 Encyclopaedia Britannica, VI (1955), 652.

1965 THE NEW CREATIVITY 53 substantial realization of that ideal is as good as proved. The proofs of such a movement in so ciety to-day are abundant."7 Science and Technology A third stream to enter the New Creativity has been called scien tism. Noone has advanced a doc trine or ideology by that name; it is a derogatory term applied to the practice of indiscriminately extending the ideas or methods of science. More specifically, the development to which I allude should probably be called. techno logism, though the language is al ready sufficiently barbarized by "isms" without adding another. At any rate, there is a view of cre ativity drawn largely from tech nology. Many people have been swept off their feet, as it were, by developments· in technology. They have been so awed by the achieve ments in this area that they have thought there was a major clue for all areas of human activity in technology. There may be, but the development to which I refer was based upon a misunderstanding of technology~ As we have seen in an earlier article, John Dewey con fused science with technology, failed to take into account the fact that technologists apply previous7 Lester F . Ward, "Sociocracy," A mer ican Thought, Perry Miller, ed. (New York: Rinehart, 1954), p. 117.

ly discovered laws, deduced meth ods from the behavior of tech nologists, and proposed to apply thes.e to all human thought and activity. Essentially, he thought that the inventor created, and that this kind of activity could be end lessly extended. Existentialism Promoted: Kierkegaard and Nietzsche The fourth support for the new conception of creativity came from existentialism. Actually, this phi losophy did not get much fame, or notoriety, until after World War II with the writings of· Jean Paul Sartre and Albert Camus. But the origins of the ideas are traced back into the nineteenth century, primarily to Soren Kierkegaard and Friedrich Nietzsche. Thus, some of the ideas can be said to have buttressed the New Cre ativity, though the philosophy was not yet known by its current name. Nietzsche's impact, at least, was considerable in artistic circles in the early twentieth century.

For example, H. L. Mencken was an early American devotee of Niet zsche. There are several schools of ex istentialism, but they generally share several premises with one another. The basic one, the one from which the name comes, is that existence precedes essences. Existentialists see man, or per54 THE FREEMAN July haps men, as creatures existing in space and time. The most im portant fact in the world, to them, is existence. They are not inter ested in, indeed are opposed to, essences, or the search for es sences. They want to confront ex perience in all its richness, not in some abstraction from it. To really be is to act, for in acting one's existence is filled out and extended. Existentialists run the gamut from rugged individualists to Christians to Marxists. But what ever their tendency, they are con cerned with the here and now, with the given existence, with act ing upon it and coming more fully to be.

Did Man Create God? Nietzsche provided the most drastic foundation for human cre ativity. God is dead, said Niet zsche, and he had a profound con ception of the significance of what he was saying. He was proclaim ing, too, that the past was dead, that the foundations of Western civilization were gone, that man's views must be drastically reori ented. As one writer puts it, "For when God is at last dead for man, when the last gleam of light is extinguished and only the impene trable darkness of a universe that exists for no purpose surrounds us, then at last man knows that he is alone in a world where he has to create his own values."s It meant something more too; it meant that men created their gods. God existed for Nietzsche, only so long as men sustained their belief in Him. This was an exact reversal of the traditional view, the view that God created man and sustained him by His Providence.

There are implicit conclusions that must logically follow: namely, that man is higher than the gods, for he has created them; that man is the lord of creation, for he is the highest being; that if creation could occur, it would probably be by man. Nietzsche talked of a Superman, the unusual man (or men) who would rise above moral ity, go beyond good and evil to become the new master. Before God! - Now however this God hath died! Ye higher men, this God was your grea test danger. Only since he lay in the gra ve have ye again arisen. Now only cometh the great noontide, now only doth the higher man become - mas ter!9 Not all the exponents of the New Creativity were as sensa8 William Barrett, "Introduction," Philosophy in the Twentieth Century, III, William Barrett and Henry D. Aiken, eds. (New York: Random House, 1962) 148. Italics mine. 9 Quoted in Richard H. Powers, ed., Readings in European Civilization (Cam bridge: Houghton Mifflin, 1961), p. 505.

1965 THE NEW CREATIVITY 55 tional in their advocacy as was Nietzsche, of course. But even the pedestrian John Dewey talked about a theory of art which has its foundation in the new view. Dewey discusses essentialism as a way of seeing things. He does not, however, believe that there are any essences which subsist in a metaphysical realm. The habit of looking to essences is merely something created and maintained by artists: If we are now aware of essential meanings, it is mainly because art ists in all the various arts have ex tracted and expressed them in vivid and salient subject-matter of percep tion. The forms or Ideas which Plato thought were models and patterns of existing things actually had their source in Greek art, so that his treatment of artists is a supreme in stance of intellectual ingratitude.l o It turns out, then, according to Dewey, that the foundations of Western philosophy were planted by artists in the mind of Plato.

Philosophy, it appears, was really created by dramatists. A New Creativity has emerged then, a radical view of man's ca pabilities, a changed conception of art and social affairs. Those who hold these views see man as a creator. The roots of the creativity 10 John Dewey, Art as Experience (New York: Minton, Balch & Co., 1934), p.294. are in the psyche, in the subcon scious; in short, creativity arises from the irrational depths of the mind. Great value is placed upon innovation, change, originality, experiment, all of which are sup posed to result in new creations. Subconscious and Irrational Perhaps the strangest of con tradictions in a paradoxical age is that between the avowed eval uation of man and the men one confronts in imaginative litera ture. On the one hand, man is held in the highest esteem, supposed to be capable of doing great things, viewed as entrustable with grea t power, held to be innately good, and life is presented in the ethos of the time as a potentially highly enjoyable affair. On the other hand, novels and stories are more apt than not to show the gradual degradation of a man in the course of his life, the disin tegration of his personality, the emptiness of the things he does, and so on. This story is told over and over again in modern fiction.

These contradictions, and others alluded to earlier, can be explained largely in terms of the New Cre ativity. The attempt to locate creativity in the subconscious has resulted in irrational artistic pro ductions. That which is dredged up from the irrational is irra tional; that which is undisciplined 56 THE FREEMAN July in its production is undisciplined. It is at least plausible that the contents of the subconscious are subconscious for good and suffi cient reason, that the subconscious is the. garbage pail of the mind, and that one may no more look for the clue to life or for sustenance for healthy living there than in actual garbage pails. That which comes to us directly from these depths poisons life. The evidence for such a conclusion now exists in great profusion. The attempt to create something out of nothing, or to draw from the junk yard of the psyche, re suIts in noise instead of music, chaos rather than order in paint ing, disfigurement rather than form in sculpture, the denigration of man rather than his exaltation in literature, the death of art rather than life. Social invention aimed at creation based on the inchoate "needs" and "desires" of people has resulted in arbitrary government, the loss of liberty, the tendency of governments to become total in character, the dis ruption of economies, social dis location, and inharmonious rela tionships among people.

Materializing the Mirage The explanations for these de velopments is now before us. Thinkers and artists have cut themselves off from their experience, ·posi ted or accepted a "new reality," and believed it was pos sible for them actually to create something. They calculate or act in terms of time, society, and be liefs or feelings of men, all of which are subject to change. They ignore the underlying and endur ing realities: the laws in the uni verse, the principles of human action, the essentials of artistic or economic production, human na ture, and the conditions of liberty. If man could indeed create, there would be no theoretical reason why governments could not issue fiat money and prevent inflation at the same time, why everything could not be controlled and di rected by governments and the liberties of the people increased, why a world government of law could not be established without putting up with the inconvenience of having laws founded upon an enduring order, why the United States (or the Soviet Union) could not intervene in the affairs of other countries without subtract ing from their independence, why taxes could not be lowered and government services increased without any untoward effects, why governments could not confiscate private property and still get pri vate investors from other lands to pour money into their indus tries, why the prices of those things that go into the production 1965 THE NEW CREATIVITY 57 of goods could not be fixed and have retail prices remain flexible, why writers could not create a vision of order which would in form their writings without be lieving in any such real order, why painters could not picture beauty and order without disci pline, why children could not be made good by surrounding them with pleasant objects without any support from the belief in and knowledge of a moral order. in the universe, why the economy could not be collectivized and individ ualism retained, and so on through what could be a much longer list of the fads, foibles, and dangerous doctrines of an era.

It is not strange that literary critics should be fascinated with ambiguities today. Men who lack a firm grip on the nature of man and the universe must surely be overcome with the failure of that which was intended and promised to materialize. There is an ex planation for all of this. The notion that man can create realities out of irrational longing is not itself founded in reality. All at tempts to act upon such premises must needs be abortive. There is an explanation, too, for the otherwise· strange and in comprehensible doings of reform ers in this century. They have largely lost touch with reality. They have imagined themselves as gods or demigods who could create a reality out of their dream of it. It turns out that they were only men. It is small wonder that those who feel deepest should turn upon man, then, and describe him as so contemptible. ~ The next article in this series will treat of "The Domestication of Socialism."

From a seller's tag attached to a handbrush: User's Duty TRUTH spreads by testimony. There is a sort of high compulsion, which lofty spirits recognize, to bear witness to the truth when ever found. That is how good standard merchandise gets world wide distribution. A purchaser who has pleasure and satisfaction from the use of this brush spreads the news of. his discovery to others whom he desires to. enrich. If this brush pleases you, will you not tell about it to the most appreciative person you know?

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN RUSSELL KIRK'S excellent John Randolph of Roanoke: A Study in American Politics, which on the date of its first issue in 1951 was a harbinger of modern conserva ti ve scholarship, has been repu b lished by Henry Regnery of Chi cago (480 pp., $5.95) with new ap pendices containing Randolph's more important speeches and a selection of his letters. The' new edition is extremely welcome, for it comes at a time when Kirk is under considerable fire from one wing of the conservatives for his attempt to make the thought of the Anglo-Irishman Edmund Burke relevant to an America which, supposedly, has never had a Burkean tradition. What John Randolph of Roanoke empha sizes is that this country once had a Burke in politics - though the resemblance of Randolph, a tor mented, sickly, sardonic South Virginia slaveholder, to Burke is obscured by so many surface dif ferences that it takes some dig ging to find it.

The main point made by Kirk is 58 that his two intellectual heroes had a common· horror of abstrac tion in political thought such as L.ocke's theory of "natural rights," or Tom Paine's "rights of man." The things men did have a right to, in the Burke (and Randolph) view, were the benefits and tradi tions incorporated over the ages in their culture and society. "All we have of freedom, aU we use and know, this our fathers bought for us, long and long ago," as I seem to remember Kipling. Kirk puts it this way: "Men's rights, in short, are not mysterious gifts deduced from a priori postulates; they are opportunities or advan tages which the stability of a just society bestows upon its mem bers." I find myself biting on air when I read a sentence like that, for the definition of a "just society" would seem to demand a theory of the nature of man, which gets us back to "rights appropriate to man's nature," or "natural rights"

tout court. But if my sense of log ic makes me a Lockean, my tem1965 JOHN RANDOLPH OF ROANOKE 59 perament makes me a Burkean, for I agree with Kirk (and Burke and Randolph) that the tissue of traditional Anglo-American liber ties should not be subjected to sudden change by legislatures or courts! -prodded by the momen tary clamor of pressure groups. Just as Burke venerated the traditions of his eighteenth cen tury British society, Randolph took the "Old Republicanism" of Tidewater Virginia as something tha t should remain beyond the reach of revolutionaries. Randolph did not like slave,ry, and he be longed for a time to Bishop Wil berforce's English society for the suppression of the slave trade. But he had inherited his slaves, and he considered that it would be a cruel thing to do to turn them off into a society not yet ready to absorb them as free men. Ab olitionists angered him, for they believed that "all is to be forced nothing can be trusted to time" or to nature." In his will John Ran dolph did give freedom to his slaves, who were sent after his death to lands which he had pro vided for them in Ohio. Kirk re marks upon the bitter irony that ensued when the people of Ohio, an abolitionist state, met Ran dolph's Negroes "with violence and drove them from the farms the southern champion had pur chased for them."

Men of Honor and Learning The Burkean reality of Vir ginia Tidewater life at the end of the eighteenth century was that it produced men of honor and learning. Randolph wanted it to continue that way. But he found himself in a Congress that had little use for his Old Republican ism. The Jeffersonian Republicans were, to Randolph's way of think ing, levelers; they looked to the development of an America, of small yeoman farmers, and they angered him because of their en mity to such institutions as entail and primogeniture. The Federal ists were no better, for they be lieved in the development of in dustry, the creation of cities, and the centralization of power in a federal state. Old Republicanism required strict construction of the Consti tution for the preservation of states' rights. In economics, it meant Free Trade, for the plant ers who supported the Old Re publicans needed English mar kets for their crops, and found it more expedient - and cheaper - to trade for English manufac tured goods. In foreign affairs, Old Republicanism meant politi cal isolationism, for wars inter fered with overseas commerce and put high taxes on agrarians who weren't prepared to pay them.

Since Randolph was never one 60 THE FREEMAN July to curb his tongue, he found him self embroiled with practically everybody else in politics in the Jeffersonian and earliest J ackson ian periods. For a while he made common cause with the New Eng landers who opposed Jefferson's Embargo and the War of 1812. The embargo and the war accom plished the ruin of both the Vir ginia Tidewater planters and the New England shipping interest and after the war was over Mas sachusetts' Daniel Webster, a great opportunist, went over to the High Tariff enemy when it became apparent that the ship ping interest would never come back. This left John Randolph with no important congressional allies. But he did pass on the sub stance of his thought to John Cal houn of South Carolina. Original ly a War Hawk and a nationalist, Calhoun embraced a Burkean de fense of the tradition of states' rights when he realized that a na tionalist North and West would menace the slave economy of the Deep South.

The Problems Remain the Same Reading about Randolph's ca reer in the Congress of a hundred and fifty years ago is a melan choly business. If the quixotic Old Republican were alive in 1965, he would recognize at least a hundred contemporary ironies as being very similar to the irony that forced southern enemies of slav ery such as himself into the posi tion of defending the rights of states to deal with their "peculiar institution" in their own way, Wha t would Randolph, the enemy of Jefferson's Embargo and "Mr. Madison's War," do about trading with Soviet Russia or about war in Vietnam and the Dominican Republic? He would be forced, would he not, to the Burkean ex pediency of supporting little ex peditions and an embargo on trade in strategic goods in order to fore stall the coming of a big atomic blow-off. As for Selma,Alabama, and all that it connotes, would Randolph, as a strict constructionist, invoke his principles to welcome a strict construction of the constitutional clause that says the privileges and immunities of the citizen shall be equal? I fancy that Randolph would acknowledge the· Federal right under the Fifteenth Amend ment to guarantee even-handed registration and to police the polls, but would fight to the end for the right of a state to impose educa tional qualifications on voters in a nondiscriminatory way and to re tain the poll tax in local elections.

This would leave a modern Ran dolph standing in uncomfortable isolation between the two fires of 1965 JOHN RANDOLPH OF ROANOKE 61 the Ku Klux Klan and the "lib erals," a quite familiar spot for a battler for Old Republican prin ciples. Randolph would find himself right at home in the controversies over reapportionment and in the fight to cut foreign aid. The vir tue of the Kirk study is that it shows that, while times do change, principles do not evaporate. This is a fine work even though it does argue in a circle on the subject of natural law. ~ ~ IF YOU DON'T MIND MY SAY ING SO, Essays on Man and Na ture by Joseph Wood Krutch,New York: William Sloane Associates, 1964, 402 pp., $5.95. Reviewed by: R. M. Thornton and E. A. Opitz WE MAY NOT be able to frame a definition of philosophy, but we can, nevertheless, recognize a phi 10sopher when we see one. He would be a man who had served a long and varied apprenticeship: professor of literature at Colum bia University, dean of American drama critics, biographer of Sam uel Johnson and Thoreau, natural ist, student of contemporary sci ence, observer of the human scene on several fronts. He would, in short, be Joseph Wood Krutch.

Krutch wrote a little bombshell of a book in 1929, The Modern Temper, all the more shattering in its conclusion because of its urbane style. The book examines the universe supposedly revealed by modern science, draws some logical conclusions, and calmly demonstrates that the human spirit can· no longer be or feel at home in such a universe. Exactly 25 years and many books later, Krutch re turned to the general subject in a book called The Measure of Man. He does not here attack the argu ment of his earlier work, but rather outflanks it. The diagnosis of The Modern Temper still stands, but the prognosis is re vised upward. Mr. Krutch sets forth his "reasons for no longer believing that the mechanistic, materialistic, and deterministic conclusions of science do have to be accepted as fact and hence as the premises upon which any phi losophy of life or any estimate of (man's) future must be' based."

The new perspectives are further elaborated in several recent books and essays. Mr. Krutch calls him self an "essayist by habit," and in the present collection, culled from various journals and spanning many years, he has given us a de lightful book, a book to enjoy, and then to ponder. Krutch views his fellow crea tures - and himself - with detach ment and amused tolerance, so that his strongest criticisms per..

62 THE FREEMAN July vade one's thinking without set ting up any unnatural resistance to what he has to say. He does not scold the social scientists for their infatuation with statistics and polls; he pats them on the head with a witty essay entitled "Through Happiness with Slide Rule, and Calipers," and they vis ibly diminish. In "Whom Do We Picket Tonight?" he de'flates those who feel called to mind other folk's business by observing that it is "sometimes easier to head an institute for the study of child guidance than it is to turn one brat into a decent human being." Dealing with those who disparage market competition, he writes: "When men cannot compete for wealth they compete for position, for authority, for influence in the right places. When they cannot own a palace, four automobiles, and ten servants, they manage to get themselves appointed to jobs in connection with which these things are assigned them. More dreadfully still, when these same men find themselves no longer re quired to pay the common man to do their work for them, they quickly discover that when the profit motive has been abolished, the fear motive affords a very handy substitute."

The things tha t people of a given period take for granted are answers supplied to them by thinkers whom they might not even know. It is the task of social criticism to confront us with the men we permit to do our thinking for us, to make us aware of our assumptions. Here is Mr Krutch's thumbnail analysis: "The fundamental answers which we have on the, whole made, and which we continue to accept, were first given in the seventeenth century by Francis Bacon, Thomas Hobbes, and Rene Descartes, and were later elaborated and mod ernized by Marx and the Darwin ians. These basic tenets of our civilization (in chronological but not quite logical order) are: (1) the most important task to which the human mind may devote it self is the 'control of nature' through technology (Bacon); (2) man may be completely understood if he is considered to be an animal, making predictable reactions to that desire for pleasure and power to which all his other desires may by analysis be reduced (Hobbes) ; (3) all animals (man excepted) are pure machines (Descartes); (4) man, Descartes notwithstand ing, is also an animal and there fore also a machine (Darwin); (5) the human condition is not determined by philosophy, reli gion, or moral ideas because all of these are actually only by-prod ucts of social and technological developments which take place in1965 OTHER BOOKS 63 dependent of man's will and unin fluenced by the 'ideologies' which they generate (Marx)."

Krutch jokingly asserts that his claim to fame is that he knows more about plant life than any other drama critic, and more about the theater than any botanist! Essays in both fields are here, plus pieces on Johnson, Thoreau, and Mencken - whom Krutch re gards as the' best prose writer of the twentieth century. Thoreau wrote that he came in to the world, not to make it better, but to live in it good or bad. Sim ilarly, Mr. Krutch, who turns a skeptical eye on many of the re forms currently proposed to im prove the lot of mankind. He be lieves that society can be improved only by improving individual men and women and that "saving the world" is, perhaps, a task beyond man's capacity. Krutch is proud of having never been taken in by communism, as were so many intellectuals during the past half century. Nor has he worshiped the other false gods of our time - Rationalism, Relativ ism, Progress, Equality, Science, and Democracy. He discusses at tempts to cure educational ills by pouring money into school plant; he shows the fallacies in pacifism, and in the sociology which exhib its a more tender concern for the criminal than for his victim; he is critical of those who would make poverty the scape,goat for all social problems, and who then look to government to rid us of poverty. Mr Krutch distrusts all panaceas, for his faith is placed on the responsible indi viduat He argues cogently that there is dis coverable me'aning and purpose in human existence, and that man is a unique creation gifted with the will and the imagination to make a world, not merely submit to one. "Man's most important char acteristic and that which bestows upon him his dignity is his free dom to choose."

Who says a book of essays has to be dull? ~ ~ THE AMERICAN COLONIAL MIND AND THE CLASSICAL TRADITION by Richard H. Gum mere, Cambridge: Harvard Uni versity Press, 228 pp., $5.25. Reviewed by Robert M. Thornton MANY EARLY SETTLERS in Amer ica, and especially the intellectual and political leaders of colonial and revolutionary days, were col lege men, but mastery of the clas sics was by no means limited to those who had attended institu tions of higher learning. The rate of literacy in settled regions was remarkably high, and the wisdom of Greece and Rome was continu ously brought to bear on the prob64 THE FREEMAN July lems of everyday life. Mr. Gum mere traces the classical ancestry of the Constitution which, like the Declaration of Independence, was in large measure the product of men whose schooling had been in "the grand, old, fortifying classi cal tradition." "Two ancient ideas were re garded as fundamental by pre Revolutionary Americans," says Mr. Gummere, "the Greek concept of a colony independent of the mother state, in everything but sentiment and loyalty, and the Law of Nature which took precedence over any man-made legislation."

He quotes Cicero's celebrated ver sion of this Law of Nature .or Higher Law: True Law is Right Reason, in agreement with Nature; it is of uni versal value, unchanging and ever lasting. It is a sin to alter this law ... we cannot be freed from its obli gations by senate or people, and we need not look outside ourselves for an expounder. There will not bedif ferent laws at Rome and at Athens; but one eternal and unchangeable law will be valid for all nations and all times. God is the author of this law. Whoever is disobedient is flee ing from himself and denying his human nature. "The high water mark of the classical tradition in colonial writ ings" is, in Mr. Gummere's opin ion, the correspondence between John Adams and Thomas Jefferson (1812-1826) . "These two elder statesmen reveal a mastery of the classics and a practical applica tion of ancient ideas to modern situations." They were, he writes, "at home in all fields of history."

It is precisely this at-homeness in history that is lacking in our age of innovation, with colleges offering practical courses, trivial electives, and quick returns. Here, as at so many points, Albert Jay Nock speaks to our condition: "The literatures of Greece and Rome," he writes in his Memoirs (p. 81), "comprise the longest, most .complete, and most nearly continuous record we have of what the strange creature known as Homo sapiens has been busy about in virtually every department of spiritual, intellectual, and social activity. That record covers nearly twenty-five hundred years in an unbroken stretch.. . . The mind which has attentively canvassed this record is much more than a disciplined mind, it is an experi enced mind. It has come, as Emer son says, into a feeling of immense longevity, and it instinctively views contemporary man and his doings in the perspective set by this profound and weighty experi ence."

The effort to recover our past might be the most effective way to assure our future. ~ The Creative Individual On Power and Corruption . In Tribute to an Unsung Hero 61John Chamberlain George I. Mavrodes 3 Ed Fortier 11 Hans F. Sennholz 15 George Winder 23 Donald L. Repp 27 Clarence B. Carson 29 Robert K. Newell 44 Leonard E. Read 47 Frederic Bastiat 58 1965AUGUST Planning Experiments in Britain . Books: The Flight from Reality: 11. The Domestication of Socialism . A Hole in the Dike . To the Democrats Freedom's Uneasy Conscience Profits . Self-Government IF IT'S SAFETY YOU WANT MOSTOPEN YOUR SAVINGS ACCOUNT AT COAST MAIN OFFICE 9th & Hill, Los Angeles FINANCIAL STRENGTH - Assets over half a billion dollars. Strong reserves and high ratio of cash and government bonds to assure with drawal of savings immediately on request. HIGHER EARNINGS - Planned rate for 2nd half 1965 is 4.85% per year, compounded DAILY, paid semi annually. Savings held 1 year at this rate earn 4.97%. First half of 1965 rate was 4.95% per year.

SAVE·BY·MAIL - We pay postage. MEMBER: Federal Savings and Loan Insurance Corp. Federal Home Loan Bank. "A Businessman Looks at Communism Vs. Capitalism" For your courtesy copy of President Joe Crail's speech, write to: Coast Federal Savings Post Office Box 5150A Los Angeles 55, California 5·56A·2 VI' Professor Carson explains "The Flight from Reality" that allowed for the domestication of socialism in the V Our old friend Bastiat offers some words of wisdom to the democrats of France in 1850 p. 58 V Leonard Read examines various manifestations of power and the way in which individuals are corrupted by each p. 47 V Until individuals understand the ways and means of self-government, constitutional forms are unlikely to preserve freedom. . ..p. 44 ............. p. 29United States . v The new inexpensive paperbacked edition of Henry Grady Weaver's The Mainspring of Human Progress appeals to John Chamberlain-as it will to you .

............ p. 61............ p. 27 VI' Freedom, says this philosopher, is not so much the total absence of re straint as the discovery of the true authority on which orderly lives de pend. .... ... p. 3 VI' A thrilling account of the voluntary response to the disastrous situation after last year's earthqua'ke in Alaska . . p. 11 VI' Dr. Sennholz analyzes the three components of so-called profits, the role of each, and the consequences of intervention. ..... p. 15 VI' The Labor government in Britain is harvesting the awkward fruits of excessive central planning p. 23 VI' A modern version of "the hole in the dike" in a socialized economy. Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

AUGUST 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.8 President, Foundation for Economic Education Managing Editor THE FREEMAN is published nlonthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss systenl, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 --- as the means of nlaintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except HFreedom's Uneasy Conscience," "In Tribute to an Unsung Hero," "The Flight from Reality," and "To the Democrats." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

I GEORGE I. MAVRODES FREEDOM has today a precarious position in our world, a position doubly insecure. It is not simply that there are men who would destroy it. It has never been with out this sort of enemy. But now there appears a growing uneasi ness among the friends of free dom. We defend it yet, but not without a certain hesitation. Free dom falls today into paradoxes and they trouble us. We seem un able now to take sides simply and decisively for it or against it. We range ourselves by and large in its favor, but the strength ebbs out of our stand. We have an un easy conscience over freedom. Examples of this come readily to mind. Shall we crack down on Dr. Mavrodes is Assistant Professor of Philos ophy at the University of Michigan, his spe cialty being the philosophy of religion. comic books and other literature that seem to be a cause for de linquency? It looks like good sense to do so. Why not dry up the sources of crime as we do of dis ease? But we see the specter of censorship raising its head. If we patrol the bookstore and the news stand, do we not kill a long-cher ished liberty, the freedom of the press? We have our alternatives.

We can keep our hands off, and wonder uneasily whether a free press is properly bought at the cost of ruined lives. Or we can act to cut off the source of crime, opening ourselves to the charge (from within as well as from without) that we have betrayed the cause of freedom. In neither case does conscience rest easy. Again, what of the communist, the fascist, or anyone else whom 4 THE FREEMAN August we have reason to think is out to destroy our liberty? Shall we let him teach, publish, organize? If he does these things effectively and succeeds, he will eliminate these very freedoms themselves. How can we say we have defended liberty if we let him go on? But if we restrict him, have we not ourselves curtailed freedom on the pretext of maintaining it? We are not really content with either al ternative. Our uneasiness over freedom arises, I think, from two mistakes we commonly make, mistakes not unrelated to each other. The first is that we think of freedom too often primarily in negative terms.

The second is that we commonly suppose that freedom is primarily a political matter. I NEGATIVE THINKING We are in the habit of defining our freedom in negative terms, as the absence of something. Pri marily we oppose it to authority. A man is free, we think, if there is no authority to which he must submit. He is free, we say, to do as he pleases. We commonly think of the his tory of freedom in these same terms. Man became free, we think, by shaking off the authority of Aristotle, of the bishops, of the kings who rule by divine right. No one now could tell him how to think, what to believe, whom to serve. When these chains had been broken, humanity stood forth in freedom. Liberty was again abroad in ·the earth. Now, I doubt greatly whether the best account we can give of freedom is this one, an account in the terms of the absence of au thority to which a man must sub mit. But if it is the best account, then we may be sure that man will have no deep and lasting in terest in that freedom. We are not attracted toward simple absences, and we will not give ourselves for their sake. The presence of apples on a tree or fish in a stream may make a boy wish that there were no fences to keep him out. Apart from some such positive factor, the absence of the fence is value less. How quickly will children trade the "free" atmosphere of some classrooms for the strong discipline of the football team or the juvenile gang! We simply will not build our lives around negations.

It is a failure to .recognize this fact that places some enthusiasts in the position of trying to force some "freedom" on people who have no interest in it. And it gives grounds to the fears of those who wonder if perhaps men will barter their freedom for security, or jobs, or glory, or any of a multi1965 FREEDOM'S UNEASY CONSCIENCE 5 tude of other things. Let there be no doubt. Man will certainly ex change this sort of freedom for security or for anything else: in which he has an interest. And he will lose nothing by doing so. Factual Limitations But is this negative conception of freedom the true one? I think not, though the negation has its genuine, if subordinate, place, from which it draws its plausi bility. To illustrate, let us take free dom of thought. Does this imply that a man may think as he pleases, an idea perhaps expressed by the saying, "Everyone has a right to his own opinion"? Cer tainly not. Noone uses this idea of freedom in those areas of thought in which he is really in terested. No chemist supposes that everyone has a right to his own opinion about the atomic weight of sodium. This is not a matter in which we become free by thinking as we please. Who is the genuine free thinker in the field of chem istry? It is the man. who resolute ly holds his thought to the hard, given data. He places no value on thinking "as he pleases." Rather he is interested in making his thought conform more and more closely to the nature of the physi cal world. His thought is free ex actly in proportion to its not proceeding "as he pleases," but rather in submission to the facts of the given world.

This should give us a clue to the nature of freedom. It is not the shaking off of all authority. Rather, freedom in any area con sists of submission to whatever is genuinely authoritative in that area. This is the only sort of free dom in which man can be passion ately interested. False vs. Genuine Authority We can see now how the nega tive aspect of freedom enters the picture and how men might have mistaken it for the whole picture. For a key phrase in our definition is this: "whatever is genuinely authoritative." Not every submis sion means freedom; some mean only slavery. There are false "au thorities" as well as true ones. The negative side of freedom is a way of dealing with those false authorities, with false claims upon our allegiance and submission. Thus, for example, a politician. is not a genuine authority in the field of chemistry. If a· che·mist is plagued by bureaucrats who dic tate how he shall write his form ulas, he rightly feels that his free dom of thought is threatened. In the interest of that freedom he must break free of these "author ities." He fights for what looks like a negative liberty, the ab6 THE FREEMAN August sence of these restraints upon his thought.

Actually, however, his interest in breaking free of the. false au thorities grows out of his desire to submit his thought to the gen uine authority. In his laboratory he rejects the authority of the king only for the sake of accept ing that of the test tube, the bal ance, and the flame. If this latter desire is strong and unquestioned, it is natural f or us to concen trate on the former while it is in doubt. We give our attention to the struggle against the false author ity. Thus, we may come gradually to think of freedom primarily in these negative terms. But when we extend this negative range, when we think of freedom as the absence of all authority, then we fall into destructive paradoxes. If the chemist rejects the test tube along with the king, what have we left? We have no more interest in the "free" fantasies of a so-called chemist than we have in the chem ical speculation of a politician.

Perhaps less. fulfilling One's Destiny Not only freedom of thought but every genuine freedom dis plays this character. Each one seeks a submission to its proper authority and welcomes it. In all of life we are looking for what might be called our "destiny," just as the chemist pursues the narrower goal of his professional specialty. Life does not come to us ready made; we make its charac ter as we go. But we also know, however dimly, that there is what might be called an ideal pattern for our lives (not that individ uals are to be stereotyped repli cas of each other). To find this pattern, this destiny, is to build meaning into my life. It is to ful fill that for which I was made. This is the freedom, or rather the potential freedom of man, and one of the factors which make him unique in the world. We do not fail to see evidence of this on every side. We are told sometimes that a man must give up some of his freedom if he mar ries. He can no longer come and go as he pleases, and so on. But marriage goes on, heedless of all this. And those who find the real meaning of it do not maunder about their lost freedoms. They know they have gained freedom, not lost it.

Nor do we rush to the moun tains and deserts to live solitary and free. From time immemorial, long before the world was crowd ed, men banded together and pat terned their lives by custom and law. Robinson Crusoe on his lone ly isle is not the paradigm of real freedom. Friday adds immeasur ably to the possibilities of his 1965 FREEDOM'S UNEASY CONSCIENCE 7 liberty as he provided that pos sibility of social intercourse which is part of Crusoe's destiny as a man. To Become Free I have mentioned the "poten tial" freedom of man. For free dom is not something we find ready made. Rather, we become free, and to a greater or lesser extent. The contemporary chem ist is not completely free in his thought about the nature of the physical world. No doubt his ideas are a mixture of truth and fantasy. But if he continues in his work, he may grow in his free dom, and find himself less and less in bondage to old errors. He is becoming free.

So also in the more generalized areas of life. For millennia men have experimented with law in the interest of what life ought to be, and hence in the interest of free dom. No doubt there have been both advances and setbacks. Sub mission to good law makes men more' free than submission to bad law. And submission to bad law has probably made men more free than has anarchy, if there ever was a real anarchy. There may even be a principle better than law and beyond it (not short of it) something which shall carry men to a full freedom which even the law cannot give them. If there is such a thing, we cannot rest un til we find it. To stop short of that is to stop short of our destined manhood. The dance can be taken, I think, as a valuable symbol and illustra tion of freedom. F'rom ancient times to the present it has fascin ated men. Physical movement is part of our life, beginning with the random activity of the infant.

We have wanted to fill it with meaning, to raise it to its highest human level. And so the dance has been developed, where all motion is structured, patterned. It is at the far end of the scale from the random movement of the child. The tempo is given by the music, the pattern of steps and gestures comes out of tradition. Every dancer submits himself to these, though of course not e'very dancer does it in the same way. The, dance itself provides for differentiation. One leaps while another bows, and together they go to make one dance. Now, no dancer who re!ally en ters the' dance mourns for the loss of the negative freedoms. He does not rebel against the tempo of the music, against the pattern of movement. He may indeed alte'r and develop them, wanting to make the dance a better one, ful ler in its freedom. But he is, far from returning to randomness, far from rejecting submission. He 8 THE FREEMAN August wishes to make a more sensitive tempo, a richer pattern, so that in submission to these the dan cers may find a fuller freedom of motion.

The child, on the other hand, cannot dance. He can move at ran dom, but he is not free enough to dance. And that is because he cannot yet submit. He has not mastered the full human use of muscle and nerve. He is not able yet to follow tempo and structure, and there is much hard work to be done before he can. The dance is a goal before him, measure of his freedom and maturity in the kingdom of the body. Human life as a whole may be thought of as a dance, one whose whole tempo and pattern must be more complex than that of any part. Into the full dance of the race must go all the individual dances of the thinker, the writer, the manual worker, the artist, and a host of others, no two precisely alike. So also must these dances combine in unique ways in the full life of each individual, filling out his destiny. No doubt this is done imperfectly now, with many a misstep, many a collision, both in public and private. The dance is re-any for none but men who are free, and none of us here is wholly free as yet. But we may be looking for our freedom, listen ing, as it were, for the music which expresses our destiny, what our lives ought to be. Giving ourselves to that, a.s the scientist gives himself to the' facts of the physi cal world, we enter more and more fully into the dance' of free men.

A Free Press We can see now in principle how the problems with which we began must be met. It is hopeless (and valueless) to look for a "free press" which is under sub mission to nothing. A press may serve the interests of the ruling clique. If it is free of that, it may serve the advertisers' interests, or it may se,rve· the' publisher's desire to make money, or to elect his friends, or to "uplift" the community, or to speak the truth, or some other such principle. If it serves nothing, it is not free; it is simply rusty from disuse. Then when is the publisher truly free in his work? There is no easy answer. He is free when he works according to that prin ciple which is genuinely author itative in this field, the field of public communication. To state that principle precisely is not easy; let me not pretend to achieve that precision here. But even if we cannot see the principle we need with complete clarity, we may still be confident of the di rection in which it lies, and of some which certainly fall short 1965 FREEDOM'S UNEASY CONSCIENCE 9 of it. No publisher and no press is morally free whose only prin ciple is profit, heedless of the lies spread or the lives broken by crime and lust. Such a press lacks genuine freedom regardless of its relation to the law. And laws which restrict such a press de stroy no genuine freedom. They cannot, for there is none.

They may, however, make it somewhat possible for a man to live out his life without fear of slander, or for children to grow up without being seduced into crime and degeneracy. If laws do this, they are helping to keep an area clear for the growth of some other freedom, and are surely justified. In such a case we cannot hesitate over the fear of "censor ship." Every book and paper is already censored, regardless of the law. Many have the truth censored out of them because of the author's fear that the truth will not pay. It is a case of choos ing between censorships, not of eliminating them entirely. There may possibly be a censorship which is better than that of laws against libel and pornography; there are certainly some which are worse. Let us not have the worse. Thus, when we see that freedom is primarily positive and not neg ative, .we begin to see the direc tion in which we must move in order to strengthen it. And we can move in good conscienc.e, not fearing for the loss of purely negative factors.

II NO POLITICAL SALVATION The second mistake, I sug gested, was that of taking free dom to be primarily a politic.al affair. Constitutions, revolutions, declarations by the heads of states - it is on these that we have often pinned our hopes for the defense and spread of liberty. There is some justification for this if we think of freedom only in the negative sense. But in pro moting genuine positive freedom the role of the state is at most a subordinate one'. No constitu tion, for example, can guarantee freedom of the press. It may, in deed, get rid of one obstacle by making it somewhat awkward for the ruling party to control the press. It is harder to make a law which will effectively keep the de sire for profit from enslaving the press to the appetite for scandal. And it is hard, indeed, to see what sort of statute could under take to fill publishers with a pos itive desire for communicating nothing but truth. Such a desire, if it is to live at all, must spring fro'm other sourc.es.

In the political realm itself the state cannot generate freedom.

10 THE FREEMAN August Secret ballots do not of themselves make a voter free. Only a genuine idea of the way in which his vote ought to be cast can do that. Lack ing this idea his vote falls under the sway of imprope,r factors without number - his prejudices, his union, his club, his purse, po litical propaganda, the weather .... His vote is secret, but it is not free. And in the realm of free thought what can the state do? Can it give to any man that passion for truth, for submission to the facts, which will make him a free and genuine thinker? The most it can do here is to block off some of the gross er interferences. But the real roots of positive liberty must be sought elsewhere. Where those roots lie I have hinted before, as I mentioned man's search for what his life was meant to be, for his destiny. In this soil only grows the flower of freedom. A man begins to grow free in thought when it dawns on him that his true destiny in this area is to know the truth, and he begins to pursue it. So it is with every freedom. When we see, however dimly, what our lives were meant to be and begin to give ourselves to that vision, we have begun the march toward the true liberty. No doubt there are easier marches. It is often easier to do what is legal rather than what is right, to know what is popular rather than what is true.

But if freedom is our interest, we cannot stop short. Weare drawn ahead by the goal - it is nothing less than the fulfilling of the whole potentiality of our lives. Life's Purpose THE CREATOR of life has entrusted us with the responsibility of preserving, developing,· and perfecting it. In order that we may accomplish this, He has provided us with a collection of mar velous faculties. And He has put us in the midst of a variety of natural resources. By the application of our faculties to these natural resources we convert them into products, and use them. This process is necessary in order that life may run its ap· pointed course. FREDERIC BASTIAT, The Law IN TRIBUTE TO An Unsung Hero A onetime skeptic recalls how "The System" saved a city. '-------ED FORTIER -------' ANCHORA'GE. HUNDREDS OF THOUSANDS of words have been written about the great Alaskan earthquake that shattered 52,000 square miles of Alaska on March 27, 1964.

As an Alaskan involved in the great upheaval and its aftermath, I want, from the clarifying dis tance of a year, to pay tribute to an unsung and sadly neglected hero of the disaster. The hard-to-sketch calamity conqueror to which honor-or at least full appreciation-is due, is that rather vague, all-embracing thing in our lives known as the "American System" or the "American Way," and the ele ments of free enterprise, competi tion, and profit motive that make it work. This article is reprinted by permission from The National Observer of March 22, 1965. Implied characteristics of those who live by the system are initia tive, independence, and freedom to act-all of which I saw bloom in abundance under the most ad verse conditions. Saved by the System On that fateful and nearly fatal Good Friday evening when the lights were out, and the heat w'as off, and the phones were dead in a shattered city, it was the Sys tem that saved the day.

Many of the experts who ar ri ved two or three days after the quake and seismic waves, de scribed by President Johnson's Federal Reconstruction and De velopment Commission for Alaska as causing "one of the greatest disasters in the recorded history of the United States," didn't see the System at work in the critical 11 12 THE FREEMAN August first 48 hours when it was at its best. From my vantage point in An chorage's Providence Hospital, largest private hospital in the state, I watched the disaster from the first shudder at 5 :36 p.m. un til the survival of the state's lar gestcity (estimated population: 80,000) was assured. My background will help to ex plain my transformation from a skeptical observer of the worth of the System under maximum pres sure to an avowed admirer. From 1951 to 1959, I was employed as a full-time Civil Defense official, starting as regional director and ending as Alaska's first state di rector.

In restrospect, I now realize that in years of building a Civil De fense framework and foundation in Anchorage and western Alaska, my associates and I never really appreciated what the System can accomplish when allowed to work. I'm not sure that we fully realized government is a servant of the governed. Plans for an Emergency I dislike needless government intrusion in my private affairs, but I must admit that at the time I was responsible for emergency planning I espoused the "govern ment knows best and can do the job best" philosophy. My plans, some of which were still intact when the earthquake struck, tried to cover every possible emergency situation with written directives. The panic and mass hysteria that I feared never developed. The looting and pillaging that I ex pected just didn't take place. All the ingredients needed to rip a community apart were pres ent in abundance-earth-shaking terror, fear of the unknown, un founded warnings that a tidal wave was expected, isolation, be low-freezing weather, darkness, loss of communications. But the composite character of the Ameri cans involved refused to crack un der the strain.

My first realization that the System is a tangible, living, and essen tial thing came at Provi dence-Hospital. Although their hospital seemed to be shaking itself to pieces, not a single nurse or aide left her pa tients on any of the hospital's five floors. No authority told them to stay with their patients; they just naturally honored an obligation to their profession. As soon as word spread tha t Providenee was the main emer gency medical center, suppliers anticipated needs almost before they developed. A bottling com pany sent a truck with distilled water and soft drinks. Representatives of major drug 1965 IN TRIBUTE TO AN UNSUNG HERO 13 companies were on the job in min utes. When not filling orders, all of which were delivered without cost, they carried stretchers. A bakery kept the bread flowing into the hospital and wholesalers did the same with other foods. A com mercial oxygen company had re serve tanks in place within an hour.

None of these free citizens had to be called or given written or ders. They came because service, emergency or not, is a prime in gredient of private enterprise. A Flood of Volunteers All off-duty workers reported to Providence, and so many volun teers had registered by 8 p.m. that radio stations broadcast the mes sage that no additional help was needed for the present. Noone had to call Anchorage's physicians and surgeons for emer gency duty. Despite the fact that almost one-third of the city's doc tors lost their homes or other property, the medical profession was at its best in meeting every emergency need. With the exception of the mil itary forces, which provided mas sive assistance in manpower and material in every corner of the vast disaster area, the City of An chorage was government at its best under disaster conditions. Under the very capable leadershi p of then Mayor George Shar rock, an airline executive, the city government acted with amazing speed to get utilities in operation.

By Saturday morning, March 28, practically the entire business district was out-of-bounds and un der military guard. As broken, sunken streets were repaired, the area of "no entry" diminished each day. By Tuesday all banks were operating and open for de posits or withdrawals. (There were few of the latter.) Those who wanted to meet the situation by imposing restrictions found an enemy in Anchorage's mayor. Soon after the disaster, Mayor Sharrock was under heavy pressure from higher authorities in government to invoke martial law, ration food and fuel, place an embargo on some shipments. He had faith in the System and re fused to. buckle under to the "gov ernment knows best" element. And the System did not betray his trust. Early on Saturday morning, I entered a food store near my resi dence. The inside was rubble, but the store was open for business. A bit hard to find what you want ed, but as long as my grocer had it, his food was for sale.

Working with candles, lanterns, and flashlights, the owner and his crew had stayed up all night to bring slight order out of chaos.

14 THE FREEMAN August He knew people would need and want food, and didn't want to dis appoint them. There was no dis cernible hoarding. This pattern was followed by hundreds of independent mer chants in every field. It wasn't easy, but they did it. They had customers to satisfy, payrolls to meet, and bills to pay. Danger in a Building An outstanding example of the System was provided by Harry Hill, president of the Lathrop Co., and his son, Donald. The Lathrop Company's new six-story Cordova Building was tilted and appeared so badly damaged it was declared unusable by government inspec tors. The company's two-year-old Hill Building, an eight-story structure housing the Federal Aviation Agency's Alaska offices, was damaged to the extent that building officials didn't want re pair crews to enter it. Believing his buildings usable, and knowing them to be useless as empty ghosts, Harry Hill disre garded the advice of government experts. He flew 100 heavy 25-ton jacks to Alaska, and assisted by his son and several brave work men, began the dangerous task of jacking his buildings back to their original position. Final repairs were completed by late summer and both buildings have been declared safe and are fully occupied.

Principal tenants in each are agen cies of the Federal government. Within a week,. the American System. of produce for profit was going full blast. Unless you wanted to retire from the scene and lick your wounds, there was not time for sitting back. This ode to the System is not in tended in any way to belittle the efforts of the many agencies of government that have aided and are assisting in the rebirth of Alaska. The fact is, however, that all the assistance would have been useless if Alaskans hadn't demon strated the will to survive and a determination to stay with their stricken towns and cities. I have noted that the many eche lons of government have a hefty corps of public information officers who recite with great competence their particular agency's role in helping Alaska get back on its feet. But with the passage of time and mounting evidence that Alas kans are undaunted in their de termination to rise above the rub ble, there is a growing recognition that the critical early battle was fought in the hearts and minds of the ordinary citizens who refused to quit when defeat seemed almost inevitable. • 1Orofit$ HANS F. SENNHOLZ Dr. Sennholz heads the Department of Eco nomics at Grove City College, Pennsylvania.

This article is from a speech given to business executives in Dallas, Texas, on April 23, 1965. ALTHOUGH every businessman aims to earn a "profit," he usually knows very little about the eco nomic nature of his objective. He may even succeed in earning a profit, and yet be unable to explain this excess of proceeds that ac crues to him after all expenses are paid. The same can be said about tax collectors who se'arch for "profits" and aim to seize parts thereof for the state. And the accountants who reveal the "profits" by com paring the business revenue with the expenses. They all look at the totality of net income without any distinction of its various compo nent parts. The economist who analyzes the economic nature of "profits" ac tually perceives three entirely dif ferent sources of income. Most proprietors and partners of small businesses who think they are reaping "profits" actually earn what ecnomists call managerial remuneration. They are earning an income through their own managerial labor, supervising their employees, serving custom ers, working with salesmen, ac countants, and auditors. Obvious ly, their services are very valuable in the labor market. They would earn a good salary if they were to work for the A & P or a 5 & 10¢ store. Therefore, that part of a businessman's income that is 15 16 THE FREEMAN August earned through his own labor ex ertion is a kind of wage or salary, and as such, totally unrelated to economic profits.

Most small businessmen with incomes up to $20,000 and $25,000 fall in this category. In the mana gerial labor market they would earn this income for services rendered to customers, for buying and selling, supervision of person nel, bookkeeping and accounting, and many other business activi ties. But the majority of American enterprises earn an income in ex cess of managerial remuneration. The economist who dissects this residi um finds yet two other het erogeneous parts. By far the larg est part, which is earned by the majority of American enterprises, is interest on the owner's or stock holder's invested capital. It ac crues to the owner on account of the time-consuming nature of the production process. Interest Whoever refrains from spend ing his income and wealth and, instead, invests them in time-con suming production can expect a return. For without it no one would relinquish his savings to provide capital for production. In terest ultimately flows from hu man nature. Men of all ages and races value their present cash more highly than a claim payable in the future. Therefore, in order to induce an investor to relinquish his cash for production, which will yield its fruits in the future, a premium, called originary inter est, must be paid. In other words, the businessman who invests in his own enterprise should hope to earn on his investment the same kind of income as the lender who extends a loan to a borrower.

This ba.sic interest return of some 4 per cent must accrue to business lest it withdraw its capi tal from production. As labor will leave an ind ustry that pays low wages, so will capital shun an in dustry that does not yield a mar ket return. If the govern men t should tax it away or if labor unions should succeed in wresting this interest income from busi nessmen, production will neces sarily contract and ultimately fall into deep depression. No addition al capital will be placed at the dis posal of an industry whose inter est accrual is distributed to work ers inste'ad of owners. In fact, the liquid capital of that industry will even be withdrawn and turned to other employment where interest can still accrue. Capital consump tion may even destroy what many generations before have built and accumulated. It is difficult to ascertain the precise rate of originary interest 1965 PROFITS 17 which businessmen earn on ac count of the-time-consuming na ture of production. For reasons of comparison we cannot even use the market rate of interest applic able to loan funds because the market rate itself is a gross rate consisting of originary interest, an entrepreneurial profit compo nent that flows from the risks of the individual loan, and finally, a risk premium that flows from the dangers of monetary depreciation wherever inflation is practiced.

But for reasons of simple illustra tion of the originary interest rate, we may use the rate the U. S. gov ernment must pay for the use of funds. If we assume that the lend er of funds to the U. S. govern ment bears no debtor's risk and that inflation does not affect the loan value, we arrive at an in terest rate that may constitute the originary rate, which is the rate businessmen should hope to earn as a basic interest return on their invested capital. Suppose your net worth of busi ness, stated in present value, amounts to $100,000. Originary interest on that amount would come to $4,000 a year, which you would earn even in such riskless investments as U. S. Treasury bonds or savings banks deposits. As a basis for this interest cal culation you would take the esti mated present market value of your net worth, for only the pres ent value of your assets, and not the arbitrary book value reflecting past valuations or tax considera tions, is meaningful for individual motivation and action.

A merchant with a business net worth of $100,000, spending long days in his shop serving custom ers, supervising his help, and otherwise· managing the business may thus earn $4,000 interest and $20,000 managerial remuneration without actually reaping any profits. Pure Profits - Temporary Response to Changing Marlcet Conditions Finally, there are enterprises that do earn pure profits. Through correct anticipation of future eco nomic conditions, businessmen may earn what economists call entrepreneu.rial profits. For in stance, through buying at a time when prices are low and selling when prices are higher, they may earn inventory profits. After in terest allowance is made for the time of investment, stock market profits are pure profits. Of course, such profits are· connected with risk on account of the uncertainty of the future. Instead of reaping profits, many businessmen suffer losses.

Contrary to popular belief, pure profits are only short-lived. When ever a change in demand, supply, 18 THE FREEMAN August fashion, or technology opens up an opportunity for pure profits, the' early producer reaps high re turns. But immediately he· will be imitated by competitors and new comers. They will produce the same good, render identical serv ices, apply similar methods of pro duction, and thus de.press prices until the pure profit disappears. The' first hoola-hoop manufacturer undoubtedly reaped pure profits. But as soon as dozens of competi tors had retooled their factories the market was flooded with hoola hoops. Prices dropped rapidly un til the pure profits had vanished. When the Ame·rican people sud denly discovered their need for compact cars, American Motors, who was the early manufacturer, temporarily earned pure profits. After General Motors, Chrysler, and Ford invaded the field, Ameri can Motors profits returned to the market rate of interest or even changed to losse·s.

Pure profits are very elusive. But opportunities for profits will emerge as long as there are' changes in demand, supply, fash ion, population, technology, or even the weather. As all life is change, and economic adjustments need to be made continuously, op portunities for profits will arise again and again. And yet, in spite of the com petitive forces that work incessantly in a free economy to wipe out pure profits, we, may observe numerous enterprises that suc ceed in earning them over lengthy periods of time'. The reason must be sought not only in the· superior management of some, enterprises in which gifted entrepreneurs di rect the speculative aspects of business, but also in the. different degrees of risk connected with the various industries. Industries that work with a minimum of risk in stable mar kets and with stagnant technolo gy must expect to earn the lowest profits. When completely adjusted to consumer demand and without any anticipation of risk, pure prof its would indeed be completely eliminated and only the originary intere·st return would re·main. But as even a completely adjusted in dustry may face future risks, eco nomic or political, and as the risk factor cannot be eliminated en tirely from any productive invest ment, some remnant of pure profit is usually earned by the suc cessful enterprises. This is the reason why even apparently risk less industries continue to earn a little more than the 4 per cent originary intere'st. The successful public utility, for instance, which may bear little investment risk, may earn 6 or 7 per cent, which consists of 4 per cent interest and 2 to 3 per cent pure· profit. But 1965 PROFITS 19 the presence of risk also explains why some enterprises in the same industry only earn the interest re turn or even suffer loss.

On the other hand, the success ful enterprises that continuously face high degrees of risk tend to earn higher profits. For several years during the cold-war rearm ament, the manufacture of air craft and parts was exceptionally profitable. According to some sta tistics, a few aircraft manufac turers earned more than 20 per cent of net worth .. Even if we bear in mind that corporate net worth is usually understated when com pared with present values, and earnings ratios therefore are con siderably overstated, we must admit that exceptionally high prof its were earned by the most suc cessful enterprises. In short, eco nomic activity that involves a great deal of risk must yield ex ceptionally 4igh profits to the' suc cessful enterprise in order to at tract the, necessary capital. It is obvious that the aircraft industry that continuously faces a great many imponderables, and often has suffered heavy losses, could not attract the needed capital if no more could be expected than a one per cent profit above the originary interest. Or, oil exploration and drilling which entail great finan cial risks would not be carried on without high rewards for success.

Interference with Profits Taxation of these high rewards, or their arbitrary distribution to workers, ,vould eliminate the in centive for risk-taking. Why should a man risk his capital in production if he can only suffer losses? In that case he· would shun every productive investment, and search for riskless employment of his funds. The economy thus be comes rigid and inflexible, and un able to adjust to changes in de mand, supply, and technology. Ex pansion and modernization are severely hampered. A confiscatory taxation of pure profits, malicious ly called "excess profits," destroys the vitality and dyna.mism of the market economy. (For an excellent discussion of profit and loss see Ludwig von Mises, Planning for Freedom, Libertarian Press, South Holland, Ill.) And what are the effects of taxes levied on the 4 per cent basic interest return? As described above, inte'rest is the payment for the use of capital over time. With out it capital cannot be invested and production must come to a standstill. When the government levies its confiscatory taxes on this basic income component, the mar ket must fall into severe depres sion. In fact, the "multiplier"

economists who usually apply their calculations to government spending would do much better 20 THE FREEMAN August calculating the-depressive effects of this taxation. Let us assume, for instance, that the government imposes a tax of $1 billion on the interest return of business. At 4 per cent this interest constitutes the yield of $25 billion capital in vested. And without this yield these $25 billion of business capi tal will be withdrawn from pro duction, at least as far as it is liquid and can be withdrawn with out heavy losses. For why should the owner keep his capital in vested without a return? The Great Depression gave dra matic proof of the depressive ef fects of confiscatory corporate taxation. And today, we can ob serve similar stagnating effects whenever the' Federal or state gov ernments raise their basic levies on business, such as the social security taxes and unemployment taxes which fall on every business regardless of its profitability.

And, finally, what are the eco nomic effects of taxes that fall on the first-mentioned component, the managerial remuneration? Why should a merchant spend twelve to sixteen hours daily in his store if he cannot earn an income that is comparable with the salaries earned by other managers? If profit taxes encroach upon this in come the independent business man will be tempted to sell out to his big competitor and rather earn a salary as a branch mana ger than to face confiscatory pro fit taxes. In economic life it is rather dif ficult to ascertain the impact of profit taxation. The same tax in some cases may fall on pure profits, in others on basic interest, and yet others on managerial re muneration. The effects, therefore, do vary. In some cases the tax merely prevents risky undertak ings, in others it causes depres sive restrictions of production, and in yet others it may cause the liquidation of small and me diurn-sized enterprises.

Addendum on Profit-Sharing For many people, profit-shar ing is thought to provide the solu tion to our labor problems. It is said to hold the key to industrial peace and represent the ideal of industrial democracy. According to a Senate Committee Report, profit-sharing is "essential to the ultimate maintenance of the capi talistic system." Even some busi nessmen praise it for giving em ployees a sense of partnership in the enterprise, raising worker morale, avoiding strikes, reduc ing turnover, increasing efficiency, and so on. In fact, profit-sharing is said to afford workers a stake in our capitalistic system. These people do not seem to realize that the market economy is 1965 PROFITS 21 a sharing system. Although hamp ered and mutilated, American business continues to deliver ever more and better goods. Wages con tinue to rise on account of im proved technology and increased capital investments, not because we work ever harder and longer hours. Competition forces inves tors and businessmen to share the fruits of their investments with their customers through lower prices and with their workers through higher wages.

But in popular terminology "profit-sharing" proposes to give the workers more than higher wages through competition in the labor market. It means an addi tional distribution of a business man's earnings to his employees. Some proposals depend on gove,rn ment or union coercion, others aim at voluntary sharing. Most shar ing firms are rather small in size and employment. Whose Share Is to Be Shared? The economist who analyzes this supplementary sharing must ask a pointed question. Which part of the business surplus com monly called "profit" is to be di vided between businessmen and workers? Is it the "managerial remuneration" which businessmen earn through their own mana gerial services? Why should in dependent businessmen yield their labor income while managers and supervisors in the service of large corporations continue to earn a market wage? Is it the "pure-profit" which businessmen are urged to share?

Only a small percentage of Amer ican enterprises actually earn pure profits. Now, are the fortunate workers who found employment in profitable enterprises to earn more than their fellow workers in average firms? Should an ac countant who serves a brilliant stockbroker earn $100,000 per year while his equally competent fellow accountants labor at $5,000 or $6,000 ? What is to determine his remuneration? But whatever the sharing plan should provide, it introduces a dubious wage prin ciple: a man's labor income is de termined by the ability of his em ployer. I doubt that this is the matrix for human cooperation, the key to industrial peace. On the contrary, it would create new sources of conflict. Most workers who receive wages only would probably demand "equal pay" from their profitless employers, which would aggravate rather than alleviate the labor situation. Many people fail to realize that industry doesn't have much profit to share. According to Claude Robinson's excellent analysis, 45 per cent of all companies, on the average, are reporting no profits.

22 THE FREEMAN August The average annual earnings for all manufacturing companies amount to eight and six-tenth cents per dollar of investment. "If we allow five cents as a form of interest," Robinson concludes, "the remaining three and six-tenths cents is left for entrepreneurial risk-taking. Should the three and six-tenths cents entrepreneurial fee be shared, it could at best mean an insignificant wage increase, and would surely decrease the willingness of owners to take the investment risks involved in pro viding better tools for workers. Sharing the entrepreneurial fee, therefore, would likely do the wage-earner more harm than good." (Claude Robinson, Under standing Profits. Princeton, N. J.: D. Van Nostrand, 1961, p. 315.) Interest on Investment And finally, there is the "inter est" which capitalists usually earn on their invested funds. But, a forced reduction of this basic yield not only prevents capital formation but also causes its with drawal and consumption. Such profit-sharing on a large scale causes stagnation and depression as the economic history of the past thirty-five years has repeat edly demonstrated.

Improvements in labor produc tivity and standards of living largely depend on the increased use of capital. Saving is a funda mental prerequisite of economic progress. It is hard to understand how anyone who has human bet terment at heart can urge us to reduce the award of saving by sharing it with those who did not earn it but propose to consume it. The friends of profit-sharing sometimes argue that if all com panies would share their profits, labor productivity would rise greatly and everyone would bene fit. But in this case, competition would again reduce prices and profits until there would be no excess profits to share. The bene fits of rising productivity would thus accrue to consumers through lower prices and to workers through rising wages. Competi tion would not tolerate the exist ence of permanent profits to share. Therefore, profit-sharing can remain only a limited indus trial practice.

In many cases even this limited sharing is sailing under false colors. Where labor actually be comes more productive through greater effort and application, its market value rises accordingly. Competition among businessmen will cause wages to rise. A busi nessman who then proposes to share his profits with his workers may merely be using this means to pay higher market wages. But instead of making payments every 1965 PROFITS 23 Friday, he may hold off paying for six months or a year, and call this profit-sharing. It is my opinion that most of the seem ingly successful profit-sharing plans merely constitute plans for delayed payment of that part of wages that is earned through spe cial effort and application. In all such cases the workers would be well advised to insist on payment of higher wages rather than expose their earnings to the risks of business. Workers may even lose their delayed wages in case the business should lose money through poor management decisions. ~ Fl~nning E:x:perirY'len ts in Erita,in GEORGE WINDER WHEN, in the autumn of 1964, the Labor Party came· to power in Great Britain, it naturally wanted to nationalize the factors of pro duction, transport, and exchange.

Its slim majority, however, seemed to afford a mandate to nationalize only the steel industry. But the party leaders sought more exten sive powers for themselves and for the state-. They knew that plan ning is not such a noxious word as nationalization, as it can often be confused with the individual plan ning which must necessarily take place in a free society. If they could not nationalize industry, they could at least plan it to their hearts' content. They established, Mr. Winder, formerly a Solicitor of the Su preme Court in New Zealand, is now farming in England. He has written widely on law, agriculture, and economics. therefore, a Department of Eco nomic Affairs under Mr. George Brown, and made it responsible for planning the whole economy. To obtain facts upon which to base their plans, the Department of Economic Affairs sent to all in dustries a questionnaire asking for estimates of their production during the next six: years. In answering these questions, busi nessmen were advised by the gov ernment to assume that the Gross National Product would increase during the period by 25 per cent.

When the answers to this ques tionnaire are recorded, a "mutual adjustment" will take place to fit all production into a National Plan which the Labor government will introduce to the' nation. The full enormity of this plan 24 THE FREEMAN August probably has not yet· been realized by many industrialists, and we may take it that they have been busy guessing what their produc tion is going to be six years hence. However, it has occurred to Mr. John Brunner who was once em ployed by the Treasury to investi gate this questionnaire. His find ings appear in a booklet, The N a tional Plan, published by the In stitute of Economic Affairs (not to be confused with the Depart ment of that name). Mr. Brunner believes that, even if the industrialists fill in this questionnaire to the best of their ability, it can never form the basis of economic planning, simply be cause the future is so uncertain in all societies that have a modicum of freedom left. It is just this uncertainty that makes the entre preneur such a valuable member of the community.

Mr. Brunner thinks that the simplest way to see whether the businessman is capable of fore casting six years ahead is to take his position over two periods of six years, 1951-57 and 1957-63, and see what a hopeless task any forecast for these periods would have been. Who, in 1951, for ex ample, would have foreseen. that the motor car industry would have increased its production during the first of these periods by 260 per cent and in the second by 144 per cent? Or that the sale of mag azines, after remaining stationary over the first of these periods, would have dropped in. the second by 22 per cent? Or that book sales, also unchanged in the first period, would have increased by 18 per cent during the second? Or that the sale of cinema seats would, in the first of these periods, have dropped by 37 per cent and in the second by 52 per cent? And what wine merchant would have ven tured to forecast that his sale of wine and spirits would have grown by 25 per cent and by 37 per cent respectively in the two periods?

Mr. Brunner's figures strongly suggest that any foreeast made for a period of six years ahead must be sheer speculation. And yet, speculations such as this are to be made the basis for a planned economy! The questionnaire also asks for an estimate of the manpower the industries will employ over the next six years. This seems even more impossible to answer. In 1959, various industries were asked to estima te the increased number of scientists and technolo gists they would require by 1962. This was only three years ahead. The mineral oil refining industry estimated their increased require ments at 18.1 per cent, the scien tificate instrument manufacturing industry at 24.4 per cent, and the 1965 PLANNING EXPERIMENTS IN BRITAIN 25 motor vehicles industry at 34.3 per cent. As it developed, mineral oil refining showed an actual drop of 2.1 per cent, while the others showed small increases of 2.6 per cent and 2.2 per cent respectively.

The paper, printing, and publish ing industry, on the other hand, forecast a 32.2 per cent increase, whereas its employment of scien tists and technologists showed an actual increase of 114.1 per cent over the 3-year period. Even the government's own na tionalized industries, supposedly stable because they have no com petition, are apt to fail the plan ners. Who, for example, would have foreseen that Britain, whose fortunes were founded on coal, would forsake it in favor of oil? Yet, between 1958 and 1963 the sale of coal fell by 7,783,000 tons (23 per cent) while the sale of fuel oil more than doubled. Or that between 1957 and 1963, 19 per cent of their customers would have forsaken the railways? The government's assumption of a 25 per cent gain in national prod uct over the next six years does not make the business forecasting any easier. The only time such a rapid growth rate has been ap proached in Britain in this cen tury was from 1900 to 1913 - and then there was no government planning for industry!

When the results of this questionnaire are returned and neatly arranged by the planners, the task begins of telling industries they must cut down on production of some goods and increase that of others. Or, as it is expressed in the questionnaire, to give the govern ment "some guide to the amount of revision of firms' existing plans which will be required to bring them into line with the National Plan." The Labor government actually intends to use this hodgepodge of forecasts, guesses, and specula tions upon which to build their plans for industrial production during the next six years - if they are not defeated at the polls. If plans founded on these assump tions lead to anything, it is much more likely to be legalized market sharing and monopoly than im provement in the conditions of the British people. Nor is the National Plan the only attempt of the British Labor government to plan the economy.

Its "incomes" policy is still being pushed. This would control all wages and prices. This was con ceived by the Conservative gov ernment and is the logical result of their weakness in allowing the inflation of the currency to take place over the whole of their pe riod in office. British trade unions have long insisted that they shall have in26 THE FREEMAN August creased wages every year; and politicians have responded by in flating the currency to accommo date such demands. The result, of course, was a rise in prices of all goods and services. The Conserva tive government, before its fall from power, had set up the Na tional Economic Development Council aimed at some reasonable settlement of wages with the trade unions. Such a settlement is es sential if the pound, under our present managed currency, is not to be continually depreciated. When the Labor Party came to power, they recognized this fact.

Mr. George Brown, through his new Dep,artment of Economic Af fairs, persuaded the trade union leaders and the leaders of indus try to sign what he hopefully called a "Declaration of Intent." This provided for annual wage in creases limited to productivity and made· provision for the control of prices. Then he appointed a "Prices and Incomes Board" to carry out this policy. But it is one thing to make a declaration of intent and quite another to limit the demands of the trade unions. Most unions, when the time comes for their ann ual round of wage increases, demand more than their increased productivity justifies and state tha t theirs is a· special case. It seems that Mr. George Brown's attempt to plan wages and prices is no more successful than was the attempt by the Conservative Party. The Conservatives had allowed in flation to the point that the, plan ning of wages and prices seemed a logical answer to the dilemma.

A high rate of investment is al leged to be one of the advantages of government planning; but that requires a high rate of personal saving if it is not to become, infla tionary. There is little doubt that the government-spending type of investment has caused much of the monetary disturbance which has affected the British economy. That, and an ever-increasing inflation ary wage rate. But the wage rate would not have been inflationa.ry if it had not been for the govern ment's excessive spending which inevitably resulted in an unbal anced budget. As Adam Smith wrote nearly two hundred years ago, "A states man who should attempt to direct private people in what manner they ought to employ their capital would not only load himself with a very unnecessary attention, but would assume an authority which could safely be trusted, not only to no single person, but to no coun cil or senate whatsoever, and which would nowhere be so dan gerous as in the hands of a man who had folly enough to fancy himself fit to exercise it." • aHOt in the dike DONALD L. REPP ONCE UPON A TIME, in a little Dutch village by the Zuider Zee, there lived a young teenager. One night, on his way home from a local youth center, he discovered a small hole in the dike that pro tected the village. Realizing that this was not his responsibility, he rushed to the home of the Mayor, who hurriedly called a meeting of the Planning Commission for the following Wednesday night.

The members of the Commis sion debated the serious situation at great length and finally asked for suggestions from the as sembled villagers. One old man who suggested that they immedi ately plug the hole was hooted Mr. Repp is a Professional Engineer in Sac ramento, California. down as a reactionary. Eventual ly, it was decided that since the problem pertained to the general welfare, it should be referred to the Leader in the Capital City. A petition was drawn up ex plaining the situation, asking for help, and pointing out that 90 per cent of the villagers had voted for the Leader in the last election. Everyone cheered as the petition left for the Capital and no one but the old man noticed that the hole in .the dike was getting bigger. Before long, the little village was swarming with investigators and planners, and even the local elected representative returned from the Capital for a "firsthand"

evaluation of the situation. Almost everyone was happy. The 27 28 THE FREEMAN August tavern keepers were happy be cause the newcomers ate, drank, and spent much more freely than the local villagers - it had some thing to do with "expense ac counts." Local businessmen were happy because they anticipated even more spending. The house wives and village loafers were happy because they now had some thing exciting to gossip about. Only one person was unhappy about the leak - the old man who just wished that they would plug it at once. The small hole in the dike be came progressively larger, and more and more water gushed through onto the lush, fertile ground. Soon, the salt water ruined much of the soil and many farmers were deprived of their livelihood; whereupon, the village was declared a depressed area and government money and adminis trators poured into the town to help the now-idle men.

The farmers were thoroughly tested· and interviewed to classify them for job training in one of the big cities; but, after being told that they would have to move, the farmers vowed that no one could force them to move away from their friends or their vil lage, by gum. Finally, the government plan ners announced that their plans were completed and the people had nothing to fear. So much land had now been ruined that the village had been declared a disaste,r area and more money and jobs were on the way. The new government aid pro gram planned to set up bucket brigades to catch the sea water before it touched the ground and pour it hack into the Zuider Zee. But when the government at tempted to hire the idle farmers to work on this project, they re fused, saying that it paid less money than farming, and that it was beneath their dignity to work at such menial tasks. The courts upheld their position and the farmers did nothing but sit in the sun and collect "their fair share"

in government aid. Since the sea water was now a foot deep all over the village, the planners began to talk about re locating the villagers to new gov ernment-built towns and building barracks and mess halls for young dropouts from the big cities who would soon arrive to man the buckets. Suddenly, with an awful rumble, the dike gave way; and over the roar of the onrushing water, no one heard the old man despairingly mutter, "Why didn't I fix that leak myself when it was first dis covered ?" ~ 11. The Domestication of Socialism CLARENCE B. CARSON The ship of reform wil'l gather 1nost headway from the association of certain very moderate practical proposals with the issue of a deliberate, persistent, and far more radical challenge to popular political prejudices and errors. It will be sufficient . .. in case they occupy some sort of family relation to plans of the' same kind with which American public opinion is already more or less familiar. -HERBERT CROLY, 1909 Our social revolution must be consummated with a minimum of shock to our delicate industrial, political, and social machinery. . . . Our social re construction must be effected during business hours. It must be accompanied by preliminary plans, specifications, and estimates of cost. It must be grad ual and quiet, though rapid. -w ALTER E. WEYL, 1912 And yet, as Oscar Wilde said, no map of the world is worth a glance that hasn't Utopia on it. Our business is not to lay aside the dream, but to make it plausible. We have to aim at visions of the possible by subjecting fancy to criticism . ... For modern civilization ... calls for a dream that suffuses the actual with a sense of the possible. -WALTER LIPPMANN, 1914 By THE EARLY twentieth century the stage was set for the entry of reformism into the stream of American political life. The in tellectual ground had been thor oughly prepared for such a move.

Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The Ameri can Tradition, both of which are now avail able as books. The flight from reality had pro ceeded far enough that many men could begin to take seriously vi sions which their counterparts in other times would have readily recognized as impractical fancies. But the intellectual· position from which such recognition would oc cur had largely been cut away. The disciplinary role of philoso29 30 THE FREEMAN August phy had been lost, in the main, with the break from metaphysics, the downgrading of reason, and the attempt to root philosophy in empirical data. The vision of uto pia provided a destination for man in the future. For many thinkers, time had been cut loose from its framework in eternity, cause dis joined from effect, man severed from his past experience, and a widening gulf separated thought from the wisdom of the past. A new pseudo philosophy - pragma tism - had been set forth to pro vide a method of operation into a future which was to be wholly different from the past. A new conception of reality had emerged to replace the old, a "reality" made up of change, society, and psyche.

A new conception of creativity held out the promise that man could and did create his own reality. These developments had impli cations for all of life, but, above all, they made ameliorative re form appear to be possible and provided the intellectual frame work for the concerted and per sistent efforts of reformers to make over man and society with the power of the state. The notion that society can be so reconstruct ed is called meliorism. But there is more to the matter than that. The belief that society, and men, can be reconstructed does not, of itself, imply any particular direc tion that should be taken in ac complishing this transformation. Yet anyone familiar with melioris tic efforts in this century should be able to see that there has been one direction to reform. Melio rism and reform have not been neutral concepts; they have been loaded with ideas which have bent the thoughts of the men who held them in a particular direction.· Re form has been informed by ideol ogy.

Indeed, one ideology has domin ated reformist thought in this century. That ideology should be known by its generic name, so cialism, though a variety of names are frequently employed. There have been attempts to restrict the meaning of socialism to the de scription of those programs for pu blic (i. e. governmental) owner ship of the means of production and distribution of goods. For example, the American College Dictionary defines socialism as "a theory or system of social organi zation which advocates the vest ing of the ownership and control of the means of production, capi tal, land, etc. in the community as a whole." But such a definition is far too restrictive. It sacrifices accuracy for precision and hamp ers rather than enables in the identification of actual socialists. It conforms neither to the etymol1965 THE DOMESTICATION OF SOCIALISM 31 ogy of the word nor to. the origin of the ideas nor to the facts of socialist advocacy.

More accurately, then, socialism should be used to describe the doctrines of those who, according to the Encyclopaedia Britannica, #lw~¥~ ~4~kin~ !t (!omplQtQ tra.ns formation of the economic and moral basis of society by the sub stitution of the social for individ ual control and of social for in dividualistic forces in the organ ization of life and work." Richard T. Ely claimed that socialism is "a principle which regulates so cial and economic life according to the needs of society as a whole.... "1 This gets much closer to the heart of the matter. So cialists conceive of society as an organism, as a being in and of itself, capable of acting to bring about certain ends. The aim of the socialists is to bring about the control by society of the eco nomic and social life, and their claim is that this will result in greatly improved well-being for all. The key word is control. There are, and have been, dogmatic so cialists who insist that this must be effected by the vesting of ownership in the "public." But many others have professed not to care who holds the title to prop1 Richard T. Ely, Socialism (New York: Thomas Y. Crowell, 1894), p. 5.

erty so long as society has the control of it. Evolution or Revolution? The only distinction among so cialists which has much empirical content is that between evolution ary and revolutionary socialism. And this is a distinction as to the means to be employed, not as to the ends to be achieved. Virtually all socialists, at least the earlier ones, have been aware that so cialism would bring about a revo lution in the lives of the people who adopted it. Some have thought, however, that this change could be brought about gradually, that it would not have to be a chieved by violent means. Others have believed that a violent take over would be necessary, and they are known as revolutionary social ists. Those socialists who are known as communists, and who claim discipleship to Karl Marx, have been the most vociferous ad vocates of revolutionary socialism, though there have been other rev olutionary movements. It seems to me, however, that all of modern so cialism stems more or less from Karl Marx and Friedrich Engels.

At any rate, they advanced mo~t of the notions which later social ists, of all varieties, have advo cated. Socialism acquired a bad repu tat ion early in its career, if it ever 32 THE FREEMAN August had a good one. After the abortive revolutions of 1848, advocates of socialism lived on the fringes of society. The workers of the world did not rush to unite behind them. The dire predictions of Marx did not come about, except in the heated imaginations of such men as accepted his words as a kind of gospel. Socialist parties made very poor showings in elections. Many of the ideas of socialists could be, and were, readily re futed. Electorates in the latter part of the nineteenth century usually rejected socialist programs with great alacrity. This was em phatically so in the United States. Yet by the 1960's socialist ideas had come to prevail, to a greater or lesser extent, almost every where in the world, including the United States. How had this turn of events come about? In two ways mainly (and they correspond to the revolutionary-evolutionary approach) : one way may be sum marized as the conspiracy-coup d' etat-violence method of gaining political power; the other has been by the propagation of ideas by intellectuals and the gradual in trusion of the attendant programs into the political action of com munities. The conspiracy-coup d'etat-violence approach has gen erally been used in the East, the other in the West.

In the early twentieth century, the flight from reality became, or began to become, very nearly iden tical with the advancement of so cialism. Much of the rest of the story will deal with how socialism was intruded into American polit ical activities. The first step in this process was the domestication of socialism. It must be kept in mind that no avowedly socialist party has ever got more than a small fraction of the vote in the United States. To the extent that socialism has gained sway, then, it has been by the adoption of so cialist programs by the older par ties and the championing of these reforms by intellectuals and poli ticians who avoided the socialist label. It will be my task to show that this is precisely what hap pened. Laying the Groundwork Most people in the United States, so far as such things can be determined, have never accept ed the bizarre formulations of the thought leaders in the nineteenth century of the flight from reality or of socialism. It is likely most men would consider Nietzsche's conception of creativity by a Sup erman as so much nonsense, and Marx's fulminations as the prod uct of a demented mind. At least, they would, and did, until they were acclimated to them in much milder formulations.

1965 THE DOMESTICATION OF SOCIALISM 33 A part of the task of acclimatiz ing people to these ideas was ac complished by the domestication of socialism, the making of it more palatable by sloughing off the name, by particularizing it, by "moderate" statements of premises, and so on. A goodly number of people undoubtedly contributed to this work. Reform was made to appear much more desirable, even necessary, by the efforts of the muckrakers. Various and sundry theorists .had begun to make some impact with their ideas. There is a considerable body of literature which could be categorized as the domestication of socialism in the United States. But for the sake of brevity and unity this account will be largely restricted to three books by three men. They are Herbert Croly's The Promise of American Life (1909), Walter E. Weyl's The New Democracy (1912), and Wal ter Lippmann's Drift and Mastery (1914). They were aU Americans, were believed to have been some what influential, founded The New Republic as a joint venture, and shared some common presupposi tions and aims.

Crofy, Weyl, and Lippmann Croly's book was much more influential than the others, by all accounts. It is supposed to have influenced Theodore Roosevelt in the formulation of the New Na tionalism and to have· been a ma jor seminal work for progressiv ism. A recent writer has noted: Croly's reputation, however, rested on more than his purported impact on Roosevelt. Men whose own thought first took shape during the progressive period have strongly praised the publicist's contribution. Lippmann called his former associ ate "the first important political philosopher who appeared in Amer ica in the twentieth century"; Alvin Johnson grants Croly "the palm of the leadership in the philosophy of the progressive movement" ... , while Felix Frankfurter credits him with "the most powerful single con tribution to progressive thinking."2 Croly's work is both the most lengthy and the most thorough of the three books. It may well be that The Promise of American Life should be ranked as the most thorough "Fabian tract" ever written. Weyl's book is much blunter, less polished, and some what more to the point. Lippmann had already developed his ponder ous style of presenting a combina tion of urbanities and inanities as if they were profound. He had already developed the ability, too, to roll with the punch, to ap parently accept the devastating criticisms of his position, even to 2 Charles Forcey, The Crossroads 0/ Liberalism (New York: Oxford Univer sity Press, 1961), pp. 5-6.

34 THE FREEMAN August joining in with the chorus of the critics, all the while maintaining the substance of his position in tact. He was a pragmatist, along with the other two men, and this made it easy for him to pursue his goal-by a new path when he found the course he was following blocked. The Art of Persuasion There is one difficulty in my thesis that these three men were domesticating socialism, and there is no reason why it should not be made explicit. The difficulty is this. In order for them to have been domesticating socialism, they must have been socialists. Yet it was essential to their task that they not be avowed socialists. At any rate, Croly and Weyl were not avowed socialists, and by 1914 Lippmann had abandoned his con nection with socialist parties. Thus, there appears to be a prob lem of proving that they were so cialists. Actually, however, the above overstates-the problem. Whether they were socialists or not, these men were advancing socialist ideas and programs. Whether they were intending to "domesticate social ism" or not is irrelevant; my point is that the way in which they were presenting the ideas had that effect. It should be made clear that this is not an examination into the motives of these men. There is no concern here with whether they were sincere or not, whether they were surreptitiously advanc ing a movement or not, or whether they were good or evil men or not.

This is not an attempt to judge them; it is an effort to describe what they did. The point is that Croly, Weyl, and Lippmann were advocating ideas and programs drawn from the socialist ideology, and that they presented them in a light so that they would be least disturb ing to the accepted beliefs of Americans. Let us first examine a few quotations which indicate the socialistic tenor of the pro posals of these men. The first is from Herbert CroIy, and the con text from which it comes is a dis cussion of the necessity of re stricting freedom: Efficient regulation there must be; and it must be regulation which will strike, not at the symptoms of the evil, but at its roots. The existing concentration of wealth and finan cial power in the hands of a few ir responsible men is the inevitable outcome of the chaotic individualism of our political and economic organi zation .... The inference which fol lows may be disagreeable, but it is not to be escaped. In becoming re sponsible for the subordination of the individual to the demand of a dominant and constructive national 1965 THE DOMESTICATION OF SOCIALISM 35 purpose, the American state will in effect be making itself responsible for a morally and socially desirable distribution of wealth."3 At one point, Croly candidly ad mits that in certain senses his program is socialistic. He says that it is socialistic "in case so cialism cannot be divorced from the use, wherever necessary, of the political organization in all its forms to realize the proposed dem ocratic purpose."4 Weyl said, "To-day no democ racy is possible in America except a socialized democracy, which con ceives of society as a whole and not as a more or less adventitious assemblage of myriads of individ uals~"5 Moreover, In the socialized democracy to wards which we are moving . . .

taxes [will] conform more or less to the ability of each to pay; but the engine of taxation . . . will be used to accomplish great social ends, among which will be the more equal distribution of wealth and income. The state will tax to improve edu cation, health, recreation, communi cation. . . . The government of the nation, in the hands of the people, will establish its unquestioned sov ereignty over the industry of the 3 Herbert Croly, The Promise of Amer ican Life, Cushing Strout, intro. (New York: Capricorn Books, 1964), p. 23. 4 Ibid., p. 209. 5 Walter E. Weyl, The New Democracy (New York: Macmillan, 1912), p. 162. nation, so largely in the hands of individuals. 6 Walter Lippmann is not easy to pin down, yet the socialist ideas are there. Quite often he obscures them as prediction, as in the fol lowing: "Now the time may come, I am inclined to think it is sure to come, when the government will be operating the basic indus tries, railroads, mines, and so forth. It will be possible then to finance government enterprise out of the profits of its industries, to eliminate interest, and substitute collective saving."7 Sometimes, however, he prescribes directly, as in the following call for all-out planning: It means tha t you have to do a great variety of things to industry, invent new ones to do, and keep on doing them. You have to make a sur vey of the natural resources of the country. On the basis of that survey you must draw up a national plan for their development. You must eliminate waste in mining, you must conserve the forests so that their fertility is not impaired, so that stream flow is regulated, and the waterpower of the country made available. 8 6 Ibid., pp. 163-64.

7 Walter Lippmann, Drift and Mast ery, William E. Leuchtenburg, intro. (Englewood Cliffs, N. J.: Prentice-Hall, A Spectrum Book, 1961), p. 70. S Ibid., p. 98.

36 THE FREEMAN August These quotations, however their authors hedged them about, do indicate that the books in question were informed by socialism. They are, however, among the more radical statements to be found in the books. In the main, the writers stick to the task of domesticating socialism, rather than to setting forth their assumptions. Let us examine now some of the means by which this is done. Gradualism First, the authors of these books were devotees of gradual ism, and were themselves propos ing the next steps in a movement toward what can be discerned as the goal of socialism. In their gradualism, they were following the path of the English Fabians who had been at work some years already. The Fabian Society, named after the Roman general, Fabi us, who fought indirectly by harassment rather than directly, was organized in 1884. Sidney Webb, a leading figure in the So ciety and movemen t, explained their conclusions this way: In the present Socialist movement these two streams are united: advo cates of social reconstruction have learnt the lesson of Democracy, and know that it is through the slow and gradual turning of the popular mind to new principles that social reor ganization bit by bit comes .... Socialists ... realize that important organic changes can only be (1 ) democratic ... ; (2) gradual ... ; (3) not regarded as immoral by the mass of the people . . .; and (4) in this country at any rate, constitu tional and peacefu1. 9 Whether Croly, Weyl, and Lipp mann were consciously socialists or not, they were certainly con sciously gradualists. Croly makes his gradualism explicit in the f 01 lowing prescription for taking over the railroads (all the while adopting a pose of objectivity about it which relieves him of responsibility for advocating it) : In the existing condition of eco nomic development and of public opinion, the man who believes in the ultimate necessity of government ownership of railroad road-beds and terminals must be content to wait and to watch. The most that he can do for the present is to use any op ening which the course of railroad development affords, for the asser tion of his ideas; and if he is right, he will gradually be able to work out, in relation to the economic situation of the railroads, some practical method of realizing the ultimate pur pose.l O He suggests that the end might be 9 Sidney Webb, "Socialism, Fusion of Democracy and Cooperation" in J. Sal wyn Schapiro, Movements of Social Dis sent in Modern Europe (Princeton: D.

Van Nostrand, 1962), p. 16l. 10 Croly, Ope cit., p. 377.

1965 THE DOMESTICATION OF SOCIALISM 37 achieved by the extension of gov ernment credit to the railroads, followed by a "gradual. system of appropriation." Weyl left no doubt about his gradualism either. He declared "that the surest method of prog ress is to take one step after an other. The first step, often un contested (because it is only one step) , leads inevitably to others."ll He gives an example of what he means, in connection with govern mental acquisition of rich mineral lands. "If the nation .could ap proach the owners of these· lands with the sword of a gentle tax in the one hand and the olive branch of a fair purchase price in the other, there would soon be no fear of any monopoly of our mineral resources."12 Although Lippmann substituted prediction for outright prescrip tion, he envisioned a gradual trans formation in America. "Private property will melt away; its func tions will be taken over by the salaried men who direct them, by government commissions, by developing labor unions. The stockholders depri ved of their property rights are being trans formed into money-Ienders."13 11 Weyl, Ope cit., pp. 265-66.

12 Ibid., p. 266. Apparently, he meant by monopoly the private ownership of mineral resources. 13 Lippmann, Ope cit., p. 49. A Fa~ade of Conservatism The grad ual approach to social transformation, these writers saw, had the advantages of lessening resistance, of avoiding shock, and of giving the appearance of con tin uity within the society. The latter two advantages take on the added gloss of appearing to be conservative. That is, they indi cate a concern with conserving much within the existing frame work while the framework itself is being fundamentally altered. Indeed, one of the least under stood of the methods of Fabian socialism, if the term may be used generically, is the fa~ade of con servatism which socialists frequent ly adopt. On the face of it, con serva tism and the radical altera tion of society are at opposite poles of the political spectrum. Yet gradualists have quite often not only reduced the distance be tween them, so far as could be readily discerned, but also have managed actually to convince some people that theirs is the conserva tive position. It turns out upon examination, of course, that what they want to do is to preserve the material achievements of modern civilization while destroying or replacing the spiritual base, knowl edge, and arrangements upon which they are built. But then, that is why socialists can be described as on a flight from reality.

38 THE FREEMAN August liThe Great Society" One of the best examples of a socialist book which embodied the conservative fa~ade was written not by an American but an Eng lishman. Graham Wallas was the author, and the book was The Great Society (1914), a name which has cropped up lately. There is no difficulty in placing Wallas ideologically; he was one of the original founders of the Fabian Society. Moreover, some slight dis cussion of the method of the book in the present discussion is in order because Wallas influenced Lippmann when he was at Har vard in 1910 as a visiting lecturer, and dedicated'The Great Society to Lippmann. One might suppose from the title of the book that it is utopian, that it is a prescription for some thing to be achieved in the future. Yet such is not the case. The Great Society already existed (in 1914), according to Wallas, at least in the highly industrialized countries of the West. The Great Society, Wallas said, had resulted from technological innovations.

The developments from these had drawn people together in inter dependence upon one another, not only nationally but internationally. But - and this was the problem with which he purported to deal there were centripetal as well as centrifugal forces within the Great Society. The centripetal forces threatened to dissolve the society. Wallas said, "But even if the forces of cohesion and dissolu tion remain as evenly balanced as they are now, our prospects are dark enough. The human material of our social machinery will con Unue to disintegrate just at the points where strength is· most ur gently required." To support this statement he supplied a catalogue of the evils within society which any socialist might be expected to give. In order to preserve the Great Society he held that a great reorganization would have to oc cur. In short, he had made it ap pear that social transformation was necessary for conservative reasons.

This theme crops up in the works under consideration. Writ ing before Wallas's book appeared, Croly said: "In its deepest as pect ... the social problem is the problem of preventing such divi sions [the divisions supposedly caused by specialization] from dis solving the society into which they enter - of keeping such a highly differentiated society fundament ally sound and whole."14 Lippmann argued from similar premises for the development of powerful labor unions. He maintained that indus trial peace would be a by-product of powerful unions. "You will 14 Croly, Ope cit., p. 139.

1965 THE DOMESTICATION OF SOCIALISM 39 meet in ... powerful unions," he said, "what radical labor leaders call conservatism." On the other hand, "It is the weak unions, the unorganized and shifting work ers, who talk sabotage and flare up into a hundred little popgun rebellions."15 'The moral is clear: Support the growth of strong unions in order to maintain peace and conserve social stability. Giving Historical Setting to the Need for Reform A considerable portion of Cro ly's work was devoted to fitting the need for reform into the American tradition. A part of his book is historical in character. His position is that there was an implicit promise in American de velopment over the years, that Americans had developed demo cratic institutions, that they had developed a national spirit, that they had at one time effected unity among the peoples. However, "the changes which have been taking, place in industrial and political and social conditions have all tended to impair the consistency of feeling characteristic' of the first phase of American national democracy."16 That is, according to him, industrialism had pro duced deep divisions within so ciety. "Grave inequalities of power 15 Lippmann, Ope cit., p. 61.

16 Croly, Ope cit., p. 138. and deeplying differences of pur pose have developed in relation of the several primary American ac tivities. The millionaire, the 'Boss,' the union laborer, and the lawyer, have all taken advan tage of the loose American politi cal organization to promote some what unscrupulously their own in terests .... "17 This situation was unwholesome, he thought. "But a democracy cannot dispense with the solidarity which it imparted to American life, and in one way or another such solidarity must be restored. "18 Some clues to the means for the restoration of "solidarity" could be found in American history. Alexander Hamilton had a vision of using the government to ad vance national well-being. But Hamilton had been antidemo cratic, and had promulgated too narrow a program, at least for twentieth century conditions. Thomas· Jefferson had contributed to the development of democratic sentiment, but he had been in dividualistic, not nationalistic.

Croly drew his conclusion: "The best that can be said on be half of this traditional American system of political ideas is that it contained the germ of better things. The combination of Fed eralism and Republicanism 17 Ibid. 18 Ibid., p. 139.

40 THE FREEMAN August pointed in the direction of a con structive formula."19 So too, the Whigs had a national vision, but they were unable fully to articu late it. Croly was setting the stage with this historical exposition for of fering his solution, and at the same time making it appear that he was joining his solution to a course which Americans had been groping toward for a long time. The solution was for Americans to "restore" their lost or threat ened unity by the acceptance of a social ideal. They were to find a national purpose, and they were to move toward the fulfillment of that purpose, or "promise," demo cratically. Thus, Croly was able to associate two ideas - national ism and democracy-which had good connotations to Americans with his program for social re construction. It should be noted that all three writers salted down their social programs with liberal sprinklings of references to "de mocracy" throughout, a practice which has long since become ha bitual, if not compulsive, with re formers.

Alterations Proposed But the attempt to make their programs appear conservative and traditional by these writers should not be overemphasized. Croly went 19 Ibid., p. 51. much further in this regard than did the others. All of them, how ever, were fairly explicit in point ing out that they were proposing alterations in the American sys tem. Even Croly said, The better future, which Ameri cans propose to build is nothing if not an idea which must in certain essential respects emancipate them from their past. American history contains much matter for pride and congratulation, and much matter for regret and humiliation. On the whole . . . , it has throughout been made better than it was by the vision of a better future; and the American of to-day and tomorrow must remain true to that traditional vision. He must be prepared to sacrifice to that traditional vision even the tradi tional American ways of realizing it. 2o Weyl left no doubt about his view of the centerpiece of the American tradition, the Constitu tion. He said, "Our newer democ racy demands, not that the peo ple forever conform to a rigid, hard-changing Constitution, but that the Constitution change to conform to the people. The Con stitution of the United States is the political wisdom of a dead America."21 Lippmann was even more emphatic, and much more general, in his repudiation of tra20 Ibid., p. 5.

21 Weyl, op. cit., p. 13.

1965 THE DOMESTICATION OF SOCIALISM 41 dition. He subscribed to the view "that we should live not for our fatherland but for our children's land." To do this men have to substitute purpose for tradition: and that is, I believe, the profoundest change that has ever taken place in human his tory. We can no longer treat life as something that has trickled down to us. We have to deal with it delib erately, devise its social organiza tion, alter its tools, formulate its method, educate and control it. In endless ways we put intention where custom has reigned. 22 Necessary Adjustments to Changing Conditions The major justification for so cial reconstruction, then, was not that it was in keeping with the American tradition to do so but that it made necessary by chang ing conditions. Thus, these writers domesticated socialism by making its measures appear to be neces sary adjustments to changed con ditions. These men argued that technological developments, new industrial organizations, the de velopment of a nationwide mar ket, the appearance of class di visions, the existence of poverty, made necessary the alteration of political action to deal with these changes. Perhaps the other two would have agreed wholeheartedly with Weyl, when he said, "It is 22 Lippmann, Ope cit., p. 147.

ideas, born of conditions, which rule the world."23 Indeed, Lipp mann took the position that many of the changes were already oc curring which were reconstructing America, whether it would or not. Croly emphasized the method of the reformer as one in which he grasped the tendencies and rein forced them. These positions indicate a rath er mystifying, or illogical, pen chant of melioristic reformers in the twentieth century. They vacil late between the poles of economic determinism on the one hand and a radical view of "freedom" which allows them to create at will, on the other. Generally speaking, Croly, Weyl, and Lippmann got maximum use from ideas drawn from contradictory positions. The determinist position allows its holder to claim that he is describ ing an inevitable evolution, to as sume a position as a scholar and possibly a scientist rather than an advocate, to avoid responsibility for his advocacy, and to leave the reader with no choice but to ad just to the predicted course of development. On the other hand, the meliorist position allows its holder to talk of social invention, of imagination, of creativity, of a new way which has been discerned, and to appeal subtly to the read er's desire to join him in being 23 Weyl, Ope cit., p. 199.

42 THE FREEMAN August in the forefront of momentous de velopments. In the real world, these are inconsistencies, but on the flight from reality you can have it both ways. Pragmatic Approach Requires No Consistent Principles Finally, the pragmatism of these writers permitted them to offer every sort of reformist idea that has ever been advanced without dogmatically subscribing to any of them. Some indication of the range of ideas which they sub scribed to or advanced should be given. Many of them have since become the assumptions of intel lectuals and some goodly number have been put into practice. In general, Croly, Weyl, and Lipp mann subscribed to the notion that the problem of production had been largely mastered, that the major task ahead was one of distribution. They spoke con fidentlyof "unearned increments," of "social surpluses," and of the "need" to distribute the wealth more equitably. None of these men, however, was an opponent of bigness in business. They con sidered trustbusting an anachro nistic and destructive undertaking.

The problem, as they saw it, was not to break up huge industries but to assure that they were oper ated in the interest of society. To assure this, they advocated govern mental regulation, discrimina tory taxation, and outright owner ship, if necessary. These writers used slightly dif ferent verbiage to describe their broad programs of reconstruction, but Weyl gives the gist of their recommendations in the following: With a government ownership of some industries, with a government regulation of others, with publicity for all (to the extent that publicity is socially desirable), with an en larged power of the community in industry, and with an increased ap propriation by the community of the increasing social surplus and of the growing unearned increment, the progressive socialization of industry will take place. To accomplish these ends the democracy will rely upon the trade-union, the association of consumers, and other industrial agencies. It will, above all, rely upon the sta te.24 Many Reforms Have Been Tried Some of the means to these ends are interesting because they have been employed, but they are no longer so openly avowed. For example, these writers favored the alteration of the Constitution by interpretation. Croly declared that, on the whole, the Constitu tion was an admirable document, "and in most respects it should be left to the ordinary process of 24 Ibid., p. 297.

1965 THE DOMESTICATION OF SOCIALISM 43 gradual amendment by legal con struction. . . ."25 Weyl said, "For the time being, the Constitution will probably change, as it has changed during the last century, by process of interpretation. . . . It is possible for them [the Su preme Court] by a few progres sive judicial decisions to democ ratize the Constitution."26 In various forms, one or more of these writers proposed social ized medicine, consumer regula tion, inheritance taxes, graduated income taxes, state insurance pro grams, socialized education, exec utive leadership, centralization of government, excess profits taxes, national planning, and a govern ment guaranteed minimum stand ard of living. Croly even argued explicitly that government should discriminate in favor of certain groups in order to assure equality. He said, "The national govern ment must step in and discrim inate; but it must discriminate, not on behalf of liberty and the 25 Croly, op. cit., p. 35l.

26 Weyl, op. cit., p. 317. special individual, but on behalf of equality and the average man."27 In general, though, their par ticular programs were not dog matically advocated. They were pragmatic about the particulars. Pragmatism is not, of course, a test of the ultimate end to be achieved; it is a test of the meth ods to be used. If one method does not work, then another one is tried, and so on. The end remains the same, and inaccessible to prag matic demonstrations. As Weyl said, "The democracy [for which one may accurately substitute "socialism"], though compromis ing in action, must be uncom promising in principle. Though conciliatory towards opponents, it must be constant to its fixed ideals. Though it tack with the wind, it must keep always in sight its general destination."28 This was one of the ways, then, by which socialism was domesti cated in America. • 27 Croly, op. cit., p. 190.

28 Weyl, Ope cit., p. 269. The next article in this series will pertain to "The Democratic Illusion."

-GOVERNMENT ROBERT K. NEWELL SINCE the dawn of history man has vainly sought to ordain order and advance social justice through political legalism. Liberty, equal ity, brotherhood, justice, security, freedom - and especially self-gov ernment - have long enjoyed stat ure in political cliches. On the surface, democracy seems to encompass all social ideals and appears to be the epit ome of political government. The motivating principle asserts the inherent right of all to participate in government and determine pub lic policy. But with unquestioned power invested in popular opinion, democratic idealism deteriorates rapidly into government by organ ized majorities. Even the authoritarian majori ties who imagine themselves self governed have no real understandMr. Newell operates a farm near Marcellus, Michigan, one of his "crops" being an oc casional article. 44 ing of political subterfuge and simply endorse whatever their leaders are pleased to tell them.

And since it is easier to subjugate and manipulate those who believe themselves free, the grand illusion of freedom and self-government is carefully preserved by the stra t egists who constantly maneuver behind the democratic stage. Since democracy is not of itself a stable form of government, but rather a method of .ordaining so cial change, all forms of political tyranny can easily win the en dorsement of the majority. The irresponsible elements of any so ciety are readily persuaded to state-sponsored beggary on the as surance their personal problems will be mira.culously solved by some political nostrum a clever candidate advises them to try. To exercise control over an apparent ly self-governed democracy is only to understand and utilize the prin1965 SELF-GOVERNMENT 45 ciples of mass psychology. The demagogues who successfully ex ploit social and economic disorders and identify themselves with the majority, ultimately attain oli garchic power.

Democracy has always enj oyed broad acclaim as the champion of political justice. But history amply indicates that government by pop ular opinion has spawned nothing but social and moral chaos. No matter how wisely begun, skillful ly expedited, or enlightened the self-governed, the self-governed states have followed similar pat terns of degeneration to mob an archy. When laws fail, the anarchy must be brought under control by some form of dictatorial govern ment, until counterrevolution in time completes the cycle by return ing political process to the hands of the people. The entire gamut precludes human liberty and so cial justice, as political instability insures social disorder and minor ity oppression in every phase. Self-Disciplinethe first Step toward Self-Government Political societies and their vari ous governments have come and gone while man has been advanc ing his civilization, but the basic problems attendant to human re lationships continue. Many, now as in the past, despairingly believe it is fundamentally more sound and morally easier to be controlled by an illusionary self-governed legal system than to master the art of governing oneself.

As free moral agents, individ uals tend to seek justice through spiritual values, while individuals acting collectively seek favoritism through deliberate applications of political injustice. Individuals must laboriously ponder justice through conscience, while political majorities have only to embrace an ideology to have it automati cally proclaimed morally correct regardless of the inj ustice it may inflict. Despotism, no matter by what name it masquerades, is quick to exploit this human in fatuation with group motivation. Human progress depends entirely upon the intrinsic moral judg ment of self-governed individu als, politically controlled in the minimum degree that prevents infringement on the human rights and opportunities of others. Constitutional legalism is both the ancient and modern political antidote for democratic oppres sion. But no matter how eloquent ly it defines the rights and virtues of individuals or how boldly it af firms opposition to majority in justice, it is still only a document of public intention. If the inten tion of the society changes, the constitution is automatically in validated.

46 THE FREEMAN August Reappraisals of constitutional application are continually substi tuted for original intent when le galism no longer reflects the true spirit of the society it governs. Constitutional legalism may ac curately recognize the basic dif ferences in human desires, initia tives, and capabilities, and assure that the fruits of human effort will be equitably divided in direct proportion to contribution. It may also impartially administer jus tice. But as soon as the legal sys tem appears less than perfect to a majority that lacks the human en ergies necessary to utilize its per fections, the endless search for the golden mean of political medioc rity resumes. The Power of Personal Character The best government, and the only government that will perma nently benefit mankind, is intro spection; for it alone can identify true social responsibilities and teach us to govern ourselves with moral restraint. Human life de mands effective living. Effective living demands that the human spirit be allowed to seek and attain justification through self chosen channels. The greatest and most far-reaching contributions to the cause of human enlighten ment have never developed from majority opinions, but rather from inspired individuals quite often at odds with their contempo raries. The only restraint that can ever be imposed on the democratic oppression that stifles human spirit is the power of personal character, developed through the moral growth of self-sufficient in dividuals.

As man apprehensively surveys the future, he is inclined to believe tha t the world has only to turn to the self-government of democracy to bring human problems to a swift and happy conclusion. But externally applied self-governing political concepts, no matter how lofty their legal and moral intent, can never provide mankind with a hopeful future. Mankind must learn to govern from deep within the individual; and when man at last has mastered himself, respon sible human relationships will be the first and most important by products of his accomplishment. ~ ON POWER AND CORRUPTION LEONARD E. READ LORD ACTON, writing in 1887, packed a profound truth into a simple sentence and, by so doing, coined a famous axiom: "Power tends to corrupt and absolute power corruptsabsolutely."l This is quoted frequently,· but popular repetition, by itself, has nothing whatsoever to do with comprehen sion.

There is evidence on every hand that power does tend to corrupt, and many a thoughtful writer has taken note of the fact. Henry Ada.ms, in 1905, wrote in his auto biography: Power is poison. Its effect on Presi dents had been always tragic, chiefly as an almost insane excitement at first, and a worse reaction after wards; but also because no mind is so well balanced as to bear the strain of seizing unlimited force without 1 John Emerich Edward Dalberg-Ac ton, Essays on Freedom and Power (Boston: The Beacon Press, 1948), p. 364. habit or knowledge of it; and finding it disputed with him by hungry packs of wolves and hounds whose lives de pend on snatching the carrion. 2 Countless thousands, doubtless, are aware that power tends to corrupt. But Acton's axiom, re gardless of its validity and the number who know it to be a truth, conveys no more than any other pat saying unless there be a knowl edge of why power tends to cor rupt. Only then, from this knowl edge, can there be a correct de duction of how one may avoid the tendency.

At the outset, let us consider the problem from the standpoint of how I can keep power from corrupting me. There are at least two reasons why the diagnosis should be approached in this first person manner. 2 From Henry Adams, The Education of Henry Adams (New York: The Mod ern Library, 1931), p. 418. 47 48 THE FREEMAN August One: Beyond what may result from my exemplary behavior, I am severely limited in doing any thing to insure the incorruptibility of others. This is exclusively a personal problem - and a deep one, at that. Nor is there much I can do to escape the effects of the corruption that befalls others. The most useful contribution I can make is to .discover how I can lessen my own corruptibility and to share the results, if any, with those having a similar aspiration. Two: Humanity is not my re sponsibility, I am my responsibil ity! Indeed, even I am too com plex an enigma for me wholly to unravel; but, by dealing with me as best I can, I serve my fellows in the most fruitful manner pos sible for me. The temptation al ways is to correct the thinking of others, though we have little competence for it, instead of at tending to our own improve.ment.

As a consequence, no one's think ing is upgraded. Nor is this first person approach inconsistent with the Cosmic Scheme, as I interpret it: Evolution is its method; and, as related to man, this calls for growth in awareness, perception, consciousness. This emergence does not have its root in any col lective abstraction: institutions, societies, nations, humanity; its wellsprings are to be found ex clusively in individuals. In each individual instance, I am my re sponsibility! As to Acton's axiom: When it is affirmed that power tends to corrupt, there is, obviously, al lowance made for exceptions, that is, power doe-s not, in every form, necessarily corrupt. And as to his "absolute power corrupts abso lutely," this seems only to suggest that the nearer absolute power is approached, the more certain is corruption, for absolute power by a human being is inconceivable. But no meaningful analysis of this axiom is possible unless I know of the varied kinds of power and, also, of the nature of the cor ruption which the several kinds of power tend to induce.

Various Kinds of Power The first kind of power that comes to mind is political control of creative actions, authoritarian ism, a relationship where the will of a man or a clique is imposed on others by physical force - that is, by a constabulary, the do-as-I-say or-die variety. Acton's axiom was derived from his observation of how ecclesiasti cal power corrupts. There are forms of power, how ever, where violent force or the threat of it is absent. An example is power of the press: having a newspaper, a journal, a platform, a soap box, an audience.

1965 ON POWER AND CORRUPTION 49 Another variation is that more or less unsuspected power which sterns from approbation and op probrium: others do as one sug gests, hoping for approval or de siring to escape disapproval. Such power, for instance, is wielded by a small, self-appointed group in Beverly Hills: In this company, the most casual witticism or the most intentional snigger may snuff out a career, while a favorable adjective or mere ly a liquor-ish grunt can start a newcomer's reputation climbing faster than Comsat ...3 And do not overlook the power of acquisition - purchasing power - that attends successful speciali zation and exchange. By far the most influential kind of power in shaping the lives of others derives from excellence; it is the power to evoke emulation. It seems that the power one may exert over the lives of others ranges all the way from the power of repulsion to its antithesis, the power of attraction. Yet, all forms -there are many others-have a trait in common, a trait I must keep uppermost in mind: each packs authority of sorts. The questions I must finally answer are, how does power, whatever its 3 See "The Most Brutal Audience in the World," The Sunday New York H er aid Tribune Magazine, April 18, 1965, p.35.

variety, tend to corrupt? Then, learning of this, what means may I employ to overcome the corrup tive tendency? If power takes many forms, it may be supposed that there also are various types of corruption. There are, of course, the baser forms of corruption commonly as sociated with that term: bribery, stealing, lying, cheating, fraud, misrepresentation, going back on one's bond, and the like. If the problem consisted solely of these foul kinds of corruption, I would commend attendance at Sunday school and let it go at that. But I suspect that all of these open and despicable abuses, taken together, do not approach in damage the more subtle forms of corruption that power tends to induce. The Power of Achievement Consider first the wholly com mendable kind of power, the pow er that derives from sheer excel lence, the power to evoke emula tion. How can this possibly be cor ruptive? Superior achievement in any activity prompts applause, ac claim, adulation, flattery. This is heady stuff and, if taken serious ly, fosters an unrealistic self-es teem. Knowing how little one knows gives way to know-it-all ness; it brings on an appraisal of self at odds with reality - a dam aging psychosis! To suffer such 50 THE FREEMAN August corruption is to unfit me for my highest purpose.

When the esteem for an indi vidual reaches that point where others "hang on his every word," he achieves an enormous author ity which most surely will be cor ruptive unless accompanied by a commensurate self-responsibility and self-discipline. In short, as others hang more and more on every word, every word must be more carefully weighed - if such power is not to be corruptive. Am I to shun excellence be cause of its corruptive tendency? Indeed not! But how to gain im munity from the tendency? A Roman emperor, riding through the streets of Rome and receiving plaudits for his successful con quests, had a slave at his feet who kept repeating, "Remember, thou too art mortal!" While the em peror knew of the self -corruption which attends adulation and de sired that he be not victimized by it, no doubt he failed in his aim. His method was at fault. It is upon one's own conscience that reliance must be placed for a real istic self-appraisal. The reminders of reality have to be self-remind ers; the responsibility cannot be delegated to anyone, much less to slaves. The psyche is not exterior to self and cannot be managed by exterior forces. To down the cor ruptive tendency, little more is required than a knowledge of how excellence and its concomitant, flattery, tend to corrupt. With this understanding one can, with a modicum of conscious effort, be come as impervious to fawning approval as to any other form of deference. When I know how lit tle I know, then no one else's over estimation - honest or insincere can unbalance me.

Purchasing Power What about purchasing power? How can this, in the absence of coercive force, tend to corrupt? Perhaps there is a cue in the oft~ heard phrase, "Money talks!" Money, undeniably, has an author ity of sorts. Abundant purchasing power tempts me to "throw my weight around" - that is, to get my way regardless of how unmeritorious my way may be. Buying special favors or preferments is a com mon practice as is buying one's way out of self-incurred messes. It's the misuse of purchasing power that accounts for the say ing, "The love of money is the root of all evil." Again, purchas ing power may lead one to a per version of high purpose, make him unfit to achieve it. Purchasing power, per se, is not the root of evil. The more purchasing power others possess, the more can I receive in exchange 1965 ON POWER AND CORRUPTION 51 for my goods or services. Wealth serves the moral purpose of free ing one from the drudgery which poverty imposes. It makes possible the devotion of self to those ac tivities for which one is peculiarly suited. It permits one to get ever deeper into life along lines in harmony with one's real being.

But, when a man uses his pur chasing power to run away from a life of doing, that is, as a means of denying a development of his faculties, he vegetates. And when he uses it to buy off the penalties of error or of bad judgmen t, he fails to exercise the corrective faculties and begets a fool. When misused, purchasing power is de structive of self, wholiy evil, and, thus, corruptive. Am I to shun purchasing power because of its corruptive tendency? No! If I am to avoid corruption becoming a vegetable or a fool, I need only keep in mind that the authority - power - which wealth bestows requires a responsibility that guards against misuse. I had a wealthy banker friend who was a very modest tipper and yet, wherever we went, people vied with each other to wait on him. He cou'nseled me, "Only he de serves good service whom others are eager to serve." He never af fected superiority with his money or his manners, a temptation to which so many yield. He treated everyone, regardless of how lowly the wealth status, just as he would wish to be treated were the situa tion reversed. It is easy to see how this self-conduct, in tune with reality and the Golden Rule, leads to the development, growth, and purifica tion of the psyche - the opposite of corruption.

Purchasing power, doubtless, tends to corrupt its possessor, but it does not follow that it must necessarily do so. It seems hardly necessary to examine the tendency of other forms of noncoercive power to corrupt self. That the tendency exists, and if yielded to is self destructive, comes clear with re flective thought. This is the rule for me to keep in mind and adhere to: Authority and responsibility must always be kept in balance if the psyche-mind, soul, spirit, in a word, I - is to remain in balance and, thus, uncorrupted. This brings me to that form of power which a person or a group possesses only by reason of having a gun or a constabulary. It is the power to compel compliance, com pulsion resting on violence or the threat thereof. 4 I will omit any 4 For an explanation of how absolute refusal to comply with governmental edicts results in death, see Chapter III in my Anything That's Peaceful (Irv ington, N. Y.: Foundation for Economic Education, Inc., 1964. $2.50 paper; $3.50 cloth.) 52 THE FREEMAN August discussion of how this kind of power corrupts when exerted pri vately, as in piracy and the like, and confine my reflections to how it would or would not corrupt me were I a part of society's organ ized police force, namely, govern ment. It is in this realm that ab solute power is most nearly ap proached and absolute corruption most seriously threatened.

The Power of Compulsion for Defensive Purposes The mere possession of a, gun by a person, or the backing of a group by a constabulary, does not, in itself, corrupt. As long as the gun hangs on the wall or the con stabulary remains "at ease," all's well and good. Nor are any cor ruptive tendencies implicit in the use of this power to fend off the a.ggressive actions of another or others. The power, when thus held in check, can be no more than a secondary action of defense; it remains quiescent except when triggered by an aggressive or of fensive action. Such a limitation of the organized police force is what I mean when referring to a government of limited power. Individuals owning guns for de fensive purposes will, for the most part, lea ve them hanging on the wall. The possession of this power to do violence rarely tempts them to aggressive action and, thus, the power does not tend to corrupt them. For instance, though the owner of firearms might feel a deep compassion for a poverty stricken friend, he would hesitate to turn himself into a holdup man as a means of raising money. He would give of his own goods or let the matter pass. Few Ameri cans personally would resort to armed robbery to pay farmers not to grow wheat, or to subsidize TVA or mail delivery, or to pro vide medical care, or to secure the financial welfare, the material se curity, or the prosperity of "the poor." Not only can most people see the utter fallacy of such thiev ish means when practiced person ally, but the mere thought of the practice does grievous offense to their moral scruples. Kept to the personal dimension, gun power shows little-tendency to corrupt.

Collective Irresponsibility But let these very same people, upright when acting on their per sonal responsibility, organize themselves into a political collec tive, backed by gun power, and they become "wolves and hounds" intent upon "snatching the car rion" !Among men so organized, the tendency to corruption is enormous. To illustrate: the presi dent of a corporation and the chairman of his city's largest pri vate hospital said to me, "I agree 1965 ON POWER AND CORRUPTION 53 with you in principle, but I must, of course, ask that F'ederal aid be extended to-our hospital. We're short of beds." "Would you personally raise the money by violent action or the threat thereof?" I asked him. "Of course not," was his' reply. "I'm no gangste'r." This man's likeness is num bered in the millions - our "best citizens" who would never person ally pull the trigger, but whose lack of principle is clearly revealed when they encourage the govern ment to rob countless unidenti fied Peters to subsidize their own selected Pauls. It is hard to be lieve that a man knows what is right when he persists in practic ing the opposite.

Shifting the Blame What goes on here? Why will a person enthusiastically embrace a procedure in collective action that is repulsive to him as private action? Why this double standard of morality? Why will the posses sion of gun power by an individual not tend to corrupt while its pos session by a collective will tend to corrupt the individual mem bers? There must be more reasons than I can ferret out. One, of course, is the myth that an act, regarded as evil if privately com mitted, is rendered virtuous if sanctioned by a majority. This hOCUS-pocus leads careless think ers to believe that an acknowl edged evil can be transmuted into a positive virtue'. Then, there is that absolution the thoughtless individual feels when an act is committed, not in his name, but in the name, of some collective nouns such as human ity, society, the common good, and the like. He somehow finds in these abstractions a sanctuary from personal responsibility. He gains anonymity behind a fa,~ade of words - or so he irrationally concludes.

The mob strings up Joe Doakes by the neck. No mobster thinks of himself as having committed the act. "The mob did it." Yet, how can a three-lettered abstrac tion hang a man? Every party to the act hanged Joe Doakes. And every party to any unprin cipled act of government is as per sonally responsible as if he had done this deed himself. Mere le gality does not confer moral ab solution; legality merely confers penal absolution and may be but a cover for gross corruption. The Real Source of Corruption This line of thought reveals an error which I, among others, have been making. Henry Adams, for example, in the quotation pre viously cited, associates corruption 54 THE FREEMAN August with the coercive power held by Presidents. And note how Plato in The Republic singularizes the evil effect by his use of the word, "tyrant," inferring that it is only the head of state whose power to use violence leads to corruption: He who is the real tyrant, what ever men may think, is the real slave, and is obliged to practice the greatest adulation and servility, and to be the fiatterer of the vilest of mankind. He has desires which he is utterly unable to satisfy, and has more wants than anyone, and is truly poor . . . all his life long he is beset with fear and is full of con vulsions and distractions . . . More over .•. he grows worse from having power: he becomes and is of neces sity more jealous, more faithless, more unjust, more friendless, more impious, than he was at first; he is the purveyor and cherisher of every sort of vice, and the consequence is that he is supremely miserable ....

When Edmund Burke wrote, "There never was for any length of time corrupt representation of a virtuous people ... ," he correct ly affirmed what I and so many others have been overlooking, namely, that a corrupt head of state presupposes a source of the corruption: numerous corrupt citizens. The tyrant's corruption stems from popular conferments, some of which are outright de mands for the employment of co erci ve powers. In the instance of such persons as the hospital chair man-who wouldn't think of tak ing violent action personally these demands are to some extent innocent in the sense that their sponsors know no better. Their limited reasoning abilities pre scribe the limitation of what is self -corru pti vee The Sin of Silence by Those Who Know But other conferments from the people to the head of state are made by those who give assent by silence. In the case of individuals who have acquired the ability to think for themselves, this may be the more self-corruptive of the two offenses. For instance, if I alone can see an impending dis aster and fail to sound the alarm for fear of endangering my own position, my silence is more cor ruptive of me than are· the overt acts of those who, in their naivete, initiate the disaster. The more abundant one's endowments, the greater the potentiality of self corruption: "Lilies that fester smell worse than weeds."

In any event, I must never en tertain the dangerous notion that the tendency of power to corrupt applies only to the man out front and, by so doing, exclude myself and others from this tendency. We are the truly responsible ones and, thus, the very ones who are 1965 ON POWER AND CORRUPTION 55 exposed to the most damaging sort of corruption. 5 Self.Responsibility The above puts the responsibil ity where it belongs: up to each I. When I ask the government to dic tate how people shall act creative ly, that is, when I acquiesce or join in the demand for subsidies, for wage and price and exchange controls, for Federal aid of this or that variety, for any of the cur rent rash of political interven tions, I am as power drunk· as the ruler put in the vanguard at the bidding of me and my kind. A fraction is inextricably bound to the whole of which it is a part. "As a man thinketh in his heart, so is he." This is to say that thought is the genesis of action: an evil thought is just as self-cor ruptive as an evil action is des tructive of others. Clearly, cor ruption of me follows as swiftly on the heels of my advocacy of 5 That corruption also befalls those who suffer the effects of coercive power is conceded. But it is not power which corrupts them, for they don't have it.

Their corruption is induced by a polit ical inhibition of their creative faculties, or by accepting something for nothing, or by a lessening of responsibility for selves, or by adapting themselves to a sheep-like way of life. To coin a term, they become "unpersons," bereft even of evolutive powers. Their corruption comes as a by-product of the wielding of coer cive power. That's at the root of their corruption. coercive power as it does on the exercise of it by the head of state. Thus, if I wish to learn how this kind of power corrupts me, if I am an advocate of it, I need only take note of how it corrupts the head of state, the administrator of it. I can review Plato's "tyrant" and obtain an accurate reflection of what is happening to me. To grasp the importance of the fact that power corrupts the ad vocate as well as the administra tor of it, merely envision millions of corrupt individuals, each of whom sees corruption only in the person he and others have made their ruler, and suspects not the slightest corruption in himself.

These weird spectacles are to be observed daily at national, state, municipal, and neighborhood lev els and they are made up of work ers, farmers, preachers, teachers, businessmen -ourselves and our friends. Not an occupational cate gory can claim exemption. Audit any board or committee gathering-private or political that takes positions on public poli cies. Note the absence of intro spection as to the quality of their own thinking. That they might have some intellectual and physi cal shortcomings themselves is sel dom considered. Then note how readily these persons will impor tune the government for special privileges which are possible only 56 THE FREEMAN August by extortion, a practice not one of them personally would indulge. A common occurrence, in such a meeting, is to ask for a Federal grant in one resolution and for a reduction of governmental ex penditures in the next! Here we have a failure to grasp that in each individual instance, I am my responsibility!

Yes, I am my responsibility. As I relate myself to the corruptive tendencies of power, I have noted that power falls into two contrast ing categories as different from each other as black and white. There are, on the one hand, the various noncoercive powers such as purchasing power, the power to attract emulation, and the like. On the other hand, in a class by itself, is coercive power - the power to shape or influence the lives of others by violence or the threat thereof. Analysis reveals that both kinds of power have cor ruptive tendencies. Disciplining Oneself However, overcoming the ten denGY of noncoercive powers to corrupt is not an insurmountable problem. There is no one of these powers but what I would increase if I could, for their acquisition spells growth, emergence, "hatch ing." I need only understand that the growing authority which these powers bestow must be managed by a commensurate increase in self-responsibility. I need to keep firmly in mind my life's purpose, lest I lose or pervert it. The self must be disciplined to the point where it never yields to the temp tation to abuse newly acquired authority. If I cannot manage an authority-responsibility balance, I am not a fit prospect for these powers, nor will I long enjoy them.

Indeed, proper management of en hanced powers is itself one of the challenges by which human beings improve or grow in stature. "Many are called but few are chosen." Countless individuals are given a trial with these noncoer cive powers but, if unworthy, are unable to retain them. Indeed, the slightest failure of responsible conduct induces self-corruption unfitness-and, thus, puts an end to the powers. The development of noncoer cive powers is consonant with life's highest aim. The dangers of corruption, while very real, are subject to self-management or self-discipline, and, these, also, are powers consistent with life's purpose. But what about coercive power? How can its tendency to corrupt be, averted? The answer is so simple it needs no analysis: never invite or accept this form of power in the first place! Acceptance of coerci ve power, that is, adopting violence or the 1965 ON POWER AND CORRUPTION 57 threat thereof to reshape the cre ative activities of others, goe-s beyond the tendency to corrupt; corruption is coincidental with ac ceptance.But even more: any time any person so much as entertains the notion of a personal com petence to control the creative-ac tivities of others, he imagines himself in the creator role; where as, in reality, he is but another human being, as ignorant as the rest of us of his own creation.

This wholly fanciful omniscience is a divorcement from reality; it results in such an overassessment of self that knowledge of self fades into nonexistence. The ac ceptance of this form of power and its attendant destruction of self-knowledge and self-discipline is itself the corruption. The corruption implicit in an acceptance of coerci ve power is unmanageable. For this is a type of authority that can have no bal ancing responsibility. To illus trate: when the aforementioned hospital chairman feathers his nest by plucking millions of others, how, conceivably, can he be responsible for them? Coercive power, once unleashed, is an au thority that is all sail and no an chor; it is without map or com pass. In summary, noncoercive power tends to corrupt and coercive pow er is itself corruption. Bending to the tendency of the former or ac ceptance of the latter brings on a warping of the psyche, a flight from reality, a loss of integrity, an unfitness to fulfill my highest purpose.

Noncoercive power is subject to self-management; that is, I can contain the tendency, keep it under self-control. But coercive power, because it is itself corrup tion, is beyond self-management. VVhen I achieve noncoercive powers and fail to manage them, or when I employ or endorse or passively accept coercive powers which are unmanageable, I break faith with life's purpose, divorc ing self from growth, evolution, emergence. This is disintegrative, the end of which is corruption. To keep faith with self, I must take instruction from whatever my highest conscience reveals as right. This may not, in fact, be The Answer, but is as close to it as I can get. This is integrative, the end of which is integrity. Be it noted that when I break faith with self I thereby lose that quality in my constitution which restrains me from breaking faith with others. I am my respO'fl,8i bility! • EDITOR'S NOTE: At the FrenClh Legislative Assembly's session of April 1, 1850, during the discus sion of the budget for tax-sup ported schools, M. Mortimer-Ter naux, one of the Representatives, proposed an amendment to de crease by 300,000 francs the state expenditures on lycees and col leges, institutions attended by children of the wealthier families.

The amendment to decrease the subsidy lost by a small margin. Bastiat's letter, published the fol lowing day in a newspaper, ex presses his opinion on the vote. Readers will note that the popu lar America.tftJattitude tow:ardsuch matters has changed since Bastiat described it in 1850. This makes it more important than ever to review what he said. FREDERIC BASTIAT No, I am not mistaken; I feel, beating within my breast, a demo cratic heart. How, then, does it happen that I find myself so often in opposition to those who pro claim themselves the exclusive representatives of democracy? Yet we must understand one another. Has this word two op posite meanings? For my part, it seems to me that there is a connection between the aspiration that impels all men towards the improvement of their 58 material, intellectual, and moral condition, and the faculties with which they are endowed to realize this aspiration.

Hence, I should like each man to have, on his own responsibility, the free disposition, administra tion, and control of his own per son, his acts, his family, his trans actions, his associations, his intel ligence, his faculties, his labor, his capital, and his property. This is how they understand freedom and democracy in the 1965 TO THE DEMOCRATS 59 United States. There ea.ch citizen is vigilant with a jealous care to remain his own master. It-is by virtue of such freedom that the poor hope to emerge from poverty, and that the rich hope to preserve their wealth. And, in fact, as we see, in a very short time this system has brought the Americans to a de gree of enterprise, security, wealth, and equality of which the annals of the human race offer no other example. However, there as everywhere, there are men who do not scruple to violate' for their personal ad vantage the freedom and property rights of their fellow citizens.

That is why the law intervenes, through the instrumentality of the public police force, to prevent and repress such aggressive in clinations. Everyone cooperates, in propor tion to his means, in the main tenance of this force. This is not a case, as has been said, of sacri ficing a part of one's liberty to preserve the rest; it is, on the contrary, the most simple, just, efficacious, and economical means of guaranteeing the freedom of all. And one of the most difficult problems of politics is to keep the trustees of this public police force from doing themselves what they are charged with preventing. The French democrats, so it seems, see things in an entirely different light. Undoubtedly, like the American democrats, they condemn, reject, and hold in contempt the-a.cts of plunder that citizens might be tempted to commit on their own authority against one another every act of aggression commit ted against the property, labor, and freedom of one individual by another individ ua!.

But plunder, which they reject between individuals, they regard as a means of equalizing p.roperty, and, consequently, the'y entrust plunder to the law, to the public police force, which I thought was instituted to prevent it. Thus, while the American demo crats, having empowered the pub lic police force to punish individ ual plunder, are very much con cerned that this force should not itself become spoliative; the French democrats, on the con trary, make of this force an in strument of plunder, which seems to be the very foundation and es sence of their system. . . . Conse quently, they have demanded and obtained a law that, by taxes on drinks and salt, takes money from the poor parents of 290,000 chil dren, to be distributed to them, the rich parents, by way of gra. tuity, encouragement, indemnity, subsidy, etc., etc.

60 THE FREEMAN August M. Mortimer-Ternaux has de manded that this monstrous situa tion be brought to an end, but he has failed in his efforts. The ex treme Right finds it very con venient to make the poor pay for the education of rich children, and the extreme Left finds it very politic to seize such an occasion to have the' system of legal plun der established and sanctioned. At which I ask myself: Where are we going? The Assemhly must direct itself by some principle; it must commit itself to justice everywhere and for everybody, if it is not, in fact, to rush headlong into the system of legal and recip rocal plunder, to the point of com pletely equalizing all classes, that is, to the point of communism. Yesterday it declared that the poor must pay taxes to relieve the rich. How can it have the che'ek to reject taxes that will soon be proposed to it to "soak the rich" in order to relieve the poor?

For my part, I cannot forget that when I presented myself be fore the voters, I said to them: "Would you approve a system of government which was based on the following arrangement: You would have the re'sponsibility for your own existence. You would demand, in exchange for your labor, your effort, and your industry, the means of feeding, clothing, lodging, and enlightening yourselves, of attaining af fluence, well-being, and perhaps prosperity. The government would concern itself with you only to guarantee you against all distur bance and unjust aggression. For its part, it would ask of you only the very modest tax indispensable for accomplishing this task." And all cried out: "We ask nothing else of it." And now, what would be my position if I had to present myself anew before those poor farmers, those honest artisans, those fine workers, to say to them: "You are going to pay more in taxes than you were expecting to pay . You are going to have less freedom than you hoped for. It is to some extent my fault, for I have departed from the system of government you had in view when you elected me. On April 1, I voted for an increase in the tax on salt and drinks, in order to come to the aid of the small num ber of our countrymen who send their children to the state schools."

Whatever happens, I hope never to put myself in the sad and ridiculous position of having to make such a speech to those who have placed their trust in me. ~ From Bastiat's Selected Essays on Political Economy, Copyright 1964, D. Van Nostrand Company, Inc., Princeton, New Jersey.

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN THE (9reativelNDIVIDUAL HENRY GRADY-or Buck - Weav er, whose The Mainspring of Hu man Progress, originally copy righted in 1947, has just been re issued by the Foundation for Eco nomic Education, was head of the Customer Research Staff of Gen eral Motors, and a great one for emphasizing the causal relation ship between individual human liberty and the proliferation of goods and services tha t go to create the affluent society. He was one part thinker, one part busi nessman, and one part evangelist - and he cared more for getting an idea over to his public than he did for claiming any particular pride of authorship. His Main spring, actually, was a collabora tive effort in that much of it con sisted of a condensation of Rose Wilder Lane's The Disc'Overyof Freedom. However, Buck Weaver added a good deal of material de riving from his own experiences and from his own extensive read ing. He was a great Frederic Bastia t man - and Bastiat, the French enemy of all collecti visms, perhaps guided the composition of Mainspring as much as did Mrs.

Lane. Weaver, who had been disci plined by his life as a supersales man for General Motors, was an accomplished simplifier. He wanted to get through to the aver age man and woman. He was, es sentially, the popular broker of an intellectual movement that started during World War II as a series of mysterious trickles. Those were years of groping. The New Deal had come - and gone - without wiping up the big pools of unem ployment. The· war itself seemed the product of a collision of states which had, in their various ways, gone over to the doctrines of cen tral planning and the idea that citizens (or subjects) must be di rected by arbitrary authorities for their own good. I remember feel ing hungry for something that would prove the futility and wrong-headedness of everything that had been in vogue since 1932.

62 THE FREEMAN August Suddenly, there seemed to be a general touching of hands all around. Isabel Paterson, a tough minded literary critic and novelist who had been an enemy and had become a friend, called me one day in 1944 and asked if I would like to meet a man named Leonard Read. We had a talk in a Manha t tan hotel room about the sources of human energy. Leonard had been arguing out on the Pacific Coast that man was a natural self starter, responsible for the dis position of his own energy on projects of his own choice. Isabel had just published her The God of the Mac'hine, which proved with mathematical rigor that high energy economies are incompatible with collectivist or intervention ist regimes. The meeting with Leonard Read led to other intro ductions. Ayn Rand was just be ginning her astounding career as a writer of fictional parables that's what Isabel Paterson called them - designed to prove the self starter point. Leonard knew busi nessmen who wanted to know writers who supported the free dom philosophy, and I heard his friend, Jasper Crane, a member of the du Pont Company, talk ap provingly of Rose Wilder Lane's The Discovery of Freedom.

A few years passed, and the trickles had become a river. The Viennese economists, Mises and Hayek, were welcomed in this country and found their natural allies in Henry Hazlitt, Aaron Di rector, John Davenport, and Law rence Fertig. Leonard Read formed the Foundation for Eco nomic Education. And Buck Weaver, taking a bit here and a bit there, quoting from Isabel Paterson, and relying on the his torical vistas unfolded in Rose Wilder Lane's book, did his great job of synthesis. It seems fitting that the Foundation for Economic Education should now be bring ing it out again with some changes suggested by Buck Weaver just before his death. The Nature of Man Weaver doesn't write as an orthodox supporter of any reli gion. But he sees man as a mys terious entity who, to some ex tent, shares the faculties of his Creator. Men have wills, they dis pose of energy. If they are not coerced or cowed they are inven tive, they make tools, they trans form their environments within certain physical limits. This is all part of their nature as men. But men can deny their own creativity, and have frequently done so in the course of checkered human his tory. Mr. Weaver speaks of the pagan ages in which men believed in sacrificing the individual to the "higher" good. The pagans saw 1965 THE CREATIVE INDIVIDUAL 63 the universe ruled by the whims of a variety of gods. They were used to thinking of man as some thing that was controlled by some Authority outside himself. And, with this submissive psychology, pagan man let those who claimed to be priests of the gods take over the direction of his energy.

The triumph of the Christian view of life released the human being from the will-of-the-swarm pagan idea. Following Rose Wilder, Lane's schematization, Weaver tells of the three a ttempts to found a civilization based on the idea that man is free to do good or evil in the sight of God. The first attempt took place in ancient lsrael,where Abraham insisted that man controls himself and Moses brought the Ten Command ments - each of which is addressed "to the indi vidual as a self-con trolling person" - to the Israelites after their escape from bondage in Egypt. The Saracen Contribution The first attempt failed within the boundaries of ancient Israel, but Christ spoke to the individual, and the Christian church became the carrier of the ideas of Abra ham and Moses through the feudal age to the present. Meanwhile, the Saracens took over the idea that man is a self-starter. When I first read Rose Wilder Lane's story of the rise of the Saracenic civilization, I had a hard time squaring it with the apathy of the Moslem lands as they exist today. He'r accounts of the rise of the great Saracen uni versi ties, from Persia and Cairo to Spain, was an eye-opener. It seems that these universities had no organ ization, no program, no prescribed curriculum, no departments, no ex amina tions. People, enrolled to study as they willed, and went to listen to the teachers that appealed to them. Whatever the effect of such permissiveness on the whole body of students, the Saracen scientists came up with the con cept of zero, which makes modern mathematics - and, indeed, the whole of modern civilization possible. Without zero the're weuld be no modern engineering, no chemistry, no measurements of substance or space.

The Rose Wilder Lane view of the Saracens is endorsed by Henry Grady Weaver. It makes one al most wish that Charles Martel hadn't beaten back the Moors at the Battle of Tours, which saved northern Europe from a conquest by Mohammedans. But the mili tary defeat of the Saracens hardly mattered, for the western Chris tianized world took over much that the Saracens had developed. As Mrs. Lane and Mr. Weaver both put it, the freedom of the Saracen 64 THE FREEMAN August world seeped into Europe via Spain and Italy even as the Sara cens themselves were being pushed back to the African side of the Mediterranean. An odd perspective offered by Weaver is that the chivalric be havior of Saracens in the Holy Land was imitated by English Crusaders, and became the basis for the British code of the gentle man. The liberties that the chival ric English gentleman permitted were exported in time to the Brit ish colonies in North America. In defending these liberties against the repressive government of King George III, the colonists launched the third great attempt to build a civilization on the idea that every human being is a free agent, responsible to himself for the right disposition of his energies.

It's a great story that Mr. Weaver has to tell, but it is far from being the story that is gen erally accepted today. However, the idea of freedom is on the march. There were only a few of us to champion the idea that man is a self-starter back in 1944, when . Isabel Paterson and Rose Wilder Lane were first being read. But today the freedom movemen t, which is sometimes called the con servative movement, is really per colating. "Buck" Weaver would be surprised at the extent of his modern public. ~ The Rewards oj Competition The following explanation of the significance of open competition was offered at the presentation of a $2,000 scholarship at a recent Junior Achievement award dinner in Seattle: "The fact that there is but one scholarship to be given to the best in 500 membership has in itself created a situation where each student has put forth his very best in time and effort to endeavor to win. Think a moment, of the motivation to you students, if we lived under socialism's idealistic concept of equality for all and the award had been announced as 500 scholarships worth $4.00 each."

Water Famine on the Hudson . Leonard E. Read 3 Currency Reform . Hans F. Sennhol z 17 Central Planning: Side Door to Socialism . Robert M. Thornton 48 61John Chamberlain Books: The Libertarian Movement and Its Propaganda . Alexander Evanoff 55 SEPTEMBER 1965 Be Responsible . Alexander s. Carney 13 The Icarians at Nauvoo. Paul M. Angle 40 IIEvery Employee Is Entitled to a Fair Wage ll C. w. Anderson 38 The Flight from Reality: 12. The Democratic Illusion. Clarence B. Carson 23 Think of That! .

COAST FEDERAL SAVINGS AND LOAN ASSOCIATION Department F, 9th & Hill Sts., Los Angeles, California 90014 o Please send me a FREE copy of "What's Inflation?" o I enclose my check (or money order) for $ _ o Please open a Coast Federal Savings accounto Individual o Joint in the name(s) of NAME _ STREET ---------CITY STATE _ 5-1l2A Q ~ COAST FEDERAL SAVINGS _. AND LOAN ASSOCIATION '~:e:..... '~I) J;1f' Of course the government can op erate a water system, but the market may afford the only way out of the inevitable famine resulting from controls ............ p. 3 J;1f' A young man explains to this year's graduating class why it is so impor tant to assume self-responsibility ............ p. 13 J;1f' Dr. Hans Sennholz examines vari ous proposed currency reforms grow ing out of the present inflationary crisis . .. , p. 17 /;II' The meaning of democracy had to be changed, explains Professor Car son, before democracy could become an instrument for change rather than a conservative influence ........ p. 23 ],111 "Chet" Anderson examines the proposition that "every employee is entitled to a fair wage." p. 38 ],111 A neglected chapter of the experi ments with socialism includes the story of the Icarian colony at Nauvoo, Illinois, a century ago ...... ... p. 40 J;1f' Robert Thornton explains why cen tral political planning is incompatible with freedom and prosperity, and shows substantial support for his po sition among the intellectuals ............ p. 48 ],111 A sound libertarian movement must rely on promotional methods con sistent with the freedom of choice for which it stands p. 55 J;1f' The Free Market and Its Enemy by Leonard Read affords the foundation for John Chamberlain's review ............ p. 61 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

SEPTEMBER 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No.9 President, Foundation for Economic Education ll!anaging Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except "The Flight from Reality," and "The Icarians at Nauvoo." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

LEONARD E. READ THOUSANDS upon thousands of kulaks starved to death during the 1930's on the richest farm lands of the Soviet Union. Down through the ages, countless millions, strug gling unsuccessfully to keep bare life in wretched bodies, have died young in misery and squalor. Why were famines their lot? Why did men walk and carry burdens on their straining backs for sixty known centuries? And how did it happen that suddenly - almost miraculously - on a small part of the Earth's surface, the forces of nature are harnessed to do the bidding of the humblest citizen? These questions are posed and Photo~raph: The Hudson from Tappan Zee Bridge. Daniel Berry, Irvington, N. Y. answered in Weaver's Main spring.! And the answer, he con vincingly insists, is that man learned how to release creative human energy through such in stitutions as the private owner ship and control of property and voluntary exchange under a mar ket system of competitive pricing.

Today, in the metropolitan New York area, I am aware of no more plentiful resource than water except air. The average annual precipitation, while presently down 20 or 25 per cent, has been about 40 inches; the enormous 1 See The Mainspring of Human Prog ress. (Available in paperback from the Foundation for Economic Education, Inc., Irvington-on-Hudson, New York, 95¢.) 3 4 THE FREEMAN September Hudson River bisects the area, one side of which has a great deal of marsh land; New York State abounds in fresh water lakes. And, it's only a hop, skip, and jump into the Atlantic Ocean! Why, then, are the twentieth century residents of this area faced with a water famine - that same prob lem of scarcity which plagued mankind for the centuries of re corded history? Why are res taurateurs not offering water on their dining tables? Why a fine if caught washing an automobile? Why must lawns dry up? Why are citizens asked to be parsimonious with toilet flushing? Why is the air conditioning shut down at Newark Airport? Why is there a flurry of free enterprise well dig ging? And entrepreneurs truck ing in water for sale at $15.00 per thousand gallons?

The answer to these questions is suggested when we ask another question: Why are Gothamites and J erseyi tes begged to go easy on water - by which they are virtu ally surrounded - while they are incessantly urged to use more electricity and other relatively scarce goods and services that are efficiently dispensed by market pricing? Reflect on this hypothesis: the impending water famine is rooted in the same cause as the starva tion and death of our Pilgrim Fathers during the first three years after landing at Plymouth Rock, the same cause that brought on the famines that punctuate the historical record: water is sub jected to the political formula from each ac'c:ordingto ability, to each aecording to need. The rem edy would appear to be the same as the only one that has ever over come scarcity: leave supplying of water and the determination of its use to private ownership and control, that is, to the market!

The Idea Is Faulty Before going further, let me hasten to the defense of the Water Commissioners, those in charge of the socialized water system. The famine is not in consequence of their administrative inabilities. Nor was it the incompetence of Governor Bradford or Stalin that accounted for the famines of their times. And it definitely was not the managerial inepti tude of a successful businessman, who, as Postmaster General for eight years, failed to slow down the rapidly increasing deficits of the socialized postal service. The ques tion here is what's responsible, not who's to blame. Is it not the socialistic form of organization, rather than the person, that is chiefly responsible for the inferior performance? The personal fault, in every such case, is no more than 1965 WATER FAMINE ON THE HUDSON 5 an unawareness of the fact that no one knows how to make social ism work. 2 In Case of Necessity Most Americans, like their fam ine-threatened ancestors, are the victims of a sticky fallacy, a carry over from ages of political super stition: Any good or service on which there is a general depen dence cannot be entrusted to the market; ownership and control must, therefore, be consigned to a public (political) agency. In other words, a critically needed good or service will be safely cared for only if socialized; necessities will be subjected to willful exploitation if left to the free market. Noone, so goes the fallacy, should be al lowed to profit from a public ne cessity!

Let me suggest that both good theory and practical experience dictate the precise opposite: The greater the dependence on and the 2 Critics may claim that Los Angeles, for instance, knows how to make social ism work. Reports the N. Y. Times (7-6 65), "Los Angeles's antidrought formula, worked out more than a half-century ago, goes like this: Plan ahead at least a gen eration. Reach out as much as 700 miles for a water supply. Spend billions of dol lars. Engage in intensive politicking, on both state and national levels. If some body gets in the way, don't be afraid to shoot it out with guns." The socialistic formula from beginning to end is found ed on coercion. Can this be said to work? If so, then robbery works. more general the need for any good or service, the more should we insist on leaving it to the mar ket, and the more reluctantly should we entrust it to political agencies.

Were it necessary to consign any goods and/or services to govern ment ownership and control, I would, quite seriously, nominate such things as hoola hoops, juke boxes, ostrich feathers - where a famine would inflict no great in jury on anyone. This must be the position of any individual who un derstands the nature and the lim ited usefulness of organized police power, on the one hand, and, on the other, the creative potentiali ties of the miraculous market men cooperating in willing ex change. But note the prevalence of pop ular opinion to the contrary. The dictionary defines a utility as "something useful to the public, especially the service of electric power, gas, water, telephone, etc." We might appropriately add rail roads, airlines, mail delivery, and sewage disposal. It is these goods and services - prime necessities and not frills - that most people insist on turning over to ,govern ment or, more to the point, that politicians insist be turned over to them!

In the United States, water sup ply is, for all practical purposes, a 6 THE FREEMAN September monopoly of government, as are sewage disposal and mail delivery. Pri vate utilities, all of them, are being subjected to increasing gov ernment control which, when final ized, is ownership. Let us now ask ourselves, how many different goods and services are produced in this country and available to consumers? No one knows; but, assuredly, it's in the millions; one company alone pro duces about 250,000 separate items. These millions of artifacts and services - all but a few - have been left to relatively free mar kets. Please note that only those items consigned to government for presumed reasons of "public safety"- give us any concern at all: water, sewage, mail delivery, education, roads! Or those goods and services where government strongly intervenes: wheat, cot ton, housing, and the like.3 Items left to the free market - clothing, churches, corn flakes, electric com puters, pencils, publications, heat, automobiles, and all the others are rarely given a second thought; supply and demand always move toward equilibrium. The evidence favoring the free market is so abundant that it is seldom noticed.

3 There is no good or service in the U.S.A. today that is free from interven tion. But if the intervention is not too powerful, the free market forces tend, markedly, to overcome the political hin drances. Paradoxically, the demonstrations are too numerous to attract atten tion. Like the air we breathe, and on which we are dependent, their omnipresence dulls our perception of them. If we wonder how effi ciently water would be supplied by the market-without serious prob lems of surplus or famine - we need do no more than extrapolate from our countless experiences with free market goods and serv ices. Theory, also, gives the same an swer. It we know the theory of the market economy, then we will un derstand why socialism does not and cannot work. Absence of Realist;cPr;c;ng One cause of the current water famine is the absence, of realistic pricing. Many residents of New York City, for instance, pay only a monthly rate per water connection.

Waste and large usage bear the same monthly charge as frugal and minor usage. But, then, real istic pricing is impossible under socialism, as Professor Ludwig von Mises so clearly demon strates. 4 Instead of free-market pricing, socialistic systems must 4 For an explanation as to why eco nomic calculation under socialism is out of the question, see Chapter XXVI, Hu man Action, by Ludwig von Mises. (Ob tainable from the Foundation for Eco nomic Education, Inc., Irvington-on-Hud son, New York. 907 pp. $15.00) 1965 WATER FAMINE ON THE HUDSON 7 resort to "dollar guessing." In short, the socialists can do no bet ter for economic guidance than to peek over their left shoulders and see what free market prices are. 5 The problem with water is, of course, that there is scarcely any market pricing left to be observed. The free market operates as a computer. 6 Billions of complex data flow into it daily and signals issue in the form of prices. No more proficiency is required of anyone than the ability to observe prices. High prices caution lower consumption and stimulate higher production, and low prices encour age consumption and discourage production. Were the provisioning of water left to the market, prices would rise whenever the heavens withhold their bounty from any given area. Consumers by the mil lions would voluntarily impose their own economies - no govern ment edicts required! And sup pliers would spontaneously spring from we know not where. Short ages and surpluses do not plague the free market where supply and demand equate; distortions are caused by political attempts at ;; Aleksy Wakar and Janusz Zielinski l leading professors of The Central Plan ning School of Poland, astonishingly for socialists, frankly admit this allegation.

See The kmel"ican Economic Review, March, 1963. fi See my "The Market Is a Computer." The Freeman, March, 1964. production, exchange, and price controls. Under socialism, the Commis sioners must make guesstimates from intricate data they cannot comprehend. Even the best of them have no competency for this. In the free market, the freely fluc tuating market prices serve as clear-cut guides to producers and consumers alike. All producers and consumers - even children are competent to observe and obey these price signals. Allocating Scarce Resources In most areas of the world to day, pure, fresh water is an eco nomic good, that is, there isn't enough of it to meet all demands, and users must pay for it. Water is scarce, and economics is the study of how best to allocate scarce resources. Let's suppose, for example, that by reason of training, research, discoveries, skills, I am suddenly the one man on earth who can cure cancer. Un told thousands are destined to suf fer this dread disease during the coming year; but my treatment is such that I can attend to no more than one patient per month, or twelve a year. How best can this exceedingly scarce resource of mine be allocated? Knowing of the miraculous market and the way it works to alleviate poverty, disease, distress, I would try to price my 8 THE FREEMAN September services sufficiently high to bal ance supply (my scarce resource) and demand (the need of untold thousands). The price, let us say, reaches equilibrium at $100,000!

"But," cry those who don't under stand economic phenomena, "your way will sa ve only the very wealthy." What really will happen? With in a very short time, thousands of doctors will be stimulated, not only by their desire to save lives but by the high price, to attain my proficiency. The price for the cure of cancer will soon fall to the point where all of the untold thousands can be accommodated. Supporting evidence is superabundant. Ball point pens, for example, were first priced at $13.95. The spread be tween low cost and high price drew countless competitors into the field. Today, they're give aways. Political Rationing The socialistic alternative? Put a political ceiling on the price, low enough to be within the reach of all consumers. Such a low price, however, will not serve to enlarge supply. I could still save twelve lives a year, but that would be it! So, how will my limited service be allocated among the untold thou sands? I can resort to personal discrimination or a public commit tee can decide who shall and shall not be saved. 7 Or the government may take from thousands of Peters to save Paul which, of course, disables thousands of Peters.

The fact that prices do fluctuate and serve as a guide to action in a free market - even though this motivation brings supply and de mand into a state of equilibrium causes many persons to reject the market method. They seem to feel that enlightened human beings which they conceive themselves to be - should be less crassly moti vated; that "human need," rather than price or dollar inducement, should provide the incentive for action and conduct. 8 Self-interest (attention to self-aspiration and self-direction) which I frankly ac knowledge is the motivating force i n f r e e mar k e t m ira c Ie s, i s frowned upon by them as beneath human dignity. Thus, if we would know why socialism does not and cannot work or, to the point, how scarcity can exist amidst plenty of water or any other commodity 7 For an enlightening commentary on this point, as related to artificial kidneys, see "'Vho Is Worth Saving' ?" Newsweek, June 11, 1962.

8 The cure of cancer is an economic service as water is an economic good. Free, unrigged pricing - not need - is the economic means of allocating these scarce resources. To substitute need for pricing is to confuse the categories; it is as senseless as to substitute need for thrift as a means of capital formation.

1965 WATER FAMINE ON THE HUDSON 9 - we must pause and reflect on the nature of self-interest. Self-Interest Examined Self-interest, here used inter changeably with self-aspiration, is as varied as are individual aspira tions and goals. Contrary to a great deal of cur rent opinion, self-interest is as prevalent among "enlightened" human beings as it was in cave men. It exists no more or less in men who resort to thievery as a labor-saving device than in "hu manitarians." Self-interest can no more be shed by a living individual than can thirst or appetite; it is an undetachable component of the psyche; self-interest is a built-in feature of each breathing soul on this earth. The denial of this, in my judgment, is self-delusion. There's only one person in John Smith's driver's seat, and that is John himself! In order not to be led astray on this point, we must first concede that self-interest, as the term is used here, is not in the moral cate gory-any more than are the senses; it is neither good nor bad, in itself. Self-interest is compan ion to self-determining, self-con trolling, self-responsible individ ualism. No "selfless" person exists nor is one conceivable! While self interest does not imply a solici tude for others, neither does enlightened self-interest necessarily preclude such concern. The "hu manitarians," who have corrupted this conceptual term, would have us believe otherwise.

The observable differences in "social conscience" or morality are not to be explained by the pres ence or the absence of self-interest, but, rather, by the different ways individuals interpret their inter ests. Differences in individual so. licitude for others, and in other moral qualities, originate at the point of interpretation. Are the interpretations intelligent or un enlightened? That's the question. I repeat, individual interpreta tions of self-interest vary as greatly as do individual aspira tions; no two are identical. But only I can interpret mine; only you yours. As unenlightened as yours and mine may be, our own interpretations will be more intel ligent than those made for us by another. Other -in terpreta tion must, of necessity, be hopelessly unintelligent, as much so as if another tried to smell or taste or feel for us. Others may hold the light high that we may better see, but the interpretation itself origi nates with self ; it cannot be other wise.

I, a free market devotee, believe my self-interest is best served when other millions of people are free from me to pursue their own 10 THE FREEMAN September aspirations as they please so long as their pursuits are creative; tha t is, so long as each respects the similar rights of others. The socialist, on the other hand, believes his self-interest is best served when other millions of peo ple are not free from his interpre tation of their interests. I insist that he assumes a capability for correctly interpreting the inter ests of others which he does not possess in the slightest degree. Personal Creativity Depends on Pursuit of One's Own Choice Self-interest, a prime concern f or things closest to home, is a uni versal human characteristic, and is, perhaps, the greatest of all motivating forces. It stands to reason - indeed, is self-evident that each of us will put forth his best effort on matters of deepest and most immediate concern to him. And this is the basic premise concerning human nature upon which the entire theory and prac tice of the market economy rests. 9 Socialism presumes otherwise: that our respective abilities should be directed according to the inter ests (needs) of others; and the 9 For readings in. depth on reasoning from self-evident assumptions, see "Some Preliminary Observations Concerning Praxeology" in The Ultimate Foundation of Economic Science by Ludwig von Mises. pp. 1-9. (Obtainable from the Foundation for Economic Education, Inc., Irvington-on-Hudson, New York. $4.50.) typical result is a water famine on both sides of the Hudson!

For example, there come to mind a man, wife, and grown daughter who have a hostelry and real estate development under way in western Washington. Their in terest in the success of this proj ect (including a private water sys tem) coincides precisely with their own self-interests. They love it, live it, talk it, dream it, work it. The creativities of their very be ings are finding free release, and it is a joy to observe the results of their efforts. Beavers could take lessons from them! That the proj ect will be a success, I have no doubt; that many others will bene fit from their completed handi work is beyond question. But, we must ever keep in mind, it's the free market form of organization, not entirely the person, that is re sponsible for the superior per formance. Now, suppose we were to divert this competent threesome from their self-interests into a situation where only other-interest is at stake: organize them into a Tri umvirate charged with the opera tion of New York's socialistic wa ter system. They'll be no more to blame nor do any better than the present administration, should na ture fail to confer bounteous pre cipitation. The results of socialis tic practice cannot be otherwise.

1965 WATER FAMINE ON THE HUDSON 11 Why Socialism Fails There are many reasons, but chief among them is the fact that creative actions and thoughts are bereft of self-interest motivation under socialism. The requirements of the socialized project and the fulfillment of self-interest go in different directions; the problem and the would-be problem-solver are on different wave lengths! Both empirical evidence and sound theory support this conclusion. True, not everyone finds fulfill ment - a free release of creative energies - in a free market soci ety. But this is the individual's rather than the free market's fault; for the opportunity for such release is wide open and many mil lions do, indeed, enjoy creative ex pression. In socialism, it is demon strable that the administrators are endowed with authoritarian, not true creative, expression. Again, it is self-evident that crea tivity will be more abundant where millions of people find crea tive fulfillment than in politically rigged situations that negate indi vidual initiative and creativity.

As suggested above, there is no self-interest motivation under so cialism; there is no driving force for efficiency, beyond the more or less unattractive emoluments of political office. The discipline of profit and loss is nonexistent; tax payers are obliged to pick up the tab. Nor does the failure of a proj ect reflect fully on the administra tor, for there are no competitive forces to rid the economy of his failures. Maintaining position de pends more on excuses than effi ciency. For what other reason does a 20 or 25 per cent decline in local pre cipitation bring the threat of a water famine? It seems that the self-interest of administrators of socialistic systems does not ade quately force their attention on future contingencies. But examine private power and light companies in the U.S.A. Their administra tions are looking years ahead as to any possible failure in fuel supply.

If they are presently using coal or gas or oil or hydro or atomic power, they have plans for substi tution. Their self-interest puts a a premium on not getting "caught short."lO If, contrary to present trends, the government doesn't take over these private companies, we can count on it, they'll con tinue to urge American consumers to use more power and light in the future. As I approach the end of my argument, I confess the unlikeli hood that water will be left to the 10 Most electric utilities use large quantities of fresh water. Engineers of one of the nation's largest producers es timate that desalination of sea water can now be achieved at a cost of not more than 30¢ per thousand gallons.

12 THE FREEMAN September market in the foreseeable future. As no one knows how to make so cialism work, neither does one know how to let go of it once it has taken root in the economy. And the rooting, emanating from the federal, state, and local gov ernments, is unbelievably deep! The best we can do, in these dis tressing circumstances, is to re pea t, over and over again, the case for the market economy, improv ing our understanding and exposi tion on each occasion, hoping that sooner or later enough persons will share our faith in freedom to bring on one more miracle, in this instance, dispelling the threat of water famine. If it ever comes to pass, it will likely be because of a cessation of taxpayer subsidy to such projects and the removal of restrictions to private entry into the business. This, admittedly, re quires a revolution in thinking and on an enormous scale. There is one mental block we must scrupulously avoid: Do not reject the idea of nonsocialized water supply because you or I cannot envision how the market would supply water. We do not know; no one knows! 11 I lay no claims to clairvoyance and, thus, can no more foresee how the market would attend to fresh water deliv ery than Adam Smith could have foreseen how the human voice could be delivered around this earth at the speed of light or than George Washington could have predicted how the market would overcome sea rei ty - removing dis tress and poverty on an unimagin able scale.

We can entertain but one cer tainty: The market, if not chained down and aborted by restrictions, will dispose of water famine as it has other famines. The free market releases crea tive human energy; this is its jus tification. A by-product is the rid dance of famines: this is its god send! ~ 11 See the chapter, "I Don't Know" in my The Free Market and Its Enemy. (Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y. $1.00 paper; $1.75 cloth.) Intervention OF ALL THINGS, an indiscreet tampering with the trade of pro visions is the most dangerous,and it is always worst in the time when men are most disposed to it-that is, in the time of scarcity. ED M U N D BUR K E, Thoughts and Details on Scarcity (1795) You are the product of your past. You are also the creator of your future. Now stop and think what this means in terms of individual responsibility. It is a concept of crucial importance, perhaps more importan t today than in any other time in history.

Why is this so? Because today, the operation of many of society's most important institutions have had the effect of relieving us of individual responsibility. Govern.. ment has increasingly assumed our burdens - welfare, compul sory social security, compulsory health insurance - all intended, we are told, to divide more equi tably the benefits of a productive, Mr. C~r~ey, n0'Y in his fourth year of medi cal tralnlDg, dehvered this 1965 Commence m~nt address at the Irvington (New York) ~lgh School from which he was graduated In 1958. ALEXANDER S. CARNEY SPONSIBLE modern society. While govern ments do provide material bene fits for some, these interventions do in fact release all of us from the exercise of choice and of in dividual responsibility. Automa tion with its demands for greater efficiency has reduced man's con trol over the extent and conduct of his work. Productivity has soared. Yet the exercise of respon sibility is frustrated. Modern con veniences have had a profound in fluence on modern living - more comfort yet less responsibility.

I do not wish to sound old-fash ioned, or appear as one opposed to modern practices, but I am point ing out that many essential as pects of our society which we con sider modern and progressive do in fact reduce the sphere of in dividual responsibility. This is quite surprising to me, especially since in no other time in history has the clamor for freedom been so intense. Authors demand more freedom of expression. Censorship is banned by the courts; the dis tinction between artistry and por13 14 THE FREEMAN September nography vanishes. Absolute stan dards of right and wrong are be ing replaced by moral relativism. Permissiveness in the raising of children is in vogue. Parents are more concerned with "getting along" with their children than they are with providing leader ship and direction. Authority is questioned and challenged, often in the form of illegal demonstra tions. These are but a few ex amples of the general climate of restlessness - the urge to break the shackles of tradition - to forge a society in which our in nermost needs and feelings may be expressed and satisfied. It is an interesting paradox, then, that whereas freedom has become an obsession in some areas, we are relatively unconcerned about it in other areas, although admittedly in the latter, the manner in which our freedom is curtailed is far more subtle.

How has this climate of change come about? Perhaps it is because of the high standard of living we have achieved. We are no longer preoccupied with mere survival; we are concerned rather with the quality of survival. Perhaps it is because of the incredible advances attained by science and tech nology. Man has always sought utopia. He now sees it within his grasp. Perhaps this climate of change is the result of growing urbanization. In migrating to the cities we are separated from the traditional ways of life fostered by our ancestors. Having broken traditional ties, we are no longer convinced of their wisdom. More and more we employ reason and the scientific method to create and sustain a system of values. This is breeding a kind of "test tube mor ality." Unless the value in ques tion is proven to us in objective, black-and-white terms, we are not apt to believe in it. Probably no one of these factors explains the changes we are witnessing today.

More likely, they are the result of a combination of these and other factors, not affecting each individ ual equally, but nonetheless ex erting their influence on the pop ulation as a whole. Man Modifies His Environment It is in this context of social and cultural change that individ ual responsibility assumes its greatest importance. You are the maker of your environment. I re fer not only to your external or physical environment, but to your internal environment of thoughts and feelings. Of course, environ ment leaves its mark on you. Mod ern theories of psychology tell us this - but perhaps with too much emphasis. I conceive of man as the master of his own thoughts, over which environment exerts 1965 BE RESPONSIBLE 15 varying degrees of influence. Some individuals are complete and ab ject servants of their environ ment, kicked around by every quirk of fate. Others have stood firm, failed to yield, and even changed environment suitable to their needs.

Environment is changing - at a pace frightening, and yet excit ing, to comprehend. Yet it is al ways within control, providing we as individuals are prepared and willing to accept the responsibil ity. How can we prepare ourselves to accept this responsibility? First, we must regard responsibility and the exercise thereof as· essential to the growth and development of the personality. Just as food is required for the body, so is re sponsibility required for the per sonality. Wouldn't it be uplifting if we would react as strongly to lack of responsibility as we do to lack of food? But the mere realization of the importance of individual respon sibility is insufficient. We must in fact be responsible. We must transform our thoughts into ac tion. You have aU heard the adage: "Nothing succeeds like success." It is also true that nothing weak ens like weakness. The continual shying away from responsibility weakens the personality. Weakness leads to discouragement and discouragement leads to further neg lect of responsibility. This vi cious cycle, thus set up, can be interrupted only by people show ing courage and determination.

They will find that just as the vicious cycle of weakness works against them, the self-generation of strength will work for them. The sine qua· non of individual responsibility is discipline. Disci plinethe idea that practice makes perfect; the idea that football games are won rarely on Saturday, bu t in the practice sessions throughout the week; the idea that good habits make good men. With discipline, you will learn good judgment. You will learn to resist the distraction of irrelevan cies. How crucial is this ability in our society today! Responsibility toward Others Finally, it must not be assumed that this concept of individual re sponsibility will breed exagger ated self-concern and thus selfish ness. Quite to the contrary, the individual who is responsible to himself is more often responsible to others. And more than tha t, this same individual has more likely developed the skills required to contribute more fully to another person's happiness. I stated at the outset that you are the creator of your future; but you are also the creator of the future of others. In 16 THE FREEMAN September this context society demands that you act responsibly.

If there be one point that I would have you remember tonight, it is simply that society is only as good as the individuals who live within it. As each indi vid ual is strong, so is society. When each individual is willing to give up his freedom, so will society be eager to take it away. Above all else, we must not take our society for granted. Each of us owes our freedom and prosper ity to the courage, the good judg ments, and the devotion of our predecessors. Will we continue in the same tradition? One cannot predict. However, we can be cer tain that in the final analysis, the praise, or blame, will rest with the individual. ~ First Step to Progress ONE of the strange quirks in human nature is the alacrity with which we pounce on any shortcoming in our government, our economic system, our employer, our grocer, and our garage man, in contrast to the tolerance with which we view our personal follies.

All of us are beset with limitations. The first essential for progress is to recognize our weaknesses and take pains to over conle them. When we have done this, we are fit for civilized society. Once a man has taken a sober look at himself, and has made an honest report, he has moved forward. His next step should be to make himself as useful as he can. Let him give his job, his employer, and his community a square deal by close appli cation to his little task. Soon he will find that larger tasks are passed to his desk, and that tangible appreciation of his effort is finding its way into his pay envelope. WILLIAM FEATH ER, The William Feather Magazine, June, 1965 OUR INFLATIONpredilection, which manifests itself in chronic Federal deficits and credit expansion through the banking system, breeds numerous effects at home and abroad. At home, prices are rising continuously in spite of the growing productive capacity of American industry' and its great technological achievements. These effects in turn breed sociological and political effects that tend to shape the course of our history.

The most spectacular effect of monetary depreciation, however, is the gold and foreign exchange dilemma. It is an effect that, be fore the days of the New Deal, also made its domestic appearance in the shape of gold and bank runs. When commercial banks had overextended their credit in pe riods of business boom and ex pansion, and depositors became doubtful of the liquidity or sol vency of their banks, they began to withdraw their demand de posits and converted their bank notes into gold. The overextended banks dreaded this moment when only banking "holidays" could save them. Severe credit contrac tions usually followed, leading to periods of business depression. President Roosevelt's nationaliza tion of all gold holdings in 1933, which "temporarily" deprived Dr. Sennholz is head of the Department of Economics, Grove City College, Pennsylvania. HANS F. SENNHOLZ American people of the freedom to hold gold,made further gold runs' futile and meaningless. Why should anyone today run to the bank for his deposits if he can only demand paper money of which there is an abundance?

Gold as Medium of Exchange In international affairs, how ever, gold continues to be the ulti mate medium of exchange. While the U.S. government can force its citizens to accept U.S. dollars in settlement of all legal debts, it is hardly conceivable that the Bra zilian government could force citi zens of the United States to deal in Brazilian cruzeiros. In our trans18 THE FREEMAN September actions with Brazilians, whether in the form of current trade or long-term capital loans, we insist on payment in gold or dollars. We refuse acceptance of Brazilian cruzeiros that are depreciating at a rapid rate. The same is true with foreigners. The U.S. govern ment is in no position to force paper dollars on reluctant for eigners. To make payment to them, we have to satisfy them as to the quality and quantity of the medi urn of exchange. True, as long as they readily accept our dollars, we may use them in ex change. But if they should prefer gold, or Swiss francs, or German marks, we have no way to compel their use of our paper money.

In times when men distrust the future of paper money, gold itself rises in value as measured not only against paper money but also against goods. Men turn to gold as the one sure thing that will survive the wreck of paper cur rencies and the changing policies of government. They seek to pro tect themselves by hiding their wealth instead of using it cour ageously in production as they do in a world of reasonable financial certainties. Since the mid-1950's the United States has been in a position simi lar to that of the overextended commercial bank before 1933. Pil ing deficit upon deficit, and continuing to announce huge spend ing programs, increases the dan ger of an international gold run. If foreign central banks were sud denly to demand gold for their dollars, they could topple the money and credit structure of the United States. This precarious monetary situa tion gives rise to numerous pro posals for monetary reform. They range from a return to sound money and the unadulterated gold standard, as it existed at times during the nineteenth century, to proposals for foreign exchange control and gold payments suspen sion.

Dollar Devaluation One possibility would be to devalue the dollar, as was done in 1934; that is, cut the gold content of the monetary unit or, expressed in the currencies of other countries, reduce the num ber of foreign units which can be had for one dollar. The devalua tion would reduce the burden of the U.S. government debt at home and abroad. In particular, it would reduce the claims on gold of 30 billion dollars now held by for eigners. A 50 per cent devaluation, for instance, would enable the U.S. Treasury to discharge its foreign liabilities with payment of half the quantity of gold it has contracted to pay.

1965 CURRENCY REFORM 19 But the champions of dollar de valuation frequently overlook that Americans are net creditors to the rest of the world in spite of the currency liabilities of the U.S. government. Dollar devaluation, therefore, means that, on net bal ance, we make a gift to our foreign debtors who can discharge their liabilities in dollars of lower gold conten t. They also over look the fact that the U.S. dollar is the leading world reserve currency that sets the pace for most other national currencies. If our government de values the dollar, we must antici pate immediate imitation on the part of most free world govern ments. It is unlikely that the United States can devalue its cur rency while the other countries abstain from doing so. But if the other countries devalue in the same proportion, no trade advan tage can be derived from such a devaluation. Our deficits in for eign payments would continue.

Payment Suspension Instead of outright devaluation, an alternative might be attempted in the form of gold payment sus pension by the United States. In this case, all other free world countries would have no choice but to follow suit. Even Switzer land, the free world's banker, would have to follow the U.S. ex ample because a sudden decline of the U.S. dollar in the international money market would invite with drawal of large funds from Swiss banks. The American depositors, for instance, who in the past made Swiss franc deposits, would find it more profitable to withdraw their funds, reconvert them into U.S. dollars which then would be sell ing at large discounts, and return those dollars to the United States. And even countries that lack American deposits would have to follow the U.S. gold payment sus pension because of its severe im pact in foreign trade relations. A worldwide suspension of gold payment also could initiate in Lon don, for the British pound sterling is even weaker than the U.S. dol lar and subject to even greater pressures of devaluation and sus pension. As Switzerland would have to follow our payment sus pension, so would the United States probably have to follow suit in the case of pound sterling decline. Foreign investors with dollar deposits in American banks would find it rather profitable to quickly withdraw their funds and convert them into pounds sterling selling at a devaluation discount.

Furthermore, a pound sterling de valuation would mean instant re duction in the gold and dollar price of English goods, which would invite more American pur chases and discourage American 20 THE FREEMAN September sales to England. Our balance of payments would worsen and our currency situation deteriorate fur ther. This is why a pound sterling devaluation or gold payment sus pension would put the U.S. dollar to a gruesome test. A series of gold payment sus pensions, however, would afford no real solution to currency problems. The weak currencies, no longer payable in gold, might decline con siderably, while the sound cur rencies, although also irredeem able, would tend to resist the de cline. In the end, all currencies no longer backed by gold would soon find international exchange ratios in accordance with their domestic purchasing powers. But this is not all. If the United States should suspend gold pay ments, 30 billion dollars now held abroad, plus an unknown quantity of unrecorded holdings abroad, could be expected to come home to roost. While foreign dollar holders could no longer buy gold from us, they could buy American goods and services. Thus, we might .anticipate a great export boom, the monetary man ifesta tion of which would be the return of many billions of U.S. dollars to our shores. This would provide the fuel for a rapid increase in domestic prices, which makes the precarious gold situation a grave concern for every American. When and if foreign holders of U.S. cur rency begin to exchange their money for goods and services, many millions of Americans might be expected to imitate the for eigners and try in turn to ex change their cash for goods and services.

Exchange Control A third possible manifestation of the monetary crisis would be foreign exchange control. Such control already may be seen in the shape of "voluntary" restrictions on bank lending abroad. Manda tory controls over capital trans actions as well as all foreign trade could follow. American tourists might be restrained from travel ing abroad. Refusal to allocate gold or foreign money could pre vent certain imIX>rts of manufac tured goods and raw materials; and private foreign investments might be curtailed on account of the "scarcity" of media of for eign exchange. The net result of such a series of restrictions would be comprehensive government con trol over all foreign transactions and dealings, which is tantamount to "nationalization." If one coun try adopts such measures, foreign governments will do the same and thus contribute to the gradual destruction of world trade and world division of labor.

It is obvious that foreign ex1965 CURRENCY REFORM 21 change control would have great est significance for industries that largely depend on imports. We may derive consolation from the fact that American .foreign trade amounts to only 10 per cent of all our trade, and that this nation alization through foreign ex change control will affect only that portion. But another 10 per cent on· top of the present government regulation and control would fur ther deplete the remnant of our individual enterprise system. A New Plan In addition to the foregoing pos sibilities, there is a new proposal according to which the United States, by unilateral action, is to transform the world monetary sys tem. Its author is Stanford Uni versity economist, Emile Despres, who also serves as an advisor to the government on international financial questions. According to the Despres Plan, the dollar is inherently far more valuable than gold, for it is the most popular international medi um of exchange. The plan is based on the recognition that the last three presidents have pledged to continue to sell gold at $35 an ounce. But according to Despres, while the selling policy is a matter of national honor, the buying pol icy may be changed. With special exceptions for Great Britain and less developed countries, the United States in the future would pay dollars for only one-third of any nation's gold holdings as they existed before the' change in pol icy was announced. Mr. Despres assumeS that such a U.S. policy would immediately cause the gold price to plummet, and would cul minate in the dethronement of gold and its replacement by the U.S. dollar.

It is true, of course, that the U.S. dollar is the mainstay of the official currency reserves for scores of countries. Foreign gov ernments use dollars in foreign ex change markets to support their own currencies when necessary. The dollar is being used in settle ment of aU kinds of payments. It also is true that the gold purchase policies of the U.S. government have greatly affected the value of gold. During the 1920's and 1930's, for instance, when the United States accumulated a large share of the total world supply, this gov ernmental action afforded value and stability to gold. On the other hand, U.S. governmental action greatly depressed the world mar ket value of gold through the 1933 prohibition of all private gold holdings. This makes it im possible to surmise what the free market price of gold would be if people were free to buy and hold gold and if the governments and 22 THE FREEMAN September central banks would refrain from hoarding it in their vaults.

But how can the U.S. g-overn ment possibly declare certain for eign gold holdings ineligible for purchases in the United States? How can the U.S. government prevent Switzerland, for instance, from using its gold for purchases from various countries other than the U.S.? Could it not trade its gold with Great Britain or the underdeveloped countries, whose gold, according to the Despres Plan, will continue to be eligible for purchases in the U.S.? How can the U.S. government police the gold trade and movements all over the world? Beyond all this, when men distrust the future of paper money, including the paper dollar, gold itself rises in value as measured not only against paper money but also against goods. Men turn to gold as the one thing that may survive the wreck of paper currencies and the chang ing policies of government. The enthronement of the U.S. dollar as currency king appears to be but another desperate scheme of inflationists who are disturbed by men's confidence in gold rather than paper money. From the be ginning of inflation some 2,500 years ago, governments have waged war on gold. Yet gold has survived as a medium of exchange throughout these millennia. ~ Monetary Crisis NOBODY traded [France in 1796] except for metallic money. The specie, which people had believed hoarded or exported abroad, found its way back into circulation. That which had been hidden reappeared; that which had left France returned. The southern provinces were full of piasters, which came from Spain, drawn from across the border by the need for them. Gold and silver, like all commodities, go wherever demand calls them; only their price is higher, it is held at that point which attracts sufficient quantity to satisfy the need. People were still exposed to some cheating by payments in mandats, because the laws, giving legal tender value to paper money, permitted people to use it for the satisfaction of written liabilities; but few dared to do so; and with regard to all agreements, they were kept in metallic money. In every market one saw only gold or silver; the workers were paid in this manner only. One would have thought there was no longer any paper in France. The mandats were then found only in the hands of speculators, who received them from the government and re-sold them to those who bought the national lands. In this manner the financial crisis, although still existing for the state, had all but ended for private persons.

As translated from THIERS' History of the French Revolution. 7th edition (Brussels, 1838) 12. The Democratic Illusion CLARENCE B. CARSON CUSTOMS do change. It was once the custom for children to read and be told fairy stories, fables, legends, and myths. Young chil dren were taught to believe in Santa Claus (and, in this case, still are), told of the legend of Robin Hood, read stories of fairies who performed work for adults, and led to believe that there was a pot of gold at the end of each rainbow. Generally speaking, such fables are no longer approved by the "experts" on child rearing. The stories have been taken out of the textbooks in the early years of schooling. Parents have been warned against filling their chil dren's minds with illusions. AcDr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The Ameri can Tradition, both of which are now avail able as books.

cording to the new dispensation, children were to be taught the facts of life from the beginning, and that as prosaically and clini cally as possible. Whatever else might be said for or against this newer viewpoint, it did have a seductive logic about it. Children who had not been pro vided with illusions would not have to be disillusioned. They should have a progressively firmer grasp upon reality as they grew up, and, as adults, be truly realis tic. It has not worked out that way. Today, adults are told fairy stories, fables, legends, and myths, and a large number of them ap parently believe them. Many men apparently believe that govern ment is a kind of Santa Claus who can bestow goods for which there is no charge, that in a democracy people may legitimately play 23 24 THE FREEMAN September Robin Hood by taking from the rich to give to the poor, that we have solved the problems of pro duction and that the good fairies will continue to produce' goods when the incentives to production have been removed, and that there is a pot of gold at the end of the rainbow which the politician de scribes if we will only follow his policies.

There is much more to current illusions, of course, than improper rearing of children, but the ques tion that the above development raises should not be left sus pended. The wisdom that is bound up in established customs cannot always be pe.rceived by the naked eye. On the contrary, what may appear illogical upon first exami nation may have reasons that stem not from abstract logic but from the way people are. Men are given to illusions, probably always have been and will be. Supplying children with illu sions in felicitous stories and myths may have the effect of an innoculation against illusion (fol lowing the principle of innocula tion of inducing the disease in a mild form). As the child grows up, he sheds the illusions one by one, or in bunches. The legends, stories, and myths may provide him in valuable points of reference for the discernment of reality. He knows, from them, what sort of things belong to the real world and what sort to illusion. Those who do not have some embodied illusions as points of re~erence may have much greater difficulty in separating illusion from reality, or, to put it another way, may suc cumb much more readily to the illusory.

At any rate, illusions abound in the twentieth century. They are usually decked out in more sophis ticated garb than the above ex amples would indicate. Men are drawn along on the journey to ward the pot of gold at the end of the rainbow by phrases such as "creating a democratic society," "adjustment of monetary supply to demographic tendencies," "trans forming the environment to meet human needs," "an equitable dis tribution of the wealth," "mutual cooperation for the advancement of the general welfare," "increas ing the purchasing power of the underprivileged," "rectifying mal adjustment induced by technologi cal innovations," "preventing the stagnation of the economy," and "balancing expenditures between the public and private sector." The language is new - out of euphem ism by sociology, midwifed by would-be bureaucratic intellectu als - but the illusions are as old as the daydreams of improvident men.

Let us examine one of the cur1965 THE DEMOCRATIC ILLUSION 25 rent illusions in -somewhat more detail, show why it is an illusion, and use the example as a way of reviewing the story of the flight from reality thus far .An illusion which appears to be gaining ground steadily in the United States is that poverty can be abolished. Already, war has been declared upon it, and we are led to expect that the demise of pov erty will occur in the not too dis tant future. The Problem of Production From one point of view, the abolition of poverty can be made to appear quite plausible, in this country at least. The argument for it goes something like this: The problem of production has now been solved. America now pro duces enough goods, or has the means for doing so, so that no one need suffer privation. To support such a contention, evidence can be adduced of the glut of goods now available despite the fact that some factories are not producing at their full capacities. Let us as sume that the description is ac curate, that there is a glut of goods and the capacity - potential or actual - for producing abun dance that will abolish poverty.

Even so, the conclusion does not follow. The fundamental fallacy is in the major premise - that the problem of prod uction has been solved. It has only been solved if the matter is viewed as being static. That is, it has only been solved for today and a few more days, after which it will e'merge once more if something is not done. Redistributionist sehemes derive such plausibility as they have by abstracting a static pic ture from the situation as it mo mentarily exists. It becomes ap parent when an actual redistribu tion is undertaken that the prob lem of production has not been solved. Planners will shortly learn, if they did not already know or sus pect it, that poverty stems not pri marily from unfair distribution but from the unwise choices which men make. The main rea sons for poverty, other things be ing equal, are improvidence, lazi ness, lack of foresight, sloven liness, the use of capital for con sumer goods or goodies, and phys ical or mental debility. (Of course, governments can and do intervene in ways to contribute to the pov erty of individuals.) Most pov erty, then, can be attributed to the choices, or failures to choose, which men make. To put it an other way, poverty results from the uses men make of their liberty.

There is reason to believe that this has long been apparent to so cial reformers, for their programs 26 THE FREEMAN September regularly result in the reduction of the choices which men have avail able to them. To state it bluntly, the attempt to abolish poverty is made by taking away the liberty of people. This can be done crudely or with considerable subtlety. When it has been done crudely, Western Europeans and Americans have usually been hor rified at it. Thus, Communist meas ures have repulsed most Western ers rather than attracted them. In the West, then, the removal of liberty has been advanced much more subtly, and the programs for abolishing poverty, or what-not, have been mild initially. The re moval of choices takes such forms as increased taxation, inflation, and governmental controls. Intervention Breeds Poverty But even when choice has been removed, poverty will not be ban ished. Prosperity, even more than poverty, is the result of innumer able choices of individuals - of de cisions, of individual initiative, of saving, of prudent investment, of invention, and so on. When liberty prevails generally, a great many people may contribute to their own and to the prosperity of others. As liberty is reduced, they lose the means, the opportunity, and the incentive for innovation, invention, discovery, and increased productivity. In consequence, poverty is extended to more and more people rather than being abolished.

This is not simply a matter of speculation; there are a goodly number of historical examples for those who prefer experimental evidence. The Russian Bolshevik innovations caused poverty on a titanic scale in the 1920's and 1930's. The programs of the Brit ish Labor Party after .World War II came near to completely wreck ing what still remained of an Eng lish economy after decades of in creasing intervention. Reports from Communist China indicate that collectivization has wrought devastation in places there. But one need not go so far afield for evidence. Ninety miles from the shores of the United States the scene has been enacted almost be fore our eyes. The Pearl of the An tilles, once a fertile paradise of productivity, has been transformed in short order into a land of hun ger and shortages. There are many other examples throughout his tory of the failure of men to pro duce when they are denied the fruits of their labor - at James town, at Plymouth, at New Har mony, and so on.

In the final analysis, poverty cannot be abolished because, when men are tolerably free, it is an individual and family matter. It is a result of their habits, cus toms, indiscipline, and themselves 1965 THE DEMOCRATIC ILLUSION 27 as they are. Any collective ap proach to the abolition of poverty, as if it were a thing itself, can only temporarily alleviate the con dition of some people, if it can do that, at the expense of a general impoverishment. The ultimate im portance of liberty does not de rive from the fact that free men will produce more bread, but they will, if that is what they want. Gaining Respectability The above principles were gen erally well known among nine teenth century Americans, and among people elsewhere, too. Men who proposed to abolish poverty were considered laughable or dan gerous, or both. It is no longer so. The series thus far has dealt with how the way was prepared for contemporary illusions, with how thinkers were cut loose from reality hy focusing upon the ab stract and ephemeral, with how utopian ideas were spread, with how past experience was defamed and traditional philosophy dis credited, with how some thinkers began to conceive of themselves as creators, with how the programs for social transformation were made-more palatable by the do mestication of them. By the early twentieth century reformist in tellectuals were beginning to draw publicists and politicians into the web of their delusion. A considerable number of Americans began to accept some of the milder pro grams of social reform.

But the programs of ameliora tive reformers involved taking away the control which people had of their own affairs. They in volved taking away some of the cherished liberties of at least some people. Now it is doubtful if there have ever been people more jealous of their liberties than Americans. It was for this that Americans rebelled against Eng land and effected their indepen dence, so genera tions of school children had learned. They had learned, too, in the inspiring phrase of Patrick Henry, that liberty was more precious than life. They had carefully limited and restricted their governments so that these might be less likely to become tyrannical. Americans would not lightly have yielded up their liberties, even if they had thought it would have resulted in more bread. Many things went into making the reduction of liberty acceptable, but none of' these could be ranked with the claim that what was be ing done was democratic. Amer icans had come, by the early twen tieth century, to value what they thought of as democracy. Indeed, they had come to associate it with their system of government and their liberties in such a way that 28 THE FREEMAN September they could not readily perceive how things that were claimed to be democratic could be antithetical to their liberties. Some reformers perceived that the American at tachment to democracy could be turned to good account; they need only identify their programs with democracy.

Herbert Croly made this rather clear as early as 1909. He de clared that the loyalty of Ameri cans "to the idea of democracy, as they understand it, cannot be ques tioned. Nothing of any consider able political importance is done or left undone in the United States, unless such action or inaction can be plausibly defended on demo cratic grounds .... "1 Elsewhere, he points out how this fact can be utilized, saying that "the Ameri can people, having achieved demo cratic institutions, have nothing to do but to turn them to good account .... A democratic ideal makes the social problem inevit able and its attempted solution in dispensahle."2 In short, he was maintaining that the political in strumentality of democracy should be used to transform man and so ciety. It is doubtful if anything in the history of Christendom can 1 Herbert Croly, The Promise of Amer ican Life, Cushing Strout, intro. (New York: A Capricorn Book, 1964), p. 176.

2 Ibid., p. 25. match the enamorment of Ameri cans with democracy in the twen tieth century. They have fought a war to make the world safe for it, written numerous books about it, taught courses about it, thingi fled it, prayed for it, and embraced it as the unquestioned good. Many writers sprinkle the word on their pages as if it were seasoning, politicians justify their programs by it, and educators call upon it as if it were heavy artillery. The Grand Illusion that "We Are the Government" What is so strange about it is that the appeal to democracy is founded upon an illusion. It is an illusion born in a.mbiguity, nour ished by a political party, brought to maturity in romantic confusion, and placed in the service of social reform. But before reviewing this history briefly, the character of the illusion should be made clear. The fundamental illusion here is that these United States, either singly as represented by the gen eral government or taken together by including the state governments, are a democracy. The general gov ernment of the United States is not a democracy. It is not a de mocracy historically, etymological ly, nor in the sense in which re formers use the word to justify their programs. The root meaning of democracy is rule, or govern1965 THE DEMOCRATIC ILLUSION 29 ment, by the people. Government, according to the American College Dic:tionary, means, "the authori tative direction and restraint ex ercised over the actions of men in communities, societies, and states; direction of the affairs of a state, etc.; political rule and administration .. :.." It should be clear that in the United States the people do not govern. They do not make the laws. They do not. ad minister the laws .. They do not enforce the laws. These functions are performed by those people' in government service. Nothing should be plainer than this.

Lincoln's Phrase Examined Some of the confusion about our system of government can be cleared up by reference to the most famous, and repeated, pur ported description of that system, the phrase extracted from Lin coIn's Gettysburg Address. As rhetoric, the phrase - "govern ment of the people, by the people, for the people" - has much to com mend it. It is simple, well balanced, and easily remembered. Unfortu nately, it has come to have the standing of revealed truth when, in fact, as description, it is part. true, part false, and part dubious. It may be accurate to say that ours is a government of the people, that is, that it derives its powers from the people, operates by the consent of the people, and that those who govern are chosen or appointed from among the people. But it is not a government by the people. To think that it is, is to confuse the governed with the gov ernors. Men exercise the powers of gove~nmen t ; they govern or rule. Those who govern are not the people; no magic of voting, ap pointment, or delegation can trans form them into the people. By con stitutions, those who govern in the United States are granted limited powers to be exercised for a lim ited time to perform limited func tions. In theory, the people have unlimi ted power; they may do whatever mortal men can do. (In practice, however, they are limited by constitutions, and those who govern are charged with seeing that they observe these.) Not so, the governors; they are strictly limited. To believe that the people govern is an illusion; it confuses governors with governed, and opens the floodgates to unlimited power of the governors over the governed. Lincoln's description here was inaccurate. As to whether ours is a government for the peo ple, that depends upon how the powers are exercised.

The notion that the United States is a democracy is almost as old as the republic about which the confusion exists. As early as 1835 Alexis de Tocqueville, a 30 THE FREEMAN September Frenchman, published a book in Europe whose title in English translation is Democracy in Amer ica. Partisans of the Democratic Party were already beginning to refer to our system as democratic. By the latter part of the nine teenth century, the name had stuck, and Americans came to as sume that theirs was a democracy. It was generally understood at the time of the drawing and rati fication of the Constitution of 1787 that it did not provide for democ racy. The Founders understood that, in classical terms, they were providing for a mixed government. Its various branches were de scribed as monarchical (the execu tive) , aristocratical (Senate and possibly the Supreme Court), and democratical (House of Represent atives). They understood very well, of course, that of the offices they were providing for, the President was not to be a monarch, the Senate not to compose an aristoc racy, nor the House a democracy.

The terminology was drawn from the-ir understanding that there are three forms for the exercise of political power - monarchy, aris tocracy, and democracy - and that they were assigning authority and responsibility to bodies derived from each of these forms. The power to be exercised was derived from the people by the representa tive principle. The resulting governmen t they understood to be a republic. The Founders' Intent The Founders neither intended to found a democracy nor did they. There were two main objections to a direct democracy at the time. One was that the country was too extensive for any such mode of the exercise of power. The other objection was much more fundamental and universal in its implications. It was that even if it were territorially prac tical to have direct democracy, it would not be desirable. In the debates over ratification in the Massachusetts Convention Moses Ames, who had presumably experienced direct democracy in the town meetings, made the point emphatically. "It has been said that a pure democracy is the best government for a small people who assemble in person. . . . It may be of some use in this argument ...

to consider, that it would be very burdensome, subject to faction and violence; decisions would often be made by surprise, in the precipi tancy of passion, by men who either understand nothing or care nothing about the subject .... It would be a government not by laws., but by men."3 In the government actually 3 Elliot's Debates, Bk. I, vol. 2, p. 8.

1965 THE DEMOCRATIC ILLUSION 31 founded, the role of the electorate was twofold: to give its consent by the choice, either directly or in directly, of those who were to gov ern, and to limit the actions of those in government by periodic elections. Yet by the Jacksonian period "democratic" was being used by some to describe the American way. The Jacksonians claimed to be lineal descendants of the J ef fersonians, and a good case can be made in justification of the claim. Later historians· have written of "Jeffersonian Democracy," though Jeff erson called his the Republican Party. Nevertheless, Jefferson did use the term "democracy" to refer to American ways, and it is ap propriate to go back to him for an historical examination of the matter in hand. The belief that the United States is a democracy arose mainly from an ambiguous use of the word "government." If Jefferson, J ack son, and their followers, had con sistently thought of government as that which has a monopoly of the use of force in a given jurisdic tion, they would not have thought of the United States as a democra cy. They understood the political arrangements in this country too well for that. But they thought of government as also embracing the management by an individual of his personal affairs as well. This is often referred to as self-gov ernment. The difficulty with such usage is that it introduces am biguities; it blurs the distinction between an individual's control of his affairs and the actions of agents of government - a distinc tion too important to be ignored.

The confusion of these distinct activities set the stage eventually for a vast extension of govern mental power at the expense of the individual's control of his affairs. 80th Jefferson and Jackson Opposed Big Government Of course, neither the Jeffer sonians nor the J acksonians fore saw any such consequences. Indeed, there is great irony here, for both men and their followers were opponents of large governmental establishments and defenders of individual liberty. The Jeffersonian Republican Party drew its follow ing from those concerned to limit the powers of the general govern ment, to delineate the rights of the individual, and to secure the powers of local governments. The J ack sonians were vigorous opponents of governmental intervention in the economy, of the grant of spe cial privileges, and of the use of large governmental powers in the lives of the citizenry. Jefferson made his position clear on the role of government in his First Inaugural Address. He said 32 THE FREEMAN September that what was needed was "a wise and frugal government which shall restrain men from inj uring one another, shall leave them other wise free to regulate their own pursuits of industry and improve ment, and shall not take from the mouth of labor the bread it has earned." Still, he did confuse the issue as between political govern ment and self-government. On one occasion, he wrote : "We of the United States, you know, are con stitutionally and conscientiously democrats." He offered this ex planation for the claim: We think experience has proved it safer, for the mass of individuals composing the society, to reserve to themselves personally the exercise of all rightful powers to which they are competent, and to delegate those to which they are not competent to deputies named, and removable for unfaithful conduct by themselves im mediately.4 That he thought of the matter primarily in terms of men manag ing their own affairs is made clear in the following. He said that Americans had imposed on them "the duty of proving what is the degree of freedom and self-gov ernment in which a society may venture to leave its individual 4 Edward Dumbauld, ed., Tke Political IVritings of Thomas Jefferson (New York: Liberal Arts Press, 1955), PP. 48· 49.

members."5 Moreover, "I have no fear but that the result of our experiment will be that men may be trusted to govern themselves without a master."6 The Jacksonians were, if any thing, more concerned with limit ing government than the Jeffer sonians and, at the same time, more fertile in producing confu sions about self-government and democracy. In the Democratic Re view, initiated in 1837, the author declared: The best government is that which governs least. No human depositories can, with safety, be trusted with the power of legislation upon the general interests of society so as to operate directly or indirectly on the industry and property of the community.7 The same author declared, "This is the fundamental principle of the philosophy of democracy, to furnish a system of administration of justice, and then leave all the business and interests of them selves, to free competition and as sociation; in a word, to the vol untary principle . ..."8 William Leggett, another J ack sonian, enunciated similar princi ples in the 1830's. "The fund a5 Ibid., p. 77.

6 Ibid. 7 Joseph L. Blau. ed., Social Theories of Jacksonian Democracy (New York: Liberal Arts Press, 1954), p. 27. 8 Ibid., p. 28.

1965 THE DEMOCRATIC ILLUSION 83 mental principle of all govern ments," he said, "is the protection of person and property from do mestic and foreign enemies .... "9 When it has done that, he thought, men may be expected to look after themselves: As a general rule, the prosperity of rational men depends upon them selves. Their talents and their vir tues shape their fortunes. They are therefore the best judges of their own affairs and should be permitted to seek their own happiness in their own way, untrammeled by the capri cious interference of legislative bungling, so long as they do not vio late the equal rights of others nor transgress the general laws for the security of person and property.l0 He identifies this with democracy by saying that "If government were restricted to the few and simple objects contemplated in the democratic creed, the mere pro tection of person, life, and .prop erty ... , we should find reason to congra tula te ourselves on the change in the improved tone of pubUe morals as well as in the increased prosperity of trade."ll Walt Whitman, too, was an apostle of democracy (or of De mocracy, for the word had not lost its partisan connotations when 9 Ibid., p. 75.

10 Ibid., p. 76. 11 Ibid., p. 87. he wrote the words below). His views were similar to those above. liMen must be 'masters unto them selves,' and not look to presidents and legislative bodies for aid."12 This being so, that government is best which governs least. One point, however, must not be forgotten-ought to be put before the eyes of the people every day; and that is, although government can do little positive good to the people, it may do an immense deal of harm. And here is where the beauty of the Democratic principle comes in. De mocracy would prevent all this harm. It would have no man's benefit achieved at the expense of his neigh bors. . . . While mere politicians, in their narrow minds, are sweating and fuming with their complicated statutes, this one single rule, ration ally construed and applied, is enough to form the starting point of all that is necessary in government; to make no more laws than those useful f 01"

preventing a man or body of men from infringing on the rights 0 f other men,13 A Large Measure of Self-Control The Jacksonians, then, had a theory of democracy, a theory which involved limited govern ment, free trade, a society of equals before the law, and each man pur suing his own interests limited 12 Ibid., p. 131. 13 Ibid., p. 132.

34 THE FREEMAN September only by the equal rights of others. In this way, the energies of each man would be released to make the most for himself and contrib ute the greatest amount to the general well-being. They perceived that from the diverse activities of men a near miraculous harmony of achievement emerged. They surrounded their idea of democ racy with a romantic aura, and some men sang praises to it. The author in the Democratic Review broke forth in what amounts to a lyrical litany to democracy: We feel safe under the banner of the democratic principle, which is borne onward by an unseen hand of Providence, to lead our race toward the high destinies of which every hu man soul contains the God-implanted germ; and of the advent of which certain, however distant - a dim pro phetic presentiment has existed, in one form or another, among all na tions in all ages.l 4 It is quite probable that it was some such, conception of the Amer ican system as this that Lincoln had in mind when he drew the fateful phrase for the Gettysburg Address. And, in this sense - con ceiving the people as individuals, and government primarily as self government - it may have been descriptively apt to refer to the system as a government of, by, and for the people. It is not diffi14 Ibid., p. 30.

cult to understand, either, how many Americans could come to value democracy so highly. As I have pointed out, however, the conception was flawed by ambigu ity. There was no clear distinction between government as force and "government" as a man's manage ment of his own affairs. Indeed, the Jeffersonians and Jacksonians did not see the need for making such a distinction. What is correctly called govern ment was only an extension of the principle of a man's control of his affairs to a different arena, when the government was popular ly based. They were majoritarians; they thought that when govern ment derived its power from a broad general consent that the liberties of the individual would be most secure. The effort to ex tend the suffrage was thought of as part and parcel of an attempt to be rid of special privileges, gov ernmental favors, and the use of government for special interests.

Reversing the Historic Pattern of Governmental Privileges In historical perspective, their case was an impressive one. Gov ernments had ever and anon been used for the advancement of the few at the expense of the many. Men of wealth and station had used government to consolidate their positions, to confer titles and 1965 THE DEMOCRATIC ILLUSION 35 hereditary positions upon them, and to grant them exclusive fran chises and monopolies. Could the poor not see that their hope lay in limiting government, in laissez faire, in allowing each man to recei ve as his efforts and ability merited? Could those of the mid dling sort not perceive that their advantage lay with a free and open economy? For the moment, in the mid nineteenth century, they could. There were as yet no widespread theories about using the govern ment positively to benefit the less well off. No grandiose: p.lans for redistributing the wealth had yet been spread to bemuse and enamor the ne'er-do-wells. In the last dec ades of the ninetee:nth .century, however, the situation was chang ing. Social theorists, utopians, re formers, communitarians, popu lists, anarchists, socialists, and others were spreading their ideas.

The programs ranged from Henry George's proposal to confiscate all rent, to the Populist idea of par tial government ownership of the means of production, to Daniel De Leon's full-fledged Marxist social ism. The siren song that all sang, however, was that the government (as force) should be used for the henefit of the general populace, at the expense of the few. The hoary practices of discrimination by gov ernmen t were to be reversed; the have-nots were at last to be made the beneficiaries of government. Pervertin.g tire Democratic Ideal Clearly, however, American in stitutions, traditions, and beliefs ran counter to any such usage. American democracy stood for lim ited government, for equality of all (including the rich) before the law, for e:ach man to seek his own good in his own way, and for each to receive the rewards of his own labor. Perhaps a revolutionary socialist would conclude that de mocracy would have to go, then.

After all, some were concluding tha t socialism would have to be ushered in by an elite. However, evolutionary socialists - Fabians, gradualists - proposed to turn the materials at hand to their ends. Democracy was a concept too deeply ingrained in American thought, as Herbert Croly indi cated, to be ignored. It must be somehow subsumed into the new vision; it must be "instrumented" for new social ends. But for this to be done the con ception of democracy would have to be transformed; the old de mocracy would have to be displaced by a New Democracy. This was the burden of Walter Weyl's book, The New Democracy, examined in the last chapter in another con nection. He made no secret of the fact that this was what he was 36 THE FREEMAN September about. He referred to the "so called individualistic democracy of Jefferson and Jackson," and de clared that whatever its merits had been at the time it was now obsolete. "The force of our in dividualistic democracy might suf fice to ·supplant one economic des pot by another, but it could not prevent economic despotism."15 What he meant was that when each man got the rewards of his efforts, some got much more than others. In consequence, "to-daY' no democracy is possible except a so cialized democracy."16 The reason for this, he claimed, was that the "individualistic point of view halts social development at every point.

Why should the childless man pay in taxes for the education of other people's children? ... To the indi vidualist taxation above what is ab solutely necessary for the individ ual's welfare is an aggression upon his rights and a circumscription of his powers."17 This conception of democracy would have to be changed: In the socialized democracy towards which we are moving all these conceptions will fall to the ground. It will be sought to make taxes conform more or less to the ability of each to pay; but the en15 Walter E. Weyl, The New Democ racy (New York: Macmillan, 1912), pp. 161-62. 16 Ibid., p. 162. 17 Ibid., p. 163. gine of taxation, like all other social engines, will be used to accomplish great social ends, among which will be the more equal distribution of wealth and income. The state will tax to improve education, health, recrea tion, communication ... , and from these taxes no social group will be immune because it fails to benefit in proportion to cost. The government of the nation, in the hands of the people, will establish its unquestioned sovereignty over the industry of the nation, so largely in the hands of individuals.l 8 The "people," however, hadgen erally been less· than enthusiastic at that time about such thorough going "democracy." To change popular opinion, Weyl believed it would be. necessary/ to undertake an immense educational program.

People must be led to recognize that we have the social wealth to cure our social evils - and that until we have turned that social wealth against poverty, crime, vice, disease, incapacity, and ignorance, we have not begun to attain democ racy. We must change our attitude towards government, towards busi ness, towards reform, towards phi lanthropy, towards all the facts im mediately or remotely affecting our industrial and political life.l 9 Such an "educational" program waS, of course, undertaken, and the story of it will be told later. 18 Ibid., pp. 163-64. 19 Ibid., p. 273.

1965 THE DEMOCRATIC ILLUSION 37 Tbel/New Democracyl/ Contingent on a New Class "of Rules But the important point here is this: The ambiguity of the earlier - conception of democracy was dis solved -into an illusion. Democracy was transformed into a. political conception~ The government (as force) was to undertake the myr iad functions-being prescribed. What had formerly _been •done by the: people (individually) was now to be done for them by the-gov ernment. But that would not be democra tic. The people' collectively could not even perform the sim pler offices of limited government. To understand this it is only nec essary' to imagine all Americans gathered to welcome a foreign am bassador or directing a ·military undertaking. No, an electorate could not even direct the' simplest of activities; for that it had to choose representatives, and these had to appoint agents. These agents were not the people, a fact well understood earlier, and they had to be checked else they would become despotic. For that, elec tions would serve, or so they hoped.

Now, however, governments were to undertake vastly complex activities, activities whose com plexities eluded the understanding of all except a few. Governments wE(reto plan economies, control eco nomic activities, attempt to effect distributive "justice," enter into every facet of the lives of people. If this could be done, it certainly could not be done by the "people." All constructive activity requires or ganization. If more than one per son is involved, hierarchical organ ization becomes necessary. Au thority and responsibility must be located in a single head, and if the undertaking involve's a great many people, there must be a "chain of command." Insofar as the Amer ican political system provides for such organization, it is not demo cratic (it is monarchic and aristo cratic, a fact well understood by the Founders); insofar as it is democratic, it does not encompass such organization and activity.

In short; the reformers could not effect their programs by demo cratic means. They could, how ever, change; the conception of democracy into a conception of ends and use undemocratic means to the end. The story of how they did this needs to be told, also. + The next article in this series will pertain to "The Democratic Elite."

c. W. ANDERSON CtEvery employee is ENTITLED to a fair wage." BEING "FAIR" in the determina tion of wages is an axiom of good management, a "demand" of union leaders. But at the risk of appear ing to be "unfair," let us examine the notion that "every employee is entitled to a fair wage." Suppose, for instance, that a man is employed to produce or dinary aluminum measuring cups. Working with only such hand tools as a hammer and cutting shears, he is able to cut and form two cups an hour - 16 in an 8-hour day; and these hardly the stream lined models which grace a mod ern kitchen. A block away, a man using a press, dies, and other mass pro duction equipment turns out high quality aluminum measuring cups at a rate of 320 a day. What is a "fair wage" in each of these plants? Is it the same for the highly skilled man who forms cups with hand tools as for the man who mass produces them at twenty times the first man's rate?

Mr. Anderson is Manager of the Employers' Association of Milwaukee. 38 If the advocate of "fair wages" begins with the assumption that two dollars an hour is a fair wage for the man using hand tools, it is clear that each cup must sell for no less than one dollar - just to cover labor costs. But charg ing any such price for handmade cups obviously is out of the ques tion if superior cups from the nearby competing plant are of fered, shall we say, at 25 cents each. If the consumers' choice is to be a determinant of the price of cups, then it appears that this hand craftsman - for the job he is doing - may not be able to earn more than a few cents an hour. Were he to insist on more from his employer, he'd obviously price himself out of that job. This, of course, would leave him the al ternative of seeking employment elsewhere; possibly at the more highly mechanized plant in the next block.

Within an economy of open competition, it seems reasonable that any person should be free to 1965 "EVERY EMPLOYEE IS ENTITLED TO A FAIR WAGE" 39 choose from among various avail able employment opportunities. But if all interested parties - in cluding employers and ,consumers - are to be equally free to choose, then it is clear that the employee may not arbitrarily set his own "fair wage" and demand a job at tha,t rate. Nor can an employer arbitrarily maintain for an ap preciable time a "fair wage" that is much higher or lower than is indicated by the competitive situa tion. If he tries to pay more than is justified by the productivity of his men and tools, he must face bankruptcy. And if he pays much below the prevailing level in that area, his workmen will quit. If freedom of choice is to be respected, then' the only fair wage is one determined by the purely voluntary process of competitive bargaining in a free market.

One may deplore the plight of the poor fellow in the unmechan ized plant; how will he use his skills? Indeed, it is unfortunate if he lacks the modern equipment to make his efforts most produc tive. But to suggest that he should receive more than is reflected in the price consumers will volun tarily pay for cups is to reject the ideal of competitive private en terprise, to turn away from free dom and to accept Marxian' philos ophy. That would be saying in effect that need, and not productivity or consumers' choice, de termines wages; and that once a person starts work at a certain job, he has a vested interest in that job and a right to receive more than he can earn in it. We may decry the decisions of con sumers in the market place if they reject the high-priced product of the hand-skilled employee, but the only substitute arrangement is to deny the consumer's right of choice by law, forcing him or some other taxpayer to subsidize the particular craftsman. Noone can have a right to such an arbitrary "fair wage," unless someone else is compelled to pay it.

So a "fair wage" is not some thing static which anyone can pick out of the air or arbitrarily define. It is not a fixed amount for every employee, but a figure that varies with each person and situation. The physical strength and technical skill of the employee may be highly important factors; but from this simple illustration it is clear that neither these, nor the man's needs, can' be the sole determinants of wages. The most important single factor - assuming consumers' choice of this product is prod ucti vity which proceeds from investment in tools. When this truth is recognized, it wholly displaces the fallacious idea of a right to a "fair wage." + Reprints, 2 cents each.

The Icarian Community of Nauvoo ETIENNE CABET, born at Dijon, France, in 1788, was one of many men of his time who were inspired by visions of a better world than that in which they lived. Soon after the French Revolution of 1830, Cabet's attacks on the gov ernment of Louis Philippe sent him into exile in England. There he fell under the influence of Thomas More's Utopia and the personal magnetism of Robert Owen, the English humanitarian who had founded a short-lived 40 communal settlement at New Har mony, Indiana, in the 1820's. In England, Cabet wrote his chart of the ideal society: Voyage et A venture de Lord William Car istal en Icarie, more commonly known as Voyage en Icarie. Cabet depicted an imaginary state in which a leader, lear, had set up a regime based on the denial of private property. In Icaria there was no money, no salaries, no taxes. Everyone ate the same food, lived in identical quarters, dressed in 1965 THE ICARIANS AT NAUVOO. 41 the .same clothes. Even the chil dren were taken from their par ents at an early age and reared and taught by designated mem bers of the community. ·Published in 1840, the book was translated into German, Spanish, and Eng lish in the next eight years.

Re-admitted to France, Cabet made plans to move his ideal so ciety from the printed page to reality. In December, 1847, he an nounced that Icaria would be founded on the banks of the Red River in Texas. There he bought several thousand acres of unim proved land. Eager recruits jumped at the chance to exchange poverty and frustration for the good life in the New World. The conditions were hard: each col onist must contribute 300 francs to the common fund, bring his own tools and clothing sufficient for two years. Nevertheless, 69 persons, all citizens of the perfect state, embarked at Le Havre for New Orleans on February 3, 1848. The voyage took nearly two months. They had· been told that there was easy access to their land: they discovered that they had to hack their way to it. At their destination they learned that their purchase had been en cumbered by impossible condi tions. Illness decimated them.

After several months they gave up and made their laborious way to Shreveport on the Red River, most of them hoping only to re turn to France. At this point Cabet, who had not accompanied the advance guard, arri ved. Soon afterward, three Icarians who had been sent north on an exploring expedition returned to report that on the Mississippi River, in the state of Illinois, stood the town of Nauvoo which the Mormons had aban doned two years earlier. Land and buildings could either be rented or purchased. Cabet quickly de cided that Nauvoo would be the site of Icaria. On March 1, 1849, 142 men, 74 women, and 64· children left New Orleans and headed upriver. (The advance guard had be.en augment ed by several later accessions.) On the trip twenty died of cholera. When they arrived at Nauvoo two weeks later, the colonists had 46,000 francs, but after buying land and houses (and renting more), and buying furniture, horses, animals, and implements, only 5,000 francs re~ained.

The State of Material Affairs Now· we turn to Cabet for an account of the Icarian community five years later-that part of his book covered by the "situation materielle" of his title. On July 1, 1855, the Icarians numbered 526, of whom 57 lived 42 THE FREEMAN September in a subsidiary group which had been established in Iowa. This number had been attained in spite of defections. Most of the de fectors were Germans who could not speak French and did not share Icarian principles. Even so, several of those who had left had signified desire to return. Cabet quoted a letter from one: "If there are those in the com munity who wish to leave, I tell them that they are mad; that they will never find what they will leave: Fraternity, Liberty, a life tranquil and without worry; for, while I have found good and gen erous hearts in the family of my wife, the community was still better." Lodging, the founder admitted, was still far from perfect, in part because of the shortage of ma sons. The colony needed stoves and lamps, candles and oil, and a horse and wagon to deliver coal and wood to each dwelling.

Various workshops were in operation: a sewing room for making dresses and men's cloth ing, a machine shop, forge, black smith's shop, tin shop, carpenter shop, and quarters for butchers, painters, coopers, printers, shoe makers, weavers, bakers, and var ious other trades. The list sounds impressive until one comes to Cabet's admission: "All these workshops are in their infancy, but the colony will develop and perfect them." The great need, it turns out, was for machines, and for storerooms for raw ma terials, tools, and finished prod ucts. This meant money, and mon ey, in Icaria, was in short supply. The inventory showed 14 horses, 25 oxen, between 400 and 500 hogs, and 20 cows which gave from 80 to 140 liters of milk a day. Fowls were scarce: so few that eggs were limited to the sick. Misfortunes had taken a heavy toll. Fire had destroyed the grain elevator, malt house, and laundry, all new buildings. Two valuable horses, three colts, and several cows and hogs had died. On the credit side the colony had built one dormitory on the temple square. It had purchased a service of faience and glass for the refec tory and had ordered another, of wrought iron, from Paris. The temple square had been planted with trees, shrubs, and flowers, and there, every Sunday after supper, 20 school children "made music in the open air."

Living Conditions Cabet described living condi tions in detail. Board-all ate in the common dining room - was nourishing and as varied as pos sible. In the morning, before go ing to work, the men were served a dram of whiskey with bread.

1965 THE ICARIANS AT NAUVOO 43 For lunch the men had soup, po tatoes or be~ns, or meat· left over from the night before. The· wo men, apparently, had to be satis fied with cafe au lait. The dinner menu bears out Cabet's assertion that the Icarians were better fed than the mass of working people elsewhere. "Several times a week we have thick soup and butcher's meat, sometimes mutton; in the winter fresh pork with sauer kraut, ham and other smoked pork; excellent fish once or twice a week depending on the season; various pastries, pota toes, sweet potatoes, beans, rice, butter, cheese, fresh vegetables of all kinds, radishes, cabbage, peas, carrots, turnips, onions, leeks, spinach; sometimes poultry; often, during the season, melons and watermelons. This year we will have an abundance of peaches, enough to eat three times a day for a month, either fresh or stewed. Next year we will have apples and other fruit, for we have planted fruit trees of all kinds, and we wiU even have all kinds of preserves. We do not yet have grapes but we will soon, for we are cultivating the vine."

"Icarian dress," Cabet declared, "must be suitable for cold and heat, in winter and summer, com fortable, economical, and conse quently simple, easy to make and repair, utilitarian, without luxury and adornment. All which tends toward luxury and coquetry is as contrary to our economic neces sity as to our principles of reason and morality." The colony had to make a large number of straw hats, and winter caps of cloth, leather, and fur. Boots had to be made for all outdoor workers, which meant practically everyone. This meant great expense, which could be diminished if money for a tannery could be obtained. In the meantime, some of the work men were turning out sabots, cheaper than boots and warmer in the winter. The colony had three schools; one for boys from six to sixteen, one for girls of the same age, and a third, a kind of nursery school, for children between three and six. The children had to eat and sleep at the older schools, which occupied a large double house. On Sunday, their parents could take them away between dinner and supper, and could see them at school any day of the week during recreation periods. The girls were taught women's work and the boys various trades, including farming. Cabet looked forward to the time when the schools could accommodate some American boarders who would receive in struction in the French language and Icarian principles.

The town had a library of 4,000 44 THE FREEMAN September volumes which received a number of French and American news papers. There was also a theater where every Sunday, in the pres enceof the entire community -the men, women, and children occupy ing separate sections - talented Icarians presented plays, sang, or recited. The choir - so the founder claimed - was much in demand for public fetes, and on one occasion had received $100 for singing at the dedication of a railroad. The colonists were fortunate enough to have a physician who was also a surgeon. He made daily visits to the infirmary and the schools and to those who were ill at home. The hospital, however, was so small it could care for men only. A midwife presided at all deliveries. Women and the girls of the school bathed in a large pond, the men and boys in the Mississippi. (What, one won ders, did they do in the winter?) 51gns of Discord So far, from Cabet's recital, one could conclude that affairs were going quite well in Icaria.

Yet he was careful to point out that the settlement at Nauvoo was not intended to be permanent. Much of the surrounding land was occupied and held at prices too high for the colony's means. The tracts that could be rented were so small that permanentim provements were impracticaL A location where the community could buy large holdings of land was indispensable. But where to go? Oregon, Texas, Kansas, Ne braska? All were too faraway, and some places were already too thickly settled. In 1852 they had decided upon Adams County, Iowa, 200 miles to the west. They pos sessed 4,000 acres there but did not have the resources really to develop their holdings. It would be necessary, there fore, to keep Nauvoo for some years as a place of apprenticeship, a school for the children, and a propaganda center. It would also be a place of reception for the many.new arrivals expected from France. When Cabet turned· to a dis cussion of the colony's morale, the true state of the venture came out.

"I am not satisfied," the founder asserted bluntly. "We do not un derstand our principles sufficiently and do not apply them fully; we do not have enough of unity and fraternity, order and economy, discipline in work, or fidelity to the conditions of admission." Cabet had a long list of specific complaints. Too many colonists tried to obtain special privileges, thus violating the principle of equality. Too many indulged in 1965 THE ICARIANS AT NAUVOO 45 slanders and calumnies. Some were lazy; some had violated the principle of communal property by secretly selling c10thingand furniture which belonged to the community. Many were careless and profligate; others regularly disregarded the rule which pro hibited hunting and fishing for pleasure. Intemperance Cabet discussed certain delin quencies at length. One of the rules of the colony enjoined tem perance, frugality, and simplicity. "But some, too many ... can be called free livers or sensualists.

r have seen no one suffer from hunger, but I have seen much of indigestion - a mother kill her children by too much to eat, and an old man kill himself by indulg ing to excess, against the advice of his friends, in melons during a cholera epidemic." Coquetry was a vice of the Old World capable of disrupting the family, yet wom en who called themselves Icari ans were bringing Paris styles to Nauvoo, while Icarian women in Paris were sacrificing their jewels for the advancement of the order. The use of tobacco, all Icarians knew, was strictly prohibited. Nevertheless, several members of the delegation sent to Keokuk to receive the last group to come from France greeted the new comers with pipe in mouth. Others, notably the Germans, had taken to their pipes only days after foreswearing them; still others could be seen smoking before their doors in the sight of the whole colony. "These abuses are grave,"

Cabet warned, "infinitely grave in my eyes, and I am convinced that it is absolutely necessary to stop them." The objections to tobacco could be· applied equally to strong drink, but with the difference that whis key was useful to workers when distributed regularly and with caution. Thus it was that in the morning, during summer, when the Icarians went to work at an early hour, they received a dram of whiskey with bread, and that between meals, in the hot weather, they were rationed whiskey di luted with water. In the winter outdoor workers, and the women assigned to the laundry, received a regular allowance. But there had been abuses, par ticularly in the shops on the out skirts of the town. Here workers had taken whiskey after each meal and oftener, and more of the critter than the rules allowed. Women had requisitioned whis key to make preserves for their own use, and there had been thefts of liquor from the storehouse.

"We even see, I say with regret 46 THE FREEMAN September and I blush for you, some drunk enness in a society pledged to temperance. I can cite only one case, but one case in Icaria is too many, much too many." The thirty-ninth condition of admission to the colony required the applicant to adopt, for reli gion, "the true Christianity, and for a creed, the practice of fra ternity." "In Icaria," Cabet ex plained, "we have neither super stitions nor ceremonies, and those who believe that it is absolutely necessary to deceive, to brutify, and to fanaticize the people in order to govern them [religion is the opiate of the masses?J must find very difficult the Icarian undertaking which has no other weapons than reason and truth. But, Icarians, how can you hesi tate to adopt for your religion the evangelical doctrine of fraternity, and for your creed the practice of that same fraternity?"

The forty-fifth, and final, con dition stipulated that the com munity would have complete con trol of the children. But almost all families had forgotten this commitment: they wished to re tain control of their children and to participate in all that con cerned them. Many seemed to think that they could prove their affection by encouraging the chil dren to develop a taste for fine clothing and choice foods; some even permitted them to hear talk which excited them to insubordi nation. "This," Cabet warned, "is one of the gravest impediments to the progress of the community." The Greatest Problem: Organized Opposition "Well, in summary, what is our morale situation?" the foun der asked in conclusion. "Isn't it evident that almost none of the conditions of admission is being fully complied with, that a certain number among us lack the Icarian qualities, that they neither know nor understand Icarian principles, and live in individual selfishness?"

The principal evil in the colony, Cabet charged, was a party hostile to communism, to the president, and to the faithful Icarians - a party which indulged in frequent, unsparing dissidence and a sys tematic opposition. The members of this group were not numerous - eight, ten, perhaps a few more but they were very bold. They scorned education and Icarian propaganda; they justified the use of tobacco and whiskey and hunting for pleasure; they en couraged insubordination in work. They spread the notion that the Icarians were slaves because they did not enjoy absolute liberty, and asserted that they had not trav eled 3,000 leagues to live in bondage. To them the faithful 1965 THE ICARIANS AT NAUVOO 47 were only flatterers moved by am bition, or informers and spies. Cabet ended with a pitiful per sonal confession. "I am old, overburdened by work, fatigue, and care, and I need rest. "In consequence of all these fatigues and agitations, at the end of a long discourse on my part in the General Assembly last December, I was struck, you will remember, by a paralytic stroke which, thanks to the care of our physician, did not keep me from going out the next morning. Since then, my eyes are no longer strong enough for me to read, nor is my hand steady enough for writ ing. I am, to a degree, ill and in pain.

"And if the systematic opposi tion to which I am subjected does not cease completely, if the party which has been formed· does not disband absolutely, if the major ity does not resolve to practice vigorously Icarian principles and obey Icarian laws, without con doning any violation, I will retire next February, and leave the safe ty of the colony up to you." The opponents of Cabet proved to be far more numerous and far stronger than he thought. In De cember, 1855, the faithful and the dissidents came to an open break over constitutional changes which the president demanded. Wran gling kept the community in tur moil for months, with Cabet losing ground steadily. Finally he de cided to lead his own followers to St. Louis. In the month of Octo ber, 1856, seventy-five men, forty seven women, and fifteen children left Nauvoo. The last contingent reached St. Louis on November 6. The next morning Cabet suf fered a cerebral hemorrhage, and died at 5 :00 a.m. on November 8.

The Icarians who had followed Gabet to St. Louis established a colony at nearby Cheltenham, which lasted until 1864. Those who had remained at Nauvoo stayed there until 1860, when they joined forces with the small group in Iowa. One group would break up only to be succeeded by another until 1895, when the common prop erty was turned over to a receiver for distribution among the few survi ving members. + 48 My THESIS may be stated very simply: central planning will even tually destroy individual liberty by concentrating all political power in one person or in a com mittee; furthermore, it will even tually end our prosperity by lay ing the dead hand of state con trol on the economy_ Now there are doubtless some advocates of central planning who are well aware that this would spell the doom of individual liberty, but the great majority of people un doubtedly believe that central planning is compatible with free dom and prosperity. It is to the latter that my words are directed.

Let me begin by noting that the three great intellectual traditions - classical liberalism, conserva tism, and whiggism -' converge at this point, in their opposition to state planning. In his monumental book, Human Action, Dr. Ludwig von Mises, a classical liberal, has this to say on central planning: The truth is that the alternative is not between a dead mechanism or a rigid automatism on one hand and conscious planning on the other hand. The alternative is not plan or no plan. The question is whose planning? Should each member of society plan for himself, or should a benevolent government alone plan Mr. Thornton is a businessman in Coving ton, Kentucky.

1965 CENTRAL PLANNING: SIDE DOOR TO SLAVERY 49 for them all? The issue is not auto matism versus conscious action,. it is autonomous action of each in dividual versus the exclusive action of the government. It is freedom versus government omnipotence. Laissez faire does not mean: Let soulless mechanical forces operate. It means: Let each individual choose how he wants to cooperate in the social division of labor; let the con sumers determine what the entre preneurs should produce. Planning means: Let the government alone choose and enforce its rulings by the apparatus of coercion and compul sion. (p. 726) Planning in England Writer and lecturer, Dr. Rus selI Kirk, a conservative, discusses central planning in his book,Be yond the Dreams of Avarice, the last half of which is devoted to de scribing the consequences of the planned economy in England: If all life is to be planned, how are the planners to be chosen? And who will guarantee their integrity?

And who will compensate for their errors? And what is to become of those delicate realities which do not fit conveniently into utilitarian plans - religion, the higher learning, the sense of beauty, the life 0:( the family and traditional community, the sense of historic continuity that distinguishes a nation from a mere mob of individuals? Few English men apprehended, at the inception of the welfare state, how its operation could not be confined to a few simple economic concerns, but nec essarily must extend further and further into the morality, the educa tion, the taste, and the little ameni ties of the life of every human be ing under its authority. (p. 215) Professor Friedrich A. Hayek, an old-fashioned Whig, argues persuasively against central plan ning in his essay, "Kinds of Order in Society" (New' Individualist Review, Vol. 3, No. 21). The per sons who favor central planning, he writes, fail to acknowledge their abysmal ignorance and, lack ing humility, believe themselves capable of creating com.plex social orders. But in none but the most simple kinds of social order is it conceivable that all activities are governed by a sin gle mind. And certainly nobody has yet succeeded in deliberately ar ranging all the activities of a com plex society; there is no such thing as a fully planned society of any de gree of complexity. If anyone did succeed in organizing such a society, it would not make use of many minds but would instead be alto gether dependent on one mind; it would certainly not be complex but very primitive - and so would soon be the mind whose knowledge and will determined everything. The facts which enter into the design of such an order could be only those which could be perceived and di gested by this· mind; and as only he could decide on action and thus 50 THE FREEMAN September gain experience, there could not be that interplay of many minds in which a lone mind can grow.

It is thus a paradox, based on a com plete misunderstanding of these connections, when it is sometimes contended that we must deliberately plan modern society because it has grown so complex. The fact is rather that we can preserve an order of such complexity only if we control it not by the method of "planning," i.e., by direct orders, but on the contrary aim at the formation of a spontaneous order based on general rules. It should be perfectly clear from the above quotations that it is in tellectually respectable to oppose central planning and that anti collectivists, with all their dif ferences, are as one in their con demnation of planning by a cen tral authority. I should now like to continue in my own words to mention briefly some of the fal lacies inherent in planning and to explain why central planning is not compatible with freedom and prosperity. Control Involved No individual or organization can plan unless control is exercised over the means required to achieve the chosen goal. Could a house wife plan a meal if she had no control over the food, the cooking utensils, kitchen appliances, utilities, dishes and silverware, kit chen and/or dining room furni ture - and the members of her family? Someone might attempt to argue that people will volun tarily submit to a master plan its brilliance will immediately be come apparent to one and all and no coercion will be necessary. But is this not a naive view of human nature? It is difficult enough to get some people to agree on the time of day! How can anyone think that a whole nation, or an appreciable part of it, will be agreeable to the plans of central authority?

Others might believe that cen tral planning need not interfere with the private lives of indivi duals. The master plan, they tell us, will be concerned only with production and the means of pro duction. But does not the experi ence of Nazi Germany and the communist states teach us that a central planning authority must necessarily direct such personal matters as where, when, how, and with whom one lives, works, plays, and worships? The master planner must not and will not tolerate contrary individuals who resist authority; everyone must submerge his individuality in the grand design. This is one side of the coin. On the other side, central plan ning will make some persons pros1965 CENTRAL PLANNING: SIDE DOOR TO SLAVERY 51 perous by granting them priv ileges at the expense of others. Central planning, like socialism, is not designed to produce more wealth but to redistribute wealth already produced, according to the whims of a central authority. The more serious the attempts to spread the wealth, the less wealth there'll be, of course, because many will cease producing any more than the minimum required to support themselves and their families. Also the "smart" folks will see that the way to riches is to please the authorities, instead of working harder or thinking of new goods and services and bet ter ways to produce them, that is, by pleasing customers.

Who Pays for Mistakes? Prudence and individual respon sibility are discounted under cen tral planning because when the master planner blunders, every one is hurt. When individuals or groups of individuals make wrong decisions, the consequences are pretty much confined to a relative ly small number of people. So, for example, if a farmer errs in his plans or is hurt by the weather, he and his family and employees are the only ones likely to suffer very much. But if the authority planning all agricultural produc tion makes a mistake, many will suffer; but not necessarily the planner himself who with the force of the state behind him will at least get first crack at what food there is. Hence, the master planner, unlike the individual man or company, does not incur the natural penalties for his mistakes. He becomes irresponsible, as will all men and women under a system which tells them what to do and consequently relieves them of the duty to exercise personal judg ment and accept personal responsi bility.

The individual under central planning is worse off than other wise because a balanced, dynamic economy is impossible under such a system. Labor and raw materials may be poured into the production of spaceships, but the result is a shortage of consumer goods. Once a master plan goes into effect new ideas, inventions, and techniques must be ignored or cast aside be cause they would upset "The Plan." Planning fixes a nation in the status quo. What, for instance, would have happened if a central authority had started planning the American economy in 1900? The planner would undoubtedly have based his schemes on an economy in which horses provided one of the chief means of trans portation. Five Year Plans and Ten Year Plans would have spelled out the production quotas for harness and saddle makers and 52 THE FREEMAN September carriage manufacturers, the con struction of blacksmith shops and liveries, and the operations of breeding farms.

But then, along comes Mr. Ford and others with the horseless car riage! Is it likely the planner would eagerly scrap old plans and make new ones based on novel and untried means of transportation and power? And if by some freak of human nature, he did, is it conceivable he could have actually planned the automobile industry (and many related industries) as we have it today, over a half -cen tury later? I doubt it. Leonard Read has demonstrated that no one can make even a pencil all by himself, so it certainly fol lows that no one person can make a car by himself. Hence, it is im possible even to conceive of any one or any group of persons plan ning the whole automobile indus try - not to mention the indus tries that are necessary to the manufacture and operation of automobiles, petroleum, rubber, glass, and so on. Planning impov erishes a nation, regardless of the good intention of the planners.

(Space does not permit a presen tation of "case histories" to support this contention, but the in terested reader is directed to two essays in the New Individuali,st Review [Vol. 3, No.2]: B. R. Shenoy, "The Results of Planning in India," and Michael F. Zarem ski, "Red China's Great Leap Backward.") It is not unfair to state that central planning has been tried and found wanting and to deny this is to shut one's eyes to history. Actually, if central planning could be perfect and absolute (which, of course, nothing of hu man design can be) society as we know it would disappear, and the poor souls remaining would have to endure a world such as that en visioned by George Orwell (1984), or David Karp (One), or Ayn Rand (Anthem). The more cen tral planning "succeeds," the more glaring are its errors and short comings and the more terrible its consequences. Francis Rabelais's Friar John asked how he could be expected to govern an abbey when he had so much trouble governing himself!

Such humility is rare today when many there are who believe them selves capable of directing the lives of their fellow citizens. Sur prisingly enough we heard a hum ble acknowledgement of this a few years ago by a U.S. Public Health Service official who declared that "a,fool can put on his own clothes better than a wise man can do it for him." (Quoted by Jane Jacobs in her excellent book, The Death and Life of Great American Cities).

1965 CENTRAL PLANNING: SIDE DOOR TO SLAVERY 53 Unanticipated Consequences The planners may be sincere and well-intentioned; the grounds on which they base their interven tions may appear to be logical. But even so, the interventions may produce unexpected and unwanted results. An urban renewal pro gram, for instance, may be set up with the idea of providing better housing for the poor, increasing property values, enriching the business community, providing jobs for the unemployed, and the like. The consequences-a shortage of housing, small businesses gone forever, graft on a colossal scale, an increased burden on the tax payer, and reduced tax revenues. Herbert Spencer said many years ago that no matter how leakproof the political design appears on paper, something not only unfore seen but unforseeable comes along to make a mess of it. In real life, we never deal with one thing in isolation; things are linked togeth er in subtle ways. Attempt to con trol merely the price of butter, and control quickly spreads from the dairy industry, to the trucking industry, to the corner grocer until the whole nation is affected.

One must also question the de terministic theory behind central planning which equates men and women to the inanimate pieces on a chessboard. Master planners, backed by state authority, may determine the conditions of a man's life, but they cannot determine the individual's response to these new conditions. Economic Calculation Impossible in the Socialist State Under master planning, as in any other socialist order, economic calculation is impossible - except by reference to the relatively free economies elsewhere in the world. The consequence is, of course, in efficient production and high prices, too much of one thing and not enough of another. The won ders of the market economy are destroyed when political decisions replace economic decisions. The central planner also forgets that what is an orderly, rational, reasonable arrangement to one person is to another person dis orderly, irrational, and unreason able (see de Jouvenel's essay, "Or der vs. Organization" in the Fest schrift honoring Mises, On Free dom and Free Enterprise). I, who am hardly able to dri ve a nail straight and cannot under any circumstances plane a board, sometimes shake my head at what appears to be utter confusion at a construction site. How the build ing ever gets up, I would not know, for everything is in such a mess.

But if I were put in charge and kept everything "neat," the build ing would never get finished! In 54 THE FREEMAN September brief, we are often tempted to pass judgment on things we know very little about. If I fall victim to this tempta tion as an individual, no great harm is done, but give me the au thority of a central planner and I can really cause trouble! The cen tral planner is not necessarily any worse than his fellow men; the trouble is that he has the power that no person can be trusted with under any circumstances. Mises acknowledged this truth in his re ply to someone who asked what he would do if he were king with authority to do whatever he wished. Said Mises, "I would abdi cate!" ~ The Fruits of Capitalism IN THE FEUDAL SOCIETY the economic situation of every individ ual was determined by the share allotted to him by the powers that be. The poor man was poor because little land or no land at all had been given to him. He could with good reason think - to say it openly would have been too dangerous - : I am poor because other people have more than a fair share. But in the frame of a capitalistic society the accumulation of additional capital by those who succeeded in utilizing their funds for the best possible provision of the consumers enriches not only the owners but all of the people, on the one hand by raising the marginal productivity of labor and thereby wages, and on the other hand by increasing the quantity of goods produced and brought to the market. The peoples of the economically back ward countries are poorer than the Americans because their countries lack a sufficient number of successful capitalists and entrepreneurs.

A tendency toward an improvement of the standard of living of the masses can prevail only when and where the accumula tion of new capital outruns the increase in population figures. The formation of capital is a process performed with the co operation of the consumers: only those entrepreneurs· can earn surpluses whose activities satisfy best the public. And the utilization of the once accumulated capital is directed by the anticipation of the most urgent of the not yet fully satisfied wishes of the consumers. Thus capital comes into existence and is employed according to the wishes of the consumers. LUDWIG VON MISES, The Elite under Capitalism THE Libertarian Movement 1~~ Propaganda ALEXANDEREVANOFF THE AVERAGE AMERICAN is not likely to have heard of the Liber tarian movement or what it rep resents and seeks to achieve. But, it seems to be clearly out of its embryo stage, prepared to exert an increasing influence. Though more quiet and less noticed than the earlier Fabian movement, its approach is also educational.

The Libertarians and the Fa bians are distinctly opposed philo sophically but their appeal, methods, and slow growth, as well as possible historical significance, may be said to bear certain simi larity. The Libertarian name was cho sen when it became clear to serious students of liberty that authoriProfessor Evanoff specializes in American Studies, Department of English, Indiana State University at Terre Haute. tar ian movements and ideas had pre-empted and perverted the free dom ideals for which the term liberal once stood. However, we are here concerned not so much with the theories or ideas of Liber tarians as with the propaganda or educational methods they use, par ticularly as outlined in a 183-page guidebook by Leonard E. Read entitled Elements of Libertarian Leadership, with the subtitle, "Notes on the Theory, Methods, and Practice of Freedom" (Foun dation for Economic Education, Irvington-on-Hudson, New York, 1962. $2.00) .

The Elements of Libertarian Leadership is intended to furnish a method and a guide toward "propagandizing" free market ideas. It is perhaps the most un expected and most unlikely book 55 56 THE FREEMAN September on techniques of propaganda ever concocted. The book is a kind of philosophy and rationale for avoid ing indoctrination. Low-grade purposes and goals may be served by indoctrination, but not the goal of freedom. Self-Improvement Comes First The first lesson for the embryo leader is that he seek to perfect himself rather than others. He who has gained a considerable knowledge of freedom will nat urally and magnetically draw those seeking a better under standing. The Libertarian point of view teaches that each individual is an end in himself and is a precious creation of God. A man's individu ality must always he respected, and the very condition of individ uality is difference or variation.

What the Libertarian most abhors is the attempt of authoritarians to make everyone of their fellow citizens over into their own image of virtue and righteousness. The ,Libertarian believes that education has a proper place in the nurture of freedom. But, even here, the chief emphasis is placed on educating the one each of us has the best chance of educating, that is: one's self. "Why," asks the author, "do so many regard as hopeless the broadening of the single consciousness over which the individ ual has some control while not even questioning their ability to stretch the consciousness of others over which they have no control at all." (p. 129) The answer, he believes, is as complex as the psy choanalysis of a dictator or the explanation of why so many peo ple dote on playing God. The na tion (as well as the world) must be saved by the salvaging of pri vate selves. The Libertarian lead er must keep his eye on his own perfection, never on repairing the shortcomings of others.

Fre~dom has to do with the "be coming," the evolution of the in dividual human being. "All that retards the development of the human potential is anti freedom. All that advances the individual's wholeness or completeness as a spiritual, moral, and wise human being is freedom in action." (p. 113ff.) Furthermore, the Libertar ian cannot use bad means to achieve good ends: "The more de structive the end in view, the more fitting are compulsive means, dis -integrative methods; the more creative the end in view, the more antagonistic to a solution are com pulsive methods and the more must reliance be placed on attrac tive, integrative forces." (p. 115) Education, or advancing other peo ple's understanding, cannot utilize the methods for selling soaps, 1965 THE LIBERTARIAN MOVEMENT AND ITS PROPAGANDA 57 drugs, alcohol, tobacco, autos, houses, or the something-for-noth ing ideas of current politics. Crea tive objectives, such as those of education, must resort to methods of "attraction" rather than com pulsion. But creative objectives are also in a series of levels. "The higher the level, that is, the more creative, the more must reliance be placed on the power of attrac tion." (p. 116) "Freedom is as high in the hierarchy of values as is the emergence of the in.dividual human spirit and must be so eval uated by those who w'ould advance an understandin.g of it." (p.117) Helping Others Help Themselves If we concede that advancing an understanding of freedom be longs to a high scale of values, the problem for the Libertarian "is nothing less than influencing others to expand their conscious ness, to increase their perceptions, to enlarge their cognitive powers."

(p. 117ff.) You will note the em phasis here is to help others to expand their consciousness, to in crease their perceptions, to en large their cognitive powers: their powers and not anyone else's. Each individual must do the job for himself; the job of expansion, increase, and enlargement of pow ers. What matters most is the ex pansion of consciousness. At the core, no Libertarian should feel that he knows all the answers to all the problems - or that any group or person has them. The Libertarian trusts in a Divine Wisdom which aims at some good evolutionary end. He trusts in the essential goodness and worth of the individual who must be encouraged to be' himself by realizing his own potential most completely. The Libertarian ·believes that his own champion ing of the free market ideas and the necessity of spontaneous individual action, individual choice, and individual decision is most worthwhile and necessary; but he is willing to permit spon taneous choice and decision to op erate even if the choice should go against him.

Now if one agrees that the Lib ertarian can best influence others by serving as an "exemplar," from what source must the expanding individual consciousness which would serve as exemplar derive its new acquisitions regarding truth and freedom? Through rev elation, through intuition, and through attunement with Infinite Consciousness, which draws man into its infinite orbit. While there is never any relaxation of the mag netic power of "Infinite Conscious ness," it does encounter hu man resistances such as arro gance, willfulness, know-it-allness. Some among us are less encrusted 58 THE FREEMAN September with such obstac1es to the mag netic pull of Infinite Conscious ness than others. "More suscept ible to this force, they experience with relative ease such of its re wards as insights and inspira tion." These persons are referred to as "intuitive" or "creative." The Libertarian leader must de velop intuitive powers; and yet, "for the most of us the expanding of consciousness, the increasing of perception, the developing of intuitive powers, takes a lot of doing." (p. 120) The Source of Wisdom The understanding of freedom, we are then led to believe, is of the same high level of quality, as well as of technique, as the mys tic's search for enlightenment from the Source. "First, there is The Source which the individual in the loneliness of his own soul can decide to heed and, to the ex tent of his ability, harmonize with." (p. 123) The selling or marketing method does not fit the freedom objective because the means would be destructive of the ends. "No," says the author, "the gaining of wisdom or the under standing of freedom is not to be imposed by man upon man, nor can it be. It is not marketed or sold." (p. 124) Whatever the Lib ertarian scholar has made his own is distinguished by its attracting quality. Truth is inher ently attractive, regardless of where it exists on our earth level or in Infinite Consciousness. "The power of attraction is not outgo ing but ingathering. It draws to itself whatever is susceptible to its force. That is at once its mer it and its limitation." (p. 125) The Libertarian must "ever lastingly concentrate on getting the ideas, making them available to those who seek, and let it go at that." But note again that the ideas are made available to those who seek. The initial response for the ideas must come from those seeking enlightenment. Those who need, want, and are ready for Lib ertarian teachings will seek them out, as well as be drawn to them magnetically, so to speak. "Ideas have a built-in communication sys tem of their own, which works very well unless short-circuited by offensive methods of propagandiz ing for them." The concept of keep ing the Libertarian philosophy secret unless others ask for it, is an important safeguard against aggressive or obtrusive behavior.

The paradox is this: "Secrets are rarely kept, and ideas whose time has come can never be con tained." Furthermore, "Ideas on liberty cannot be kept secret; we'll tell about them or burst. But we can hold in reserve the ideas we possess until other minds invite 1965 THE LIBERTARIAN MOVEMENT AND ITS PROPAGANDA 59 them in, invitations that are cer tain to come if the ideas be worthy." Only the seeker for truth and freedom can know when he is ready to sample what Libertarians champion. But they hold them selves in readiness. This is rem iniscent of Milton's line: "They also serve who only stand and wait." Five Booby Traps In the first chapter of Liber tarian Leadership are listed five erroneous approaches toward the objective of freedom which Lib ertarians must avoid: 1. The belief that freedom can be obtained by uncovering card carrying communists. This posi tion seems to hold that our ills originate in Moscow. But com munism originates as much in the minds of the American people' as in any other and is a worldwide phenomenon.

2. There are those who believe that loss of freedom stems from what is called "the ignorant mass es" and that the solution is sim ply to teach the man in the street that there is no such thing as "free lunch or some other such simplici ty that can be grasped as he passes a bulletin board or drowsily reads baby-talk literature in a barber chair." 3. There is a considerable num ber who would offer political action as their highest bid for free dom. Organize "right down to the precinct level" and elect "the right people" to public office. This is futile under present circum stances, as if freedom could be had by activating the present ab sence of understanding, so as to shift existing ignorance into high gear! 4. Another group believe that the price of freedom need not be much higher than the cost of beaming radio reports behind the iron curtain, and telling those slave peoples how luxuriously and splendidly we live in our freedom, our gadgetry, and our affluence.

5. Then there are those who feel that a "free world" can be assured if we tax our own people heavily enough to give to foreign govern ments and thus purchase friend ship in exchange for cash. It is as if subsidized relationships were the basis for freedom. High-Level Goals Cannot 8e Attained by Low-Level Means Man's essential task is self-im provement. The improvement of self, in a very real sense, is not really for the ultimate purpose of selfish-self-improvement so as to shine above others, or to have powers above others. Indeed, self improvement would be impossible if this were the aim. High-level goals cannot be attained by low60 THE FREEMAN September level means. The perfection of self is a matter of perfec;tion for use making of one's self a more perfect channel (vessel is the medieval or religious term usually employed) through which the evolutionary purpose of the Creator of men may function.

The leadership problem is not a mass reformation problem. If we had no way of remedying the present socialistic drift except as the "millions come to master the complexities of economic, social, poli tical, and moral philosophy, we would not be warranted in spending a moment of our lives in this undertaking - it would be like expecting the majority of Ameri cans to compose symphonies." (p. 89) It is the nature of politics and political leadership that it can only reflect influential opinion. "There is no way to improve the quality of political leadership ex cept as we lift the level of influen tial opinion - and this is an edu cational task." Above all, implies Mr. Read, the educational methods of Liber tarian propaganda should be con sistent with the voluntary ex change of the market place. ~ The Individual Mind ACTS AND IDEAS that lead to progress are born out of the womb of the individual mind, not out of the mind of the crowd. The crowd only feels: it has no mind of its own which can plan.

The crowd is credulous, it destroys, it consumes, it hates, and it dreams - but it never builds. It is one of the most profound and important of exact psychological truths that man in the mass does not think but only feels. The mob functions only in a world of emotion. The demagogue feeds on mob emotions and his leadership is the leadership of emotion, not the leadership of intellect and progress. Popular desires are no criteria to the real need; they can be determined only by deliberative considera tion, by education, by constructive leadership. HERBERT HOOVER, American Individualism A REV lEW E RI S NOTE BOOK J a H N C HAM BER LA I N Thmkof That1 SOMEWHERE in the works of George Santayana there is a pas sage about the inherent expan siveness of· the universe if only things will get out of the way of each other. "Things," of course, are recalcitrant. But man, the self starter, is natively endowed with some faculties that enable him to get around things. The problem is to let the kinetic energy released by the self-starters flow into all those interacting creativities that make human society different from the beehive or the anthill, where all things go by rote.

The justification of the free market is that it lets things get out of the way of each other. I don't know whether Santayana ever knew Leonard E. Read, but he could have had him in mind when he was speculating upon the pos sible expandability of the universe. Leonard Read, as every Founda tion for Economic Education afi ciona,do knows, takes economics in his stride as a subdivision in the larger study of the individual lib erty that enables man to fulfill his supreme purpose in life, which, in Readian terms, is "'to hatch,' to emerge, to evolve." His latest book, The Free Market and Its Enem,y (Foundation for Economic Educa tion, $1.00 paper, $1.75 cloth), is not economics as our Galbraiths and Hellers know it, a deduction from the manipulation of what might be called macro-statistics. Instead, it is a philosophical in quiry into the nature of the mira cle that can bring a Brahms con certo to your bedside by the flick of a switch at three in the morning of a sleepless night. The devotees of macro-economics, or macro-sta tistics, might be able to tell you how many men are employed by Zenith Radio or whatever in manu facturing the gadgets that bring Brahms to you across ether or at mosphere. But this sort of econom ist is forever being deflected from a contemplation of the prime source of the Brahms-plus-Zenith61 62 THE FREEMAN September Radio phenomenon: the intermesh ing of what Leonard Read calls the thousand-and-one individual "think-of-thats" that bring the original composition of a concerto, the original inventions of electron ics, the original creation of a man ufacturing and marketing organi zation, and the original predilec tions and training of a potential customer's taste together to help a sleepless man invite his soul at three o'clock in the morning.

Who Could Have Planned It? The freedom to be a self-starter had to exist in a bewilderingly complex number of cases to enable a sleepless Leonard Read to sub stitute Brahms for a nembutal tab let. Who, by whatever magic of "planned parenthood," could have matched the genes to make a Johannes Brahms? Who could have planned the potential genius's mu sical education? What government bureau could have supplied Edison and Marconi and the early hams of radio, the proprietors of KDKA in Pittsburgh or whoever, with the clues and incentives and materials that have resulted in making Brahms available to anybody for no more than the flick of a switch? The answer is that nobody could have thought all of this out in ad vance, or even a tenth part of it. It had just to "happen." Leonard Read's conception of "economic education" is to per suade men to have the courage to say "I don't know." Only the "know-it-all" would presume to "plan" musical satisfaction for all tastes at all times. The "know-it all" psychosis is what nourishes the socialism which, in Read's definition, "amounts to the frus tration of willing exchange by people who are unaware of how little they know."

True enough, the "know-it-all" can get away with his presump tiveness for a while. He can extort billions by taxation to pay for the moon machinery, foreign aid, so cial security, the razing and re building of defunct downtown areas, the establishment of busi nesses in the mountain coves of Appalachia. Scientists can be hired to make moon machinery, for, as Mr. Read puts it, "people will as readily sell their ingenuity for a coercively collected dollar as for a voluntarily subscribed dollar." But there is a hidden toll in all this. When big money is only available for moon machinery, the "think-of-thats" that might have gone into a thousand other lines of endeavor are necessarily aborted. Professors of science who go to Washington become unavail able to their students in Cam bridge, Massachusetts, or Berke ley, California. We get an ele phantiasis in one direction, a con1965 THINK OF THAT 63 dition of multiple sclerosis in another. Potential Edisons are, so to speak, lured into spending their lifetimes on electric power when they might be going on into mo tion pictures. The "think-of-thats"

don't ramify: moon machinery precludes terrestrial or undersea machinery to the extent that dol lars and time and energy are de flected by force into a single minded crash program established by the "know-it-all" psychosis. The Theory to Fit the Practice We have always, of course, had our "know-it-alIs." The desirabil ity of a free market has always been a matter of common -sense observation, but it wasn't until the late eighteenth and the nine teenth centuries that systematic thinkers had the temerity to go up against the "planning" mind in providing a theoretical under pinning for the common sense of the man in the street. Mr. Read honors three men in particular for contributing to his own "economic education." He cites Adam Smith for his "development of the spe cialization thesis" in 1776, Fred eric Bastiat for his "description of what he termed 'an absolute principle' : freedom in transac tions" in 1840, and Carl Menger for his discovery in 1870 that "the value of a good or service is de termined not objectively by cost of production, but subjectively by what others will give in willing exchange." Mr. Read would, pre sumably, be willing to admit that J evons in England and John Bates Clark in the United States were codiscoverers with Menger in value theory; he cites Menger much in the way that evolution ists cite Darwin, not the codis coverer Wallace, when they are passing out the credit for the the ory of natural selection in biology.

We need symbols when we talk about credits for "think-of-thats," and Mr. Read's symbols are as good as yours or mine just so long as the principles are clear. No One Knows the Future The student of liberty, says Mr. Read, must not be trapped by the type of "know-it-all" who demands an "absolute" projection of what might happen if the government, say, were to get out of the post office business. Nobody knows what might happen, for competi tion in the private mail-carrying business would be open to a myr iad of "think-of-thats." All we know for certain is that "voice delivery," by private companies, has improved to the point where it is delivered at the speed of light at any distance on earth, and all at a steadily decreasing cost to the customer. The socialized de livery of the written word, on the 64 THE FREEMAN September other hand, is not as good as it used to be, and since 1932 the Post Office has accumulated "an ac knowledged deficit of $10 billion."

Mr. Read can't guarantee that pri vate delivery of the mail would take any specific turn, but the pre sumption is that what has been done for voice delivery could also be done for delivery of the written or printed word. Freedom, in sum, promotes an incomprehensible order - incomprehensible, that is, to those who demand that all things be known in advance. On the other hand, the "planner" actually produces a condition under which the Cuban in Havana is starved for meat and the Chinese in Red China must escape to Hong Kong if he is to hope for his own betterment. They call this state of affairs "order" in Havana and in Peking, but to L.eonard Read it is an apt descrip tion of chaos. ~ Leonard E. Read THE ASPIRING LIBERTARIAN, if he has made the first important step in progress, understands that he does not know how to mastermind the life of a single human being. He concedes that there is an order of Creation over and beyond his own mind, that this order works in diverse and wondrous ways through billions of minds and that he should not in any way abort these miracles. This, however, does not make him a know-nothing.

Even though, from his experience, he does not know what will happen, he gains a faith that miracles will happen if creative energies be free to flow.

Henry Hazlitt 3 Leonard E. Read 11 F. A. Harper 15 John C. Sparks 26 Edmund A. Opitz 31 Harry L. Smith 41 Clarence B. Carson 44 OCTOBER 1965 Back to Gold? . Knowing that We Know Not . Can Wage and Price Controls Cure Inflation? Impatience Undermines Freedom . The Liberating Arts . Gulliver and the Planners . The Flight from Reality: 13. The "Democratic" Elite . Books: The Independent Sector . Other Books . John Chamberlain 59 62 COAST FEDERALSAVINGS AND LOAN ASSOCIATION Department F, 9th & Hill Sts., Los Angeles, California 90014 5·112A STREET _ CITY STATE _ o Please send me a FREE copy of "What's Inflation?" o I enclose my check (or money order) for $ _ o Please open a Coast Federal Savings accounto Individual o Joint in the name(s) of NAME _ ~ ~ COAST FEDERAL SAVINGS ~} AND LOAN ASSOCIATION .~~ ];I' Perhaps the title should have been "Forward to Gold," as Henry Hazlitt examines the pros and cons of the money question p. 3 '" A further wor~ on behalf of humil ity in the approach to learning ....p. 11 '" The only cure for high prices, ac cording to "Doc" Harper, is for the government to stop printing "money"

........ p. 15 '" Besides humility, the understand ing and practice of freedom calls for more patience than many of us have mustered to date p. 26 "" The Reverend Mr. Opitz explains how a Liberal Arts course can provide education for privacy - and personal growth , p. 31 ];I' In his travels, Gulliver, too, en countered central planning and warned of its consequences ....p. 41 "" Dr. Carson contends in this chap ter that the notion of a "democratic elite" is one of the more serious as pects of The Flight from Reality ........ p.44 V" John Chamberlain shares author Richard Cornuelle's hope for Reclaim ing the American Dream-voluntarily ........ p. 59 1'" Other books reviewed are Mer chants Make History by Ernst Sam haber and University Economics by Armen Alchian and William Allen ........ p.62 Anyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

OCTOHER 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No. 10 Pres'ident, Foundation for Economic Education Manag1ing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited government, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone-to reprint any article in whole or in part, providing customary credit is given, except "The Flight from Reality." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

HENRY HAZLITT IN FEBRUARY of this year Presi dent de Gaulle of France startled the financial world by calling for a return to an international gold standard. American and British monetary managers replied that he was asking for the restoration of a world lost forever. But some eminent economists strongly' en dorsed his proposal. They argued that only a return to national cur rencies directly convertible into gold could bring an end to the chronic monetary inflation of the last twenty years in' nearly every country in the world. What is the gold standard? How Mr. Hazlitt is the well-known economic and financial analyst, columnist, lecturer, and au thor of numerous books, including What You Should Know About Inflation (Princeton, N. J.: D. Van Nostrand, 1960; second edition, 1965). did it come about? When and why was it abandoned? And why is there now in many quarters a strong demand for its restoration?

We can best understand the an swers to these questions by a glance into history. In primitive societies exchange was conducted by barter. But as labor and pro duction became more divided and specialized, a man found· it hard to find someone who happened to have just what he wanted and hap pened to want just what he had. So people tried to exchange their goods first for some article that nearly everybody wanted so that they could exchange this article in turn for the exact things they happened to want. This common commodity be4 THE FREEMAN October came a medium of exchange money. All sorts of things have been used in human history as such a common medium of exchange cattle, tobacco, precious stones, the precious metals, particularly silver and gold. Finally gold be came dominant, the "standard" money. Gold had tremendous advan tages. It could be fashioned into beautiful ornaments and jewelry.

Because it was both beautiful and scarce, gold combined very high value with comparatively little weight and bulk; it could there fore be easily held and stored. Gold "kept" indefinitely; it did not spoil or rust; it was not only durable but practically indestruc tible. Gold could be hammered or stamped into almost any shape or precisely divided into any desired size or unit of weight. There were chemical and other tests that could establish whether it was genuine. And as it could be stamped into coins of a precise weight, the val ues of all other goods could be exactly expressed in units of gold. It therefore became not only the medium of exchange but the "standard of value." Records show that gold was being· used as a form of money as long ago as 3,000 B.C. Gold coins were struck as early as 800 or 700 B.C. One of gold's very advantages, however, also presented a problem. Its high value compared with its weight and bulk increased the risks of its being stolen. In the sixteenth and even into the nine teenth centuries (as one will find from the plays of Ben Jonson and Moliere and the novels of George Eliot and Balzac) some people kept almost their entire fortunes in gold in their own houses. But most people came more' and· more into the habit of leaving their gold for safekeeping in the vaults of goldsmiths. The goldsmiths gave them a receipt for it.

The Origin of Banks Then came a development that probably no one had originally foreseen. The people who had left their gold in a goldsmith's vault found, when they wanted to make a purchase or pay a debt, that they did not have to go to the vaults themselves for their gold. They could simply issue an order to the goldsmith to pay over the gold to the person from whom they had purchased something. This second man might find in turn that he did not want the actual gold; he was content to leave it for safekeeping at the goldsmith's, and in turn is sue orders to the goldsmith to pay specified amounts of gold to still a third person. And so on. This was the origin of banks, and of both bank notes and checks.

1965 BACK TO GOLD? 5 If the receipts were made out by the goldsmith or banker himself, for round sums payable to bearer, they were bank notes. If they were orders to pay made out by the legal owners of the gold themselves, for varying specified amounts to be paid to particular persons, they were checks. In either case, though the ownership of the gold con stantly changed and the bank notes circulated, the gold itself almost never left the vault! When the goldsmiths and banks made the discovery that their customers rarely demanded the actual gold, they came to feel that it was safe to issue more notes promising to pay gold than the actual amount of gold they had on hand. They counted on the high unlikelihood that everybody would demand his gold at once. This practice seemed safe and even prudent for another reason. An honest bank did not simply is sue more notes, more IOU's, than the amount of actual gold it had in its vaults. It would make loans to borrowers secured by salable assets of the borrowers. The bank notes issued in excess of the gold held by the bank were also secured by these assets. An honest bank's assets therefore continued to re main at least equal to its liabil ities.

There was one catch. The bank's liabilities, which were in gold, \vere all payable on demand, with out prior notice. But its assets, consisting mainly of its lo.ans to customers, were most of them pay able only on some date in the fu ture. The bank might be "solvent" (in the sense that the value of its assets equaled the value of its liabilities) but it would be at least partly "illiquid." If all its depos itors demanded their gold at once, it could not possibly pay them all. Yet such a situation might not develop in a lifetime. So in nearly every country the banks went on expanding their credit until the amount of bank-note and demand deposit liabilities (that is, the amount of "money") was several times the amount of gold held in the banks' vaults. The Fractional Reserve In the United States today there are $11 of Federal Reserve notes and demand-deposit liabilities Le., $11 of money - for every $1 of gold.

Up until 1929, this situation a gold standard. with only a "frac tional" gold reserve - was ac cepted as sound by the great body of monetary economists, and even as the best system attainable. There were two things about it, however, that were commonly overlooked. First, if there was, say, four, five, or ten times as much note and deposit "money"

6 THE FREEMAN October in circulation as the amount of gold against which this money had been issued, it meant that prices were far higher as a result of this more abundant money, per haps four, five, or ten times high er, than if there had been no more money than the amount of gold. And business was built upon, and had become dependent upon, this amount of money and this level of wages and prices. Now if, in this situation, some big bank or company failed, or the prices of stocks tumbled, or some other event precipitated a collapse of confidence, prices of commodities might begin to fall; more failures would be touched off; banks would refuse to renew loans; they would start calling old loans; goods would be dumped on the market. As the amount of loans was contracted, the amount of bank notes and deposits against them would also shrink. In short, the supply of money itself would begin to fall. This would touch off a still further decline of prices and buying and a further decline of confidence.

That is the story of every major depression. It is the story of the Great Depression from 1929 to 1933. From 800m to Slump What happened in 1929 and after, some economists argue, is that the gold standard "collapsed." They say we should never go back to it or depend upon it again. But other economists argue that it was not the gold standard that "col lapsed" but unsound political and economic policies that destroyed it. Excessive expansion of credit, they say, is bound to lead in the end to a violent contraction of credit. A boom stimulated by easy credit and cheap money must be followed by a crisis and a slump. In 1944, however, at a confer ence in Bretton Woods, New Ham shire, the official representatives of 44 nations decided - mainly under the influence of John Maynard Keynes of Great Britain and Har ry Dexter White of the United States - to set up a new interna tional currency system in which the central banks of the leading countries would cooperate with each other and coordinate their currency systems through an In terna tional Monetary Fund. They would all deposit "quotas" in the Fund, only one-quarter of which need be in gold, and the rest in their own currencies. They would all be entitled to draw on this Fund quickly for credits and other currencies.

The United .States alone explic itly undertook to keep its cur rency convertible at all times into gold. This privilege of converting their dollars was not given to its 1965 BACK TO GOLD? 7 own citizens, who. were forbidden to hold gold (except in the form of jewelry or teeth fillings); the privilege was given only to for eign central banks and official in ternational institutions. Our gov ernment pledged itself to convert these foreign holdings of dollars into gold on demand at the fixed rate of $35 an ounce. Two-way convertibility at this rate meant that a dollar was the equivalent of one-thirty~fth of an ounce of gold. The other currencies were not tied to gold in this direct way. They were simply tied to the dol lar by the commitment of the var ious countries not to let their cur rencies fluctuate (in terms of the dollar) by more than 1 per cent either way from their adopted par values. The other countries could hold and count dollars as pa.rt of their reserves on the same basis as if dollars were gold.

International Monetary fund Promotes In"ation The system has not worked well. There is no evidence that it has "shortened the duration and les sened the degree of disequiUbri urn in the international balances of payments of members," which was one of its six principal declared purposes. It has not maintained a stable value and purchasing power of the currencies of individual members. This vital need was not even a declared purpose. In fact, under it inflation and depreciation of currencies have been rampant. Of the 48 or so national members of the Fund in 1949, practically all except the United States devalued their cur rencies (Le., reduced their value) that year following devaluation of the British pound from $4.03 to $2.80. Of the 102 present mem bers of the Fund, the great ma jority have either formally de valued since they joined, or al lowed their currencies to fall in value since then as compared with the dollar.

The dollar itself, since 1945, has lost 43 per cent of its pur chasing power. In the last ten years alone the German mark has lost 19 per cent of its purchasing power, the British pound 26 per cent, the Italian lira 27 per cent, the French franc 36 per cent, and leading South American curren cies from 92 to 95 per cent. In addition, the two "key" cur rencies, the currencies that can be used as reserves by other coun tries-the British pound sterling and the U. S. dollar - have been plagued by special problems. In the last twelve months the pound has had to be repeatedly rescued by huge loans, totaling more than $4 billion, from the Fund and from a group of other countries.

8 THE FREEMAN October Balance of Payments The United States has been harassed since the end of 1957 by a serious and apparently chronic "deficit in the balance of pay ments." This is the. name given to the excess in the amount of dol lars going abroad (for foreign aid, for investments, for tourist expenditures, for imports, and for other payments) over the amount of dollars coming in (in payment for our exports to foreign coun tries, etc.). This deficit in the balance of payments has been run ning since the end of 1957 at a rate of more than $3 billion a year. In the seven-year period to the end of 1964, the total deficit in our balance of payments came to $24.6 billion. This had led, among other things, to a fall in the amount of gold holdings of the United States from $22.9 billion at the end of 1957 to $13.9 billion now - a loss of $9 billion gold to foreign countries. Other changes have taken place.

As a result of the chronic deficit in the balance of payments, for eigners have short-term claims on the United States of $27.8 billion. And $19 billion of these are held by foreign central banks and in ternational organizations that have a legal right to demand gold for them. This is $5 billion more gold than we hold altogether. Even of the $13.9 billion gold that we do hold, the Treasury· is still le gally obliged to keep some $8.8 billion against outstanding Fed eral Reserve notes. This is why officials and econo mists not only in the United States but all over the Western world are now discussing a world mon etary reform. Most of them are putting forward proposals to in crease "reserves" and to increase "liquidity." They argue that there isn't enough "liquidity" - that is, that there isn't enough money and credit, or soon won't be - to con duct the constantly growing vol ume of world trade. Most of them tell us that the gold standard is outmoded. In any case, they say, there isn't enough gold in the world to serve as the basis for national currencies and interna tional settlements.

The Minority View But the advocates of a return to a full gold standard, who though now in a minority include some of the world's most distin guished economists, are not im pressed by these arguments for still further monetary expansion. They say these are merely argu ments for still further inflation. And they contend that this further monetary expansion or inflation, apart from its positive dangers, would be a futile means even of 1965 BACK TO GOLD? 9 achieving the ends that the expan sionists themselves have in mind. Suppose, say the gold-standard advocates, we were to double the amount of money now in the world. We could not, in the long run, conduct any greater volume of business and trade than we could before. For the result of in creasing the amount of money would be merely to increase cor respondingly the wages and prices at which business and trade were conducted. In other words, the result of doubling the supply of money, other things remaining unchanged, would be roughly to cut in half the purchasing power of the currency unit. The process would· be as ridiculous as it would be futile. This is the sad lesson that inflating countries soon or late learn to their sorrow.

The Great Merit of Gold The detractors of gold com plain that it is difficult and. costly to increase the supply of the metal, and that this depends upon the "accidents" of discovery of new mines or the invention of bet ter processes of extraction. But the advocates of a gold standard argue that this is precisely gold's great merit. The supply of gold is governed by nature; it is not, like the supply of paper money, sub ject merely to the schemes of dem agogues or the whims of politicians. Nobody ever thinks he has quite enough money. Once the idea is accepted that money is some thing whose supply is determined simply by the printing press, it becomes impossible for the poli ticians in power to resist the con stant demands for further infla tion. Gold may not be a theo .. retically perfect basis for money; but it has the merit of making the money supply, and therefore the value of the monetary unit, in dependent of governmental ma nipulation and political pressure.

And this is a tremendous merit. When a country is not on a gold standard, when its citizens are not even permitted to own gold, when they are told that irredeem able paper money is just as good, when they are compelled to accept payment in such paper of debts or pensions that are owed to them, when what they have put aside, for retirement or old-age, in sav ings banks or insurance policies, consists of this irredeemable pa per money, then they are left without protection as the issue of this paper money is increased and the purchasing power of each unit falls; then they can be completely impoverished by the political de cisions of the "monetary mana gers." I have just said that the dollar itself, "the best currency in the world," has lost 43 per cent of its 10 THE FREEMAN October purchasing power of twenty years ago. This means that a man who retired with $10,000 of savings in 1945 now finds that that capital will buy less than three-fifths as much as it did then.

But Americans, so far, have been the very lucky ones. The. situ ation is much worse in England, and still worse in France. In some South American countries practi cally the whole value of people's savings - 92 to 95 cents in every dollar - has been wiped out in the last ten years. Not a Managed Money The tremendous merit of gold is, if we want to put it that way, a negative one: It is not a man aged paper money that can ruin everyone who is legally forced to accept it or who puts his confi dence in it. The technical criti cisms of the gold standard become utterly trivial when compared with this ~ingle merit. The ex perience of the last twenty years in practically every country proves that the monetary managers are the pawns of the politicians, and cannot be trusted. Many people, including econ omists who ought to know better, talk as if the world had already abandoned the gold standard.

They are mistaken. The world's currencies are still tied to gold, though in a loose, indirect, and precarious way. Other currencies are tied to the American dollar, and convertible into it, at definite "official" rates (unfortunately subject to sudden change) through the International Monetary Fund. And the dollar is still, though in an increasingly restricted way, convertible into gold at $35 an ounce. Indeed, the American problem today, and the world problem to day, is precisely how to maintain this limited convertibility of the dollar (and hence indirectly of other currencies) into a fixed quantity of gold. This is why the American loss of gold, and the growing claims against our gold supply, are being viewed with such concern. The $35 Question The crucial question that the world has now to· answer is this: As the present system and present policies are rapidly becoming un tenable, shall the world's curren cies abandon all links to gold, and leave the supply of each nation's money to be determined by politi cal management, or shall the world's leading currencies return to a gold standard - that is, shall each leading currency be made once again fully convertible into gold on .demand at a fixed rate?

Whatever may have been the shortcomings of the old gold stand1965 BACK TO GOLD? 11 ard, as it operated in the nine teenth and the early twentieth cen tury, it gave the world, in fact, an international money.When all lead ing currencies were directly con vertible into a fixed amount of gold on demand, they were of course at all times convertible into each other at the equivalent fixed cross rates. Businessmen in every country could have confidence in the currencies of other countries. In final settlement, gold was the one universally acceptable curren cy everywhere. It is still the one universally acceptable commodity to those who are still legally al lowed to get it. Instead of ignoring or deplor ing or combating this fact, the world's governments might start building on it once more. ~ KNOWING THAT WE KNOW NOT LEONARD E. READ A QUESTION that plagues numer ous libertarians is: "Why does the free market, private property, limited government way of life find so little acceptance? Isn't it because it's so hard to under stand ?"

The right answer, it seems, is a qualified "yes." For it is ex tremely difficult to understand that there is a method of social and economic cooperation that doesn't require a lot of knowledge on the part of anyone person. It isn't easy to grasp the fact that there is a wonderful way of life, suited to humanity as it is - that is, made to order for all of us, no one of whom knows very much. The fact is, the free market can no more be understood than can a living tree or Creation itself. But like the sun's energy, or even life, it is possible to gain an awareness of its miraculous per formances and, becoming thus aware, treat this system of dis coveries and willing exchanges with the intelligent solicitude of any other wondrous blessing. We can know of the free market; we cannot understand it! We know of the Giant Sequoia, for instance. But we do not pre12 THE FREEMAN October tend that we understand this won der of Nature. We readily concede the tree to be a product of Crea tion, and let it go at that. True, scientists have noted that it is en ergy in particular atomic and mol ecular configurations, but under standing fades into nothingness when it comes to comprehending what atoms and molecules really are and how they coales'ce to mani fest themselves in a tree. But we do not have to understand trees in order that our lives may be en riched by their existence.

The free market is just as in comprehensible to our finite minds as any other manifestation of Creation. The artifacts by which we survive and live and enjoy our selves - each and all of them, from the bread we eat to Grand Opera - represent the culminations of trillions upon trillions of creativi ties and discoveries which have been flowing through the minds of men and interacting in complex exchange ever since the dawn of human consciousness. These pro ceed from the same Source as do the mysteries of Nature; they are spiritual forces - in depth! We will never really understand the free market, but it is our good 1 For an explanation of this concept, see Chapter II, "The Miraculous Market" in my The Free Market and Its Enemy (Irvington-on-Hudson, N. Y.: Founda tion for Economic Education, 1965), $1.00 paper; $1~75 cloth. fortune that the market will confer its blessings on us regardless that is, if we do not destroy it. Be it remembered that man, while un able to create life, has the power to destroy not only life but also the life-giving forces with which Creation has endowed him ..

The Marlcet Process to Be Talcen on faith One of these important life-giv ing forces is the market process of voluntary exchange that affords abundance to millions of individ uals where thousands previously struggled for subsistence. The process functions without any overall masterminding; indeed, centralized, dictatorial planning is its nemesis! But if there be no awareness of or faith in this fact, man will go beyond his com petency; he will interfere and disrupt the market and, by so do ing, deny himself and countless others its benefits and blessings. If he doesn't know that he knows not, he will, as the saying goes, "throw a monkey wrench in the machinery." Man's misguided and coercive intervention can and will destroy this vital life force. Man, with an exception now and then, has been willing to concede the creation of life and the cosmos to Creation. Some things in Na ture he has had no part in origi nating; he doesn't know how they 1965 KNOWIN'G THAT WE KNOW NOT 13 came about; a hand other than his own accounts for their mak ing; he accepts them as the en vironmental structure in which he finds himself; and, important to this explanation, he does not de mand that he understand how to make a tree, for example, before enjoying its shade or using its trunk to build his home. In a word, man seems to think it is all right not to understand miracles he has had no part in bringing about.

Rejecting the Mysterious But let mankind begin to par ticipate in creation, that is, to have an infinitesimal part in an occasional miracle or discovery, and contemporaneous .individuals will tend not to accept the free market way of life - me·rely be cause they cannot understand how such "chaos" could account for the artif acts by which they exist. The artifacts by which you and I survive and live give the appe.ar ance of flowing from our own hands, even though no one of us can make a single one of them. 2 Power and light, TV sets, autos, computers, dishwashers, milking machines, ball point pens, reape.rs, or whatever, seem to be of our 2 See Chapter XI, "Only God Can Make a Tree - Or a Pencil," in my Anything That's Peaceful (Irvington-on Hudson, N.Y.: Foundation for Economic Education, 1964), $2.50 paper; $3.50 cloth. own doing. The illusion that we ourselves are the authors of these artifacts, coupled with the belief that we should understand what we originate, causes many per sons to reject the free market. It is this illusion that lies at the root of the trouble. Why, they seem to ask, should we embrace something we cannot comprehend?

The reali ty ? The source of these artifacts by which we live is not contemporaneous man. At best, you and I do no more than to add a discovery or a creativity, now and then, to an enormous body of antecedent discoveries and crea tivities extending back through the millennia to the harnessing of fire. These trillions of discoveries and creativities, interacting in complex exchange, over many thousands of years, and finding their way through the porosity of restrictive and coercive inter ventions, taboos, edicts, and laws constitute the free market. It is a mistake to think of the free mar ket as anything less than this in comprehensible performance in depth. The Nub Now we come to the nub of the matter: When people are unaware of the free market as it really is, they are prone to tamper with what they thoughtlessly miscon ceive it to be. They will tend to 14 THE FREEMAN October reject a performance they cannot understand in favor of a system whose specifications can be framed within their own dim awareness.

Put another way, they are disin clined to place any faith in any thing that is "over their heads." The free market being beyond their ken, they embrace what comes within their ken: price and production controls, taking from some and giving to others, diluting the medium of exchange, and sim ilar perversions. In short, they contri ve a planned economy, dic tatorially managed - a way of Iife shallow enough for them to grasp. Assume that man had the same attitude toward Creation as mani fested in Nature as most men now have toward Creation as manifested in the artifacts by which man lives and survives. Wha t would he do in this case? Not understanding or being able to make a tree, he would first ob tain all of a tree's chemical com ponents. He would next paste these together in the shape of a tree. He would then paint the parts to look like a tree. So skilled is the artistry of man that the visual resemblance would be remarkable.

But there would be no functioning root structure, no osmotic pres sure attending to sap flow; indeed, there would be no sap. Further, there would be no photosynthesis, or any chemical transformations, or any life! And as to its useful ness - well, nothing beyond an art gallery. What a grotesquerie! The trillions of varied creativi ties, flowing through space and time, can never be synthesized to the point where the whole com plex can be understood by any single person. Understanding is more than difficult; it is impos sible. And, without question, it is this inability to understand which keeps faith in the free market from forming, growing, accumu lating. It is also this inability to understand which accounts for all the little, annoying, destructi ve man-made substitutions. But the free market doesn't need to be un derstood. The free market is but another of countless performances that re quire no more of man than an awareness of and a faith in its miraculous promises. The aware ness and the faith are easy enough to acquire for anyone who can per ceive the abundant evidence which lies about us on every hand. ~ For a further development of the theme of the above article, see Leonard Read's The Free Market and Its Enemy (Foundation for Economic Education, Inc., Irvington-on-Hudson, New York, 1965. $1.00 paper, $1.75 cloth).

CAN WAGE AND PRICE CONTROLS CURE INFLATION? F. A. HARPER CONTINUING INFLATION inevitably poses the question: Are wage and price controls effective medicine for the illness? Does the bottle contain a potent remedy, or is it filled with the false potions of quackery? A doctor diagnoses illness from his knowledge of a healthy body and how it functions. The eco nomic doctors must do likewise. So our first step is to study the anatomy of a healthy trading econ omy. Ours is a nation of 195 million persons. L.ike any other giant and complicated machine, its operation can best be seen by focusing our attention on its small, integral, and essential working parts, so that we may clearly observe how they relate to one another. So let's start with Jones, a pio neer in the primeval forest. He hunts and fishes and grows some crops in his little clearing. He tames a few animals and uses them for toil or to provide food.

Then along comes Smith to be Jones' neighbor. He, too, hunts and fishes and farms. But Jones is the better hunter, and Smith is the better farmer. As they follow their respective abilities, Jones comes to acquire an abundance of furs, but is short of corn for his meal; Smith has a goodly supply of corn, but is short of furs. So one cold day in winter, Jones - warm in his furs, but hungry - wanders 15 16 THE FREEMAN October over to see Smith, who is well-fed but shivering in his cave. Jones proposes to trade some furs for some com. The two men may higgle and haggle over the terms of the trade. The margin for bargaining may appear to be wide in this instance, in contrast to real life in our com plex economy. No alternative mar ket exists for the product each has in surplus, except to keep it him self. But on closer scrutiny, we find that each has an effective bar gaining tool against the other: Each knows that the other realizes the advantage of making a trade, as compared with keeping his sur plus product. Each knows that there is little sense in driving so hard a bargain tha tit kills off a trade. Each realizes the absurdity of continuing to suffer for want of what the other has for trade. So we may assume that trade will somehow be arranged between them.

Now, what terms of the trade between Jones and Smith might be called fair and just? The question of a just price pre sumes certain antecedent ques tions: Says who? In whose judg ment? By what right to speak? Justice always presumes a judge with some principle by which to judge. Who is to be the judge, and what is the principle involved? Would it be fair to make Jones the sole judge, empowered to force upon Smith whatever terms of trade he shall dictate? Hardly, for to do so is to deny Smith all rights of ownership of the corn he has labored to produce. It would allow Jones to confiscate Smith's prop erty. Would it be fair to make Smith the sole judge? No - and for the same reason. The Historical Concept Historically, the concept of "a just price dictated by a disinter ested third party" has usually been offered as the solution of this seeming dilemma. This concept has persisted in the affairs of man since earliest times - since ancient man first congregated into groups of three or more, thus making it possible for one person to interject himself into the economic affairs of two other persons. Let us say that the third party in this in stance is Joe Doakes, a new and distant neighbor. Joe seems to be qualified to render justice since he is "distinterested, impartial, un prejudiced, and objective." He might be called the "public repre sentative." Shall it be left to Joe to decide what is a fair price?

Joe's presumed qualifications for judging what price is fair - being disinterested, and all that - are precisely the reasons why he is not really qualified at all. He has 1965 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 17 not one iota of right to speak as an owner because he has done noth ing to produce either the furs or the corn. He has no relevant infor mation except what he might ob tain from Jones and Smith. They alone can know their own wants, and whether, at each specified price, they should keep what they have produced or exchange it. At best, Joe knows less about it than does either Jones or Smith. Bluntly and in simple terms, Joe is unqualified for the job of de termining a fair price; and fur thermore, it is none of his busi ness. To empower him to throw the bargain this way or that is to grant him the equivalent of owner ship of both products; and by the test of who has produced them and who owns them under private prop erty, he deserves no such right. At best, he is an interloper; at worst, he is an outright racketeer, hold ing a power by which he can de mand a bribe from either or both parties.

What is wrong with this theory of an impartial judge determining what price is fair? Why is this any different from a judge in. a court of law who presides, let us say, in a civil suit concerning an alleged violation of contract? Such a civil suit involves an im passe of conflict, in which one or the other side must lose bya judg ment of "guilty" or "not guilty." A judgment is rendered based on the evidence: Was there a con tract? Was it valid? What were its terms? Were the terms violated by the actions of the person? Yet none of these conditions exist in the instance of Jones' and Smith's trade. There is no impasse which must be resolved against one party or the other; each· may keep his property and maintain his sta tus the same as it was before they met. In that sense, neither must lose. If they trade voluntarily, both will be better off than before. And the ownership of what is his own gives to each the right of veto the right to decree that there shall be no trade between them. As was said above, to violate this right by allowing Joe to force a trade at terms he dictates is to violate the right of ownership.

Dual Judgeship How, then, is the problem to be resolved? Jones has been disquali fied as the sole judge. And so has Smith. And so has Joe. Since that excludes all who comprise this so ciety, the problem may appear to be insolvable. But it seems that way only if one persists in looking for a single judge - some one per son qualified to make the decision. There is the appeal of simplicity, among other things,-jn~.havingau thority reside with one person some Joe - empowered to establish 18 THE FREEMAN October a just price. Throughout all his tory, this practice has been in evi dence. In Medieval times, for in stance, kings or lords fixed prices for goods, and thereby supported the traditional thought of the time, which presumed a just price according to the powerful church influence and the ecclesiastical "logic" of the time. More recently, various arrangements of govern ment have done likewise. But al ways there has been some Joe oc cupying the seat of authority, like our own heads of opA and OPS.

There has always been the urge, in other words, to find some one person who should be empowered, as the all-wise, to decide the price that would be just. And therein lies the error of the search. Under the beginning concept that J ones owns his furs and Smith owns his corn, it is clear that no rights are violated if no trade occurs and each keeps what he has. There is no conflict in that sense. The only sense in which a conflict can arise is if either Jones or Smith-or some third Joe-pre sumes ownership of what is not his, and acquires a power to dic tate the terms of a trade beyond his own rights as owner. But so long as the basic right of owner ship is preserved, a contemplated trade is never a conflict; it is an attempted act of cooperation un der which both parties, not merely one, stand to benefit. Each has a voice in the decision. Since both reserve the right of veto, their voices are equal in a decision that must be unanimous or else there is no "case in court" and no ver dict.

The exchange process involves two persons, not just one. There is no free exchange unless and until two persons, serving as judges, agree on what the price shall be. The .only persons who qualify as judges are the owners of the goods to be exchanged. The J95 Million Traders In our 1965 economy, there are some 195 million J oneses and Smiths. The ebb and flow of their trade and exchange is too complex for any human mind to grasp fully. What is a just price for shoes or wheat or a day's work in this· economy? There is no one just price for all shoes sold today. Justice, as al ready analyzed, rests on freedom of exchange for each pair of shoes, between the store which offers it for sale and the consumer who considers buying it. So the only way to have justice in the price for shoes today is to have free trade and free terms of exchange for each and every separate deal. Justice in prices, then, precludes any legal or authoritative decree of price for any trade of anything.

1965 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 19 Justice on a large scale cannot be composed of subsidiary in justices. Justice in the aggregate comes only from justice in each of its parts - free and voluntary terms of exchange for· each buyer and seller. That demands the preservation of private property rights, above all else. Justice re sides in the right to keep what is one's own, if all buying offers are unsatisfactory; in the right of every offerer and bidder to resist coercion-even by the government, the presumed agency of legal jus tice. Once the search for justice ceases to focus on indi vidual buyers and sellers and scans the national "price of wheat" or "hourly wage," the hound is off the trail. In a free economy where personal rights are preserved, there is no national price of any thing; there are innumerable prices, trade by trade. Miraculous Balance When prices are freely arranged between each buyer and seller, an overall condition develops which is one of almost miraculous bal ance. Both surpluses and short ages disappear. Peace appears where otherwise there would be chaos and conflict. "Who shall have what?" is resolved in the only way possible if a person's time is to re main his own; if what he has pro duced is to remain his; if he may give his property to whom he wishes, or trade it on whatever terms are satisfactory to both him and the buyer.

The manner in which this bal ance occurs is revealed by the accompanying chart. It combines two simple economic facts: 1. Consumers will buy less of a thing at a high price than at a low price. 2. Producers will produce more of a thing in anticipation of a high price than of a low price. Another economic fact, not shown in the chart, is important in in terpreting it: For a society· as a whole, the consumers are the pro ducers, and the producers are the 20 THE FREEMAN OctobeT consumers. This fact, coupled with the simple truth that we cannot consume what is not produced, necessitates a balance between con sumption and production. As the chart shows, a balance in this in stance is found at the free price (at 30¢) , where neither surplus nor shortage exists. The free price also generates a maximum amount of trading; and the terms of trade will have been accepted by every seller and every buyer as benefit ing himself - as evidenced by their having traded willingly. The only just price is the free price.

IIEconomic '"ness ll Against this background of the anatomy of a sound economic body, we may now proceed with its path ology. What is the economic illness for which the stand-by controls are intended ? What are the symp toms that will signal a rush to the economic medicine cabinet for the presumed remedy? "It will be when wages and prices soar due to war or inflation or some other serious disruption; when some emergency causes acute shortages of certain things." These, in the minds of those who favor stand-by controls, are the symptoms of the illness. Appearing before Congress, a former Defense Mobilizer said: "I am always delighted to see a re turn to the free market, but I must be sure that circumstances permit it."l The same view was expressed in the following release from the Chamber of Commerce of the United States: "In case of a seri ous new national emergency, a price and wage freeze would be the most effective way of dealing with the situation, as we learned in both the World War II and Post Korean periods. "2 Such persons believe that the free market with free exchange is a pleasant luxury-a lovely thing to be enjoyed only in those happy times when the economy is sailing over untroubled waters. At all other times, the government should prohibit the citizens from such wasteful indulgence, and should dicta te prices and wages under the control of administrative law.

Freedom of exchange, by this rea soning, should be considered a pleasant pastime - a privilege granted to us and bestowed upon us by the government only when officials of government consider that the circumstances warrant it. Weakness in Emergencies As clearly implied in the Defense Mobilizer's statement, those who lHearings before the Committee on Banking and Currency, United States Senate, Eighty Second Congress, Second 8ession on 8.2594 and 8.2645. March 4, 1952, p.27. 2Economic Intelligence, Number 55, February 1953, U. S. Chamber of Commerce.

1965 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 21 favor stand-by controls for emer gencies look upon controlled prices as strength and upon free prices as weakness. Why, otherwise, would they prescribe the medicine of controls in emergencies? Any price either above or below the point of a free price, forced by some "Joe" armed with political authority rather than with rights as owner, is injustice. As prices depart from that point, more and more trading is killed off, to the detriment of both buyers and· sell ers. Then further controls over the affairs of workers and producers are likely to be added in order to obfuscate the new difficulties brought about by the first injus~ tice. Error is piled on error in an inverted pyramid of interferences, until eventually the monument of mistakes must be dismantled or collapse under its own unstable 'weight. Whenever a false premise is adopted for medication, the "cure" is likely to aggravate the condition; then there is the temp tation to apply more and more of it under the assumption that the dosage was inadequate or that the area of application was too narrow.

Nothing - not even the famous guinea pig - is as prolific as con trols in the hands of political au thorities, during so-called emer gencies. In the light of the previous anal ysis, enacting stand-by controls of wages and prices amounts to hav ing a medicine cabinet stocked with injustice to be used in times of emergency; to creating sur pluses. and shortages, rather than balanced distribution, when emer gencies arise; to giving a poison as an antidote for itself. If justice is strength and injustice is weak ness, it amounts to prescribing weakness at precisely those times when strength is most needed. Goodness and justice, it would seem, are luxuries to be tolerated during an indulgent binge; but when the going gets rough and sobering realities must be faced, it seems that the emergency bottle should contain injustice. Historical Failure of Control For those who find the proof of the pudding only in the eating, history affords continuous and am ple evidence, since the first known price control laws were enacted in Babylonia 3,800 years ago. They failed of their purpose, as has every similar attempt in recorded history since that time.

It is ever the same. When a gov ernment inflates the money or some other cause pushes prices upward, attempts are made to conceal the symptoms, rather than to attack inflation at its source or otherwise get at the root-cause. The attempt is made to adj ust the scale on the thermometer by edict, rather than 22 THE FREEMAN Octobe1' to cure the fever that causes the mercury to rise - so to speak. The treatment applied to the fever vic tim is to throw him into a deep freeze. Notional Socialism Via Control The evidence against controls, even during emergencies, is so over whelming - by logic, and as re vealed in the historical record that one wonders how their enact ment has gained so much credence in this "land of the free." Could it be that we have been so busy man ning the machines of physical de fense that an intellectual mass at tack upon our bastions has gone unnoticed? Sometimes our perspec tive on such matters is helped if we back away from the illusory be lief we have embraced and look at the evidence from a distance.

Lassalle, the German Socialist, in a letter to Bismarck on June 8, 1863, wrote: "The working class instinctively feels attracted to dic tatorship, if they can first be con vinced that it will be practiced in their interests." Spengler accu rately forecast an age of govern mental demagogy when he wrote: "What is truth? For the multi tude it is that which they constant ly read and hear ... what it [the press] wants, is true. Its com manding officers engender, trans form, and exchange truths. Three weeks' work by the press, and all the world has perceived the truth." In the early forties, when we were at war with national so cialist Germany, the United States Department of State published a revealing treatise on these ideo logies of our then enemy. It is re vealing because it shows that we embraced, and are still embracing, the ideologies of our enemy in na tional socialism. 3 This source warned us that as the plan of national socialism pro gresses, an authority is to be made supreme; his decisions are to be final and always right; his follow ers are to owe him the duty of un questioning obedience. This is the same concept that was advocated by the ardent nationalistic philos opher, Johann Gottlieb Fichte.

A Prophecy But under the influence of Na poleon's repulsive example, Fichte later opposed absolutism in the state, foretelling the character of a future fuhrer and describing how he might come to attain his power: The future fuhrer would educate his people in cool and de liberate piracy; he would encour age extortion; robbery would be made the honorable token of a fine 3Raymond E. Murphy and others, National Socialism: Basic Principles, Their Applica tion by the Nazi Party's Foreign Organiza tion, and the Use of Germans Abroad for Nazi Aims, Department of State Publication No. 1864 (Washington, D. C.: U. S. Gov ernment Printing Office, 1943), pp. 11, 12, 15, 22.

1965 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 23 reason; the State should virtually eliminate private enterprise, set ting up a rigidly planned corporate economy - including, of course, price controls and other controls of various sorts; there would be strict governmental control of la bor and production, concealed in flation and blocked currency, inter national barter agreements, and intensive armament as a prelude to territorial expansion. Those are the concepts embodied in controls, whereby legalized loot ing of some persons by others is authorized under guise of fighting inflation. It is the blueprint of na tional socialism as told by our own State Department. We should read it again and again - and judge our own acts by its measure. Goering's Advice This quotation from Henry J. Taylor, of what Goering said in an interview long after Goering, Rib bentrop, and others had been jailed following the surrender of Ger many, is revealing: "Your America is doing many things in the economic field which we found out caused us so much trouble. You are trying to control people's wages and prices - peo pie's work. If you do that, you must control people's lives. And no country can do that part way. I tried it and failed. Nor can any country do it all the way either. I tried that too and it failed. You are no better planners than we. I should think your economists would read what happened here.

"Germany has been beaten, eliminated, but it will be interest ing to watch the development of the remaining great powers, the stupidities they practice within their home lands, their internal strife, and their battles of wits abroad. "Will it be as it always has been that countries will not learn from the mistakes of others and will continue to make the mistakes of others all over again and again?" This same view - believe it or not - was confirmed by the then Vice-president of the Council of People's Commissars and People's Commissioner of Foreign Trade, in an interview printed in all So viet newspapers on May 18, 1945.4 In explaining the serious food sit uation in Germany, he blamed the Hitler regime for having forbid den free trade of all articles of daily consumption. He stated that the trouble was due to the closing of all markets and the forced de livery of all farm products to the government, thus killing the incen tive to produce.

It is not, perhaps, entirely a co incidence that the man who was 4Sup pUed through the courtesy of Professor Jacques Rueff, of the Institut d'Etudes Poli tiques, Paris, France.

24 THE FREEMAN October the administrative head of German Price Administration until 1923, when their inflation exploded, came to the United States, wrote the book entitled Price Control in the War Economy in 1943, and be came chief consultant in the Office of Price Administration. A Matter of Degree Now, rather than being at war with a national socialist Germany, we are involved in a "cold" war with communist Russia. Let's take a look at the advice from that quarter. Not that there is much difference between the communism of Russia and the socialism of Ger many prior to World War II. Com munism is merely socialism in a hurry. Even Marx spoke of what we now label "communist" as be ing socialist, and the Soviet state was named the Union of Soviet So cialist Republics. Moreover, the Communist Party in the United States, in its advice about recruit ing new members, says that it should be easy to recruit a social ist by showing him that the Com munistParty is the only real fight er for socialism in America; that the most effective way to help at tain his ideals is to join the Com munist Party.5 In 1848, Karl Marx, the "father"

of communism, listed ten measures 5Gaini1f.g Recruita for an Idea, single sheet, Foundation for Economic Education. for a successful communist-social ist revolution. Among them are several which specify controls by the State of prices in their various forms, and also the confiscation of private property. In 1950, Earl Browder, former leader of the Communist Party in America, discussed the American trend toward communism. He listed 22 specific attainments which he said had furthered the com munist program in this country even beyond that attained in Brit~ ain under their much-maligned La bor government. Among those listed were controls over prices, credit, money, laborers, and busi nesses; also bribes, in the form of special privileges to various groups. The program is so far ad vanced already that the govern ment owns nearly one-fourth of all wealth other than land, and has licensing and other controls over practically every type of business.

Stand-by Controls for What? The most kindly charge that can be made against one who favors stand-by controls for emergencies, it seems to me, is that he does not understand the workings of a free market and that he lacks confidence in the performance of free men working with private property in a voluntary exchange economy. And if that be his belief, why does he not propose government CQD1965 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 25 troIs of everything, all the time? Why not use the "strength" of controls all the time, not just in emergencies? Stand-by controls? For what? Not, to be sure, for the purpose of either productive efficiency or jus tice! Not to maximize trade, nor to balance distribution so that shortages and surpluses will dis appear! Not to further the free dom of man in this land which we claim will be the last bastion of freedom in the world struggle in which we are now engaged!

To enact stand-by controls would mean putting into the law of the land a permanent endorsement of a basic tenet of socialism - the principle that control of the vital mainstreams of commerce and con fiscation of the rights of private property are sound and just prac tices. A nation· of freedom cannot enact even stand-by controls and remain basically free. ". . . it hath been found by Experience that Limitations upon the Prices of Commodi ties are not only ineffectual for the Purposes proposed, but likewise productive of very evil Consequences to the great Detriment of the public Serv ice andgreivous Oppression of Individuals."6 • • • 6June 4, 1778. Journals of the Continental Congress (1908 ed.). p. 569, Vol. XI. One Set of Ills for Another THE RESULTS have been astonishingly uniform .... The history of government limitation of price seems to teach one clear lesson: that in attempting to ease the burdens of the people in a time of high prices by artificially setting a limit to them, the people are not relieved but only exchange one set of ills for another which is greater .... The man, or class of men, who controls the supply of essential foods is in possession of supreme power .... They had to exercise this control in order to hold supreme power, be cause all the people need food and it is the only commodity of which this is true.

MARY G. LACY, Pood Control During Forty-six Centuries JOHN C. SPARKS IMPATIENCE UNDERMINES FREEDOM THE TYPICAL American of the 1960's enjoys a level of living, health, and comfort unimaginable to those who struggled twice as hard a half century earlier. The increased leisure of a shorter work week and longer life span might be expected to yield an air of pa tience and relaxation. Yet, .some future historian is likely to re classify our age of speed as the era of impatience, marked by lack of time, annoyance at delay, intoler ance of those held responsible. Ours definitely is not a time of great patience among men. Sports and Recreation One by-product of our extra time has been the rapid growth of sports and recreation. Here, Mr. Sparks. is a business executive of Canton, Ohio. 26 surely, one might expect to find relaxation - and patience. Ama teur and professional sports have alw,ays been popular in this coun try, but never before have there been so many organized activities - from Little League haseball to professional football, from small girls vying for victory for their swim club to the women's profes sional golf tour. Spectator interest also has grown along with in creased knowledge ,of the tech niques of the games. Televised broadcasts, with statistics sup plied by commentators, afford the average fan 'enough knowledge of the game to be well aware and highly impatient when the players or the coaches err ever so little.

A coach's every move is pub lic knowledge, includi~g the meth ods he employs to teach young 1965 IMPATIENCE UNDERMINES FREEDOM 27 athletes. If coaches seem to lack patience with their charges, it is not difficult to understand why. Most fans will not toler,ate a loser. Noone talks of a losing season certainly not a coach whos·e career is at stake. His teams must have won subs·tantially more' games than they lost. Such pressure is often reflected in severe impatience with the players and by tantrum-like antics ,along the-side lines in re sponse to decisions by officials. Other student activities are frowned upon by the coa,ch and sometimes absolutely prohibited such as participation in choir, speech, or another sport. No time can be allowed for rounding out a student; the ,coach must win. It is his livelihood. Other Areas Nor is such impatience confined to the playing field. Owners of business are impatient with a management that does not set sales-and-profit records each year.

The political officeholder must promise prosperity to his consti tu ents, and take steps to deliver, or he is quickly turned out of office for another whose promises are more convincing. People who enjoy the highest level of living in his tory are impatient for more, even when their savings have been spent. They seek short cuts to greater comforts than they can afford by contracting heavy debts and demanding political privi leges. The political opportunist sees the chance to vault himself into power by leading the impatient poor to believe it i.s unf,air that others should enjoy a greater prosperity than themselves. Thus do impatient politicians seek easy advancement without the requisite patience, wisdom, and effort of true statesmanship. Various professional church leaders would convert mankind, not by age-old methods of patient education and persuasion, but by the short cut of legislation to force "proper behavior" as they define it.

Parents ignore the responsi bility of providing their children with a basic understanding and fundamental philosophy of life, ab dicating to others who either have no time or ability to teach such wisdom or who have been re stricted by public authority from doing so. Parents then become im patient because the results are not what they expected. Impatience with Others Other people are the most likely objects of our impatience, includ ing persons we may never have seen before. A courteous, polite person may change per:sonalities completely when he stations him28 THE FREEMAN October self at the wheel of an automobile, acting rudely toward other driv ers who, he feels, are unnecessarily delaying him. This will add neither to his happiness nor to the safety of himself and others along his route. Sometimes our impatience is more closely directed, as when a mother frets about her daughter in-law's housekeeping, or so criti cally supervises a small daughter's piano practice as to destroy any aptitude for music the child might have had. An anxious and impa tient father may cause his budding young athlete to err on otherwise routine plays. Impatience with others is no more the key to suc cessful teaching than to self-satis faction or to pleasant human rela tions.

The Root of Impatience It is not unusual to find that impatience with others originates in anger at oneself. Recently, I played golf with an acquaintance who was having one of his better rounds, until a poorly executed shot on the fifteenth hole led to trouble. After that, he pressed succeeding shots, each worse than before. By the end of the round, his wild swings and displays of temper were in sharp contrast to the smooth, calm excellence of his earlier play. His final score was not as good as usual; yet nothing had occurred to alt'er the condition of the game except his mounting impatience with himself. Just as every golfer would like to break par on each round, so perhaps does everyone dream a life of perfection, with health, marital bliss, a well-paying job, friends, travel, the respect of one's contemporaries, and the like. But few golf games or human lives are perfect dreams-corne-true; the "slings and arrows of outrageous fortune" are bound to take their toll along the line despite all our foresight and planning. If one dreams unduly of perfection, any disturbance, however slight or un important, may be more than he can take - with patience. And oth ers will be found to blame - one's children, spouse, employer, em ployee, neighbor - everyone else in general. The possibHity of poor ex ecution on his own part seldom will occur to him.

Many of today's most difficult social problems doubtless can be traced to the man who faults ev eryone but himself and then, in his impatience, lashes out against oth ers. Leonard E. Read refers to such persons as "know-it-alls." Their worst affliction is their ig norance, "which they must inflict on the rest of us if they can find the means to do so. But there is no way ... without employing com pulsion. The know-it-alls, by them1965 IMPATIENCE UNDERMINES FREEDOM 29 selves, do not possess enough com pulsive force to inflict their ignor ance on the rest of us. What to do? They seek and often obtain posi tions in society's agency of organ ized force : government. In short - we obey their edicts, or we take the consequences."! Government Planner's Salesmanship The government planner is prone to seek out particular activi ties of private citizens - peaceful though they are - that seem to be poorly coordinated, or without overall plan. He then proposes a program to control or restrict pri vate decisions or to prohibit them altogether. If the planner can per suade legislators to approve his idea, he need not bother selling the idea to the numerous private citi zens affected. Political planning thus differs from the patient mar ket effort to serve consumers to their personal satisfaction.

Furthermore, the government planner does not stand personally accountable for any weaknesses in his plan. And if he should gain the monopoly power he seeks, it will not be possible to compare the re sults with alternatives. Subcon sciously the government planner rationalizes: "My plan, my dream, 1 See The Free Market and Its Enemy (lrvington-on-Hudson, New York: Foun dation for Economic Education, Inc., 1965.) is superior. The government pro vides a short cut to its accomplish ment. I am impatient to see my dream come true. Why not?" He never realizes that his own short comings are in this manner adver tised for all to see. Effect on Private Owner Government planning also has important consequences to owners whose property may be involved. When the government proposes to seize property, directly or indi rectly, the owner's only recourse is costly, often ineffective, appeal to courts likely to be biased toward the governmental plan. In contrast, property owners are fully free to accept or to reject any private plan offered in the market place, and at no greater cost than the effort of studying its pros and cons. No great defensive effort is needed to protect property against such peaceful planning. The private planner must be a good salesman, and his plans must be efficiently executed, if he is to remain in busi ness. Patient persuasion and pre paredness are the hallmarks of the successful private planner; impa tience repels prospective custom ers.

The objective of freedom also can be thwarted by lack of pa tience. Persons newly aware that individual rights of ownership and choice are being sacrificed in the 30 THE FREEMAN October name of the collective good are tempted to lash out at "the com munists" without the necessary self-preparation in the under standing and practice of freedom. Patient study is required to prop erly answer false charges that the free market system neglects the poor and favors the rich. Identify ing and denouncing communists before unwilling listeners gains no friends for freedom, and such im patience may only arouse sympa thy for those so disparaged. Com munists are not really to blame for the lack of preparation and under standing that leads the impatient champion of freedom to deal in personalities rather than with the ideas and ideals of his own worthy cause. Ideas vs. Persons Though impatience with other people is never to be commended, there is nothing to be gained by patience toward wrong ideas or practices. Theft, for instance, is wrong and should be impatiently rejected in all its guises. Laws that deny liberty are to be rejected summarily. Nor is murder to be patiently accepted. But to reject impatiently such evil practices does not deny the virtue of pa tience toward persons who harbor such mistaken ideas. To displace another persons' wrong ideas with those that seem more proper to us is the challenge each of us faces and patience is the key.

By our intolerance, we deny the dignity of man. Or, as Emerson said in his essay on Self-Reliance, "society everywhere is in conspir acy against the manhood of every one of its members." Each man has his own destiny, his obstacles to overcome, his deepest purpose to fulfill. Interference by others not only delays that man's achieve ment but also deprives those oth ers of the patience and will power to reach their own respective des tinies. Nor does such interference stem entirely from evil intent. Impa tience may be the peculiar vice of those otherwise nobly endowed with the virtues and qualities of leadership; those who could lead toward freedom, if only they would leave others free to choose and to follow. Embittered lives, split com munities, devastated homes, broken employees, spiritless chil dren result from the tyrannical power of otherwise virtuous lead ers who allow their impatience to destroy the spirit of independence.

Any person who would fully share the God-given right of every individual to be free must pa tiently content 'himself with over coming his own weaknesses - not those of others. ~ The Liberating Arts EDMUND A. OPITZ EVERYONE who wishes to pull his own weight in life needs one or more skills which his fellows think valuable to them. Most of us are not born with much talent; we have to learn to be useful. This means acquiring a "trade." The word is interesting. It implies that most of us cannot get by just being our own sweet selves; to the contrary, we have to learn. to per form a service which is sufficient ly attractive to our neighbor so that he will give us something he values a little less in order to en joy that service. And so there are training schools where we learn how to be secretaries, or mechanics, or fash ion designers. At the professional level there are the traditional faculties of medicine, law, and theology; schools of science now constitute a fourth. Quite distinct The Reverend Mr. Opitz of the Foundation staff is active as a lecturer and seminar leader.

from training and professional schools is the liberal arts college. The student emerges from one of these institutions after four years' exposure to a liberal arts program with little or nothing in the way of a marketable commodity; if he has acquired an immediately market able skill, it is usually by extracur ricular means. This is as it should be, for the fundamental purpose of liberal arts education is to provide gen uinely libera ting experiences for the persons involved. The Two Cultures Everyone acknowledges the im portance to society of the kinds of people who accomplish the work of the world: the engineers and technologists, the managers and manufacturers, the doctors, law yers, chemists, and so on - the people who. possess know-how, in strumental knowledge, power. But 31 32 THE FREEMAN October what about those who are schooled merely in the liberating arts; what role might they aspire to play in our culture?

If students have been exposed to the best that has been thought and said about man, so that they have some understanding of what it means to be a person, some un derstanding of the nature, destiny, and proper end of a human being, then - if such people are heeded by those with know-how and power - we might yet scrape to gether sufficient wisdom to save our society from being blown to pieces by the detonation of its newly released energies. It is our fate to live at a time when enormous power is at our disposal, but only partially under our control. Control is ultimately an intellectual and spiritual thing, and we won't know what to do with our recently acquired power until we have decided what to do with our lives. This is where schooling comes in, for it is one function of a liberal education to help us face up to this question of how to make our lives count for the things that really matter.

Everyone of us has encoun tered persons of enormous energy and enthusiasm, bursting with ideas which sound plausible, but whose projects fizzle out without getting anywhere. I knew such a man. He had written a widely noticed book during the thirties, and since that time had sta.rted numerous organizations to save the world. The world persistently refused the offer. Discussing the matter with a friend some years ago I wondered aloud why so-and so had never gotten himself off the ground. "The trouble with him," said my friend, "is that he got his drive shaft installed be fore his steering wheel." It is a prime function of a liberal education to provide us with the moral equivalent of a steering wheel, and perhaps a map as well. A bishop of the early Church said much the same thing when he declared that society needs three kinds of men: those who work, those who fight, and those who pray. Society needs someone to grow the wheat and bake the bread. It needs someone to stand guard and protect the producer against marauders. But in addition, it needs those who continually remind the rest of us that there is more to life than this, that man has a spiritual and intellectual nature with needs just as real as his physical hungers, that there is a meaning for human life which transcends material comfort or even physical survival, and that man will not solve his material and social problems un less he successfully seeks that meaning.

1965 THE LIBERATING ARTS 33 Weslern Scholarship Scholarship, therefore, has a significance that extends beyond the ivy walls. The tradition of Western learning goes back to Socrates - or to Plato. These men laid down the lines along which most serious thought has moved until our own time. This body of thought which goes back nearly two-and-a-half millennia, com prises "the grand old fortifying classical curriculum" of our an cestors. It is like the Gulf Stream coursing through the Atlantic as it comes down to us through the generations touching, at any given time, only a handful of persons. There is only a little exaggeration in E'merson when he observes that "there are not in the world at any one time more than a dozen per sons who read and understand Plato-never enough to pay for an edition of his works; yet to every generation these [works] come duly down for the sake of these few persons. . . ."

The custodian of this intellec tual treasure of ancient learning is the university. Every college in the American colonies consciously partook of this heritage, and like wise most of the colleges founded during the nineteenth century. The first of our universities, Har vard, was founded in 1636, and William Bradford, in his Of Ply mouth Plantation traces its line of descent as follows: "A light was kindled in Newtown [that is, Cam bridge] in the Bay Colony in 1636. But the spark that touched it off came from a lamp of learning first lighted by the ancient Greeks, tended by the Church through the Dark Ages, blown white and high in the medieval universities, and handed down to us in direct line through Paris, Oxford, and Cam bridge." Harvard College was largely a duplicate of Emmanuel College, the most Puritan of the Cambridge (England) colleges, and the one from which John Har vard came.

Much has been made of the al leged tradition of anti-intelle,ctualism in America's past and present. Unintelligent books con tinue to ring the changes on this theme, stressing the scars left by the frontier, and so on. There's some truth to the charge. We are a practical-minded people with lit tle time for frills in education, or anywhere else. Our schools have tended to stress practical courses, the values of life adjustment, and quick returns. Then, too, there is our democratic ideology which, by passing the important principle of equality before the law, introduces a leveling and egalitarian ten dency into our attitudes. This sort of mentality is affronted by any excellence or superiority. But to say no more than this about the 34 THE FREEMAN October American mind is to convey a distorted picture. Reformation Heritage America was founded, and its institutions established, as a pro jection of the Reformation. So keen were the Reformers for learning that the medieval schol ar's gown was adopted by the Re formation clergy as their offieial garb. Professor Harbison of Princeton points out that "the Protestant Reformation began in a scholar's insight into the· mean ing of Scripture. It was to a large extent a learned movement, a thing of professors and students, a scholars' revolution. The Catho lic response to the challenge, par ticularly in the Council of Trent, partook of the same-nature. The prestige and influence of Chris tian scholars probably never stood higher in all of Western history than during the two generations which embraced the lifetimes of Erasmus, Luther, and Calvin. In no other period is there anything quite like the zest for learning, the respect for scholarship, the confidence in what scholarship might accomplish - and the revo lution it did accomplish - of the age of the Reformation."

There were other facets to the Reformation, of course, and the unlettered enthusiasts had a field day; but their decisive influence on American life came later. The Puritan clergy were scholars, and their influence did not wane until the late eighteenth century. Useless Knowledge The world in every generation perishes for want of purpose and direction, and it is the scholar with his wisdom, that is, the phi losopher, who can save us from ourselves. But the cost of this kind of salvation comes high, and the world does not always want it at the price - as in the case of Soc rates. Socrates might be said to exemplify the scholar's plight in every age from his day to our own. Socrates was blissfully unaware of his plight, except when Xanthippe, his wife,reminded him of it which must have been on the hour, every hour. No wonder Socrates spent so much time out in the streets and in the marketplace!

The .philosophical opponents of Socrates were the Sophists, and the Sophists had a practical aim. They taught men to use their wits so as to win an argument or a debate, and they also taught the techniques by which a trial lawyer could win a case no matter how guilty his client. The Sophists were teachers who accepted fees for their services, and the skills they imparted commanded a good price. Sacra tes was also a teacher, but his teaching had no practical 1965 THE LIBERATING ARTS 35 aim. His teaching subjected men to the painful process of thought and self-examination. Socrates gave men new ideas, but all they could feel was the loss of the old ones; so they got rid of him! 'Twas ever thus; it has always been the scholar and philosopher against the world. The two need each other as flint and steel need each other; but when they get to gether, the sparks fly. Perhaps there is a good reason for this mu tual hostility and suspicion be tween the verbalist and man of intellect, and the mass of sensual and vegetative men. Deep down in the psyche of everyone of us is the awareness that thought, even with the best of intentions, may betray us. At some point in our biological heritage we got sepa rated from the sure guidance of instinct - which controls the be havior of the other orders of crea tion - and came reluctantly under the influence of the uncertain promptings and leadings of the intellect. Our conscious knowledge is still uncertain compared to the effortless assurance of that un conscious knowledge with which we breathe, circulate our blood, regulate our temperature, and so on. So, scholarship in every gen eration has to prove its merit and earn our confidence. Most scholars are men who deal in words, and those who manipulate verbal symboIs are in danger of confusing words with what words stand for.

Thus they may build a structure of thought so elegant as to be un inhabitable. Whitehead has warned us against what he called the Fallacy of Misplaced Con creteness. The Intellectuals Let me continue the case against the intellectual. An artist or a craftsman works in material that is only partly malleable to his mind and will. His experience is with refractory substances. In or der to carry out his design he must make some degree of accom modation to the nature of the ma terial. He has to learn that there are certain things he can do with bronze, for instance, which he can not do with marble, and that steel is indicated in other situations. Th us, the craftsman and the artist is limited by the nature of his medium; it keeps him within the norms of realism and physical law. There are no such natural and inevitable inhibitors to help the intellectual keep his feet on the ground and his head on his should ers. That is wps so many produc tions in such realms as philosophy and political theory are pure moonshine. The cloistered word artist time and again has spun a gossamer fantasy which, while it may charm thousands for a time, 36 THE FREEMAN October has only the remotest relation to any verifiable reality. Thought is a nonresistant medium; which is why the court philosopher often resembles the court jester!

Although I may appear to be serving as a devil's advocate, my strictures against the philosopher and scholar are directed mainly at that tribe of True Believers who possess the Ultimate Truth, and who so often think of themselves as The Intellectuals. At this point I share the feelings of the late C. S. Lewis, the Oxford don. "It is an outrage," he writes, "that they should be commonly spoken. of as Intellectuals. This gives them the chance to say that he who attacks them attacks Intelligence. It is not so. They are not distinguished from other men by any unusual skill in finding truth nor any vir ginal ardor to pursue her ... It is not excess of thought but defect of fertile and generous emotion that marks them out. Their heads are no bigger than ordinary; it is the atrophy of the chest beneath the seat of Magnanimity and Sen timent - that makes them seem so." The Power of Public Opinion As a matter of fact, it is ideas that rule the world, for good or ill; and the strongest power in society is public opinion. Therefore, it should be the prime goal of idea men to work toward an intellec tual climate in which ideas are respected, and sound ideas made attractive. The world is reaping now the bitter harvest of ideas sown during the past couple of centuries, and the soil is waiting to be planted with different seed.

The scholar and philosopher, from time immemorial, has had to contend against ignorance, stupid ity, indifference, and personal an tagonism from without; within, he had to overcome his own inertia, prejudice, and the mind's natural frailties. The disciplines of logic and rhetoric aided him here, and an acknowledgment of the limita tions of the intellect helped him think straight within those limits. The independent status of the mind in the universe was not suc cessfully impugned; it was the mind of man which elevated him above the beasts and allied him with God, his Maker. But in the nineteenth century, man as thinker had to face a chal lenge of a radically different kind - from a foe within his own house hold. I refer to the rise of philo sophic materialism and mechanism which denies to mind and intellect an independent status in the uni verse. Materialism, briefly defined, is the doctrine that the universe contains no entities except those which can be analyzed exhaustive ly in terms of physics and chem1965 THE LIBERATING ARTS 37 istry. It is the notion that only material particles are ultimately real, with the corollary that the realms of mind, spirit, or intellect are mere offshoots of bits of matter.

This is a kind of anti-intellec tualism beside which all other va rieties of anti-intellectualism are child's play! A theory is not a material thing; it is an idea, and an idea is nonmaterial. Material ism as a theory is, therefore, a contradiction in terms. Seeds of Materialism: Darwin and Marx Nevertheless, two seeds of ma terialism were sown in the year 1859, in Charles Darwin's Origin of Species and Karl Marx's Con tribution to the Critique of Poli tical Economy. Marx, in his Au thor's Preface to the Critique, writes as follows: "The mode of production in material life deter mines the general character of the social, political, and spiritual proc esses of life. It is not the con sciousness of men that determines their existence, but, on the con trary, their social existence de termines their consciousness." According to the internal logic of this statement, the categories true or false cannot apply to it; certain .sounds are emitted by Marx who, if the statement be taken literally, is a mere mouthpiece for the material productive factors of 1859. His mind may frame the words, but it does not originate .the ideas. The ideas are genera ted mechanically by "the mode of production in material life," with no more inherent vi tality than words coming from a phonograph record.

Charles Darwin is customarily regarded as Mr. Evolution: actu ally, there are many theories to account for the biological and geo logical facts, and Darwin merely supplied the theory which sur vived in the struggle for existence with the other theories. Darwin eliminated purpose from evolution and admittedly made no effort to account for the inherent creativity in organisms which produced the variations upon which environ ment operates. Once the variations appeared, an automatic or natural selective process would occur, which preserved those variations favoring survival. Criticizing the Darwinian thesis, Jacques Barzun writes, "The sum total of the acci dents of variation thus provided a completely mechanical and ma terial system by which to account for the changes in living forms." Darwin himself, unlike many of the Darwinians,. entertained some doubts. Writing to a friend, he said: "With me the horrid doubt always arises whether the convic tions of man's mind, which has 38 THE FREEMAN October been developed from the mind of the lower animals, are of any value or at all trustworthy. Would any one trust the convictions of a monkey's mind - if there are any convictions in such a mind 1" In the Descent of Man occurs the des pairing assertion: "There is no fundamental difference between man and the higher animals in their mental faculties."

Mind Banished from the Universe The intellect as an independent vehicle for the discovery of truth is now no longer master in its own household. There is only re flected opinion. For the Marxist, a man's opinion is merely a reflex of his class status; it is hopeless for the bourgeois to try to grasp pro letariat truth. For the Darwinist, the mind is. a mere fragment of nature, a tool for adjusting organ ism to environment. A generation or so after these men, the Freu dians would teach that the con scious mind is a mere pawn in the grip of unconscious mental forces over which, by definition, we have no possible control. The mind or intellect, in being explained, is ex plained away. Twenty-five years ago, Gerald Heard discussed this painful effort to eliminate mind or reduce the stature of intellect: "The mechan ist picture of the universe," he wrote, "is consistently imposed on all that universe's contents, not merely on the motions of the heavens and of the earth but on the motions and motives of life and, finally, of consciousness. It is an immense achievement of co ordinated argument and carefully selected illustrations - not of proof."

The trend that deprived mind of its citizenship papers in the uni verse and made it a mere append age to the class, the organism, or the unconscious, was persuasive without being proved - or even provable. Proof is, in fact, impos sible, because the thing declared incompetent - the mind - is our only instrument for proving or disproving anything. The intel lectual cuts his own throat when ever he engages in the anti-intel lectual conspiracy to sell short his chief weapon, the mind. Whenever he does this he damages himself, but in addition the scholar de prives society of his indispensa ble services. Economic and Political Liberty The scholar serves society by keeping its institutions under sympathetic and understanding surveillance, including its eco nomic and political orders. The market place and the forum are two of society's most important in stitutions, and freedom constitutes the health of both. Liberties of 1965 THE LIBERATING ARTS 39 the mind, in most periods, are self evidently valuable to most schol ars; but economic and political liberties appear to be grubby con cerns remote from the study and the classroom. The fastidious scholar might regard them with distaste, much as the finicky Pla tonist is chagrined to find that his mind and spirit are ineluctably yoked to a perishing carcass which has to be fed and housed, tended when ill, and whose aches and pains interfere with his philoso phizing.

This attitude of hostility toward or disgust with the physical body, found in Platonism and the East ern religions, is no part of the Judeo-Christian tradition. The re ligious tradition in which most of us were reared has a robust, earthy attitude toward the body and its concerns. It holds that being in the body is a condition of the soul's salvation; and it is con cerned, not only with the soul's immortality, but with the body's resurrection. Economic Freedom a Means The theological stance here was psychosomatic long before that term was invented, and this stance has a carryover into the market place. The business, commercial, and industrial pursuits of a so ciety are somewhat analagous to the bodily activities of an individ ual; they are not ends in them selves but they are necessary means, and if they are to be effi cient means, they must be free. If the economic means are not free, that is to say, if they are centrally planned by government, government's role in society is im mediately overextended and it per force begins to impede the liber ties of the mind, the scholar's cen tral concern. The economic means are the means to all our ends, and whoever controls them obtains an almost irresistible leverage over every human activity.

Freedom to teach and to publish are basic liberties of the mind, but if the central government owns the schools and appoints the instruc tors, what becomes of academic freedom? And if newsprint is a government monopoly and all printing presses are government owned, the liberty of publishing vanishes. Material Roots of Progress Liberties of the mind have their roots in affairs that are not spiri tual but material, and it has al ways been so. The Scottish philos opher and historian, W. G. De Burgh, in his great work, Legacy of the Ancient World, declares that "all down through the ages, know ledge and the arts have arisen and fructified in close con tact with industry and trade.

40 THE FREEMAN October Athens and Alexandria, Florence and Venice, Antwerp and Rotter dam were great commercial cities, where artists and thinkers drew life and gave it back, by just ex change, amid the seething tide of human energy." The mind is in the body, and the person is in society. The demands of organic life fret us in the first case, as do the imperatives of the economic and political orders in the second. Thus, there is an all too~human tendency to bog down at this point; to regard these ties as either ultimate - in which case we face into a dead end, or negli gible - in which case their instruc tion is lost on us. But if the liberating arts have performed their true role, the bio logical and social orders are neither slighted nor overempha sized; rather, they are put in per spective as the indispensable means to ends beyond themselves. If the liberation "takes," the mind and the person emerge as the ful fillment and completion of the pur poses for which body and society exist. ~ A. Fundamental Doctrine STATISM postulates the doctrine that the citizen has no rights which the State is bound to respect; the only rights he has are those which the State grants him, and which the State may at tenuate or revoke at its own pleasure. This doctrine is funda mental; without its support, all the various nominal modes or forms of Statism which we see at large in Europe and America - such as are called Socialism, Communism, Naziism, Fascism, etc., - would collapse at once. The individualism which was pro fessed by the early Liberals, maintained the contrary; it main tained that the citizen has rights which are inviolable by the State or by any other agency.

ALBERT J. NOCK, from the Introduction to the 1940 edition of The Man Versus the State by Herbert Spencer UNITED NATIONS officials, military men, and sundry world govern ment advocates, have at times recommended an extraterrestrial police force. Such an international force, sanctified by good inten tions, would circle the globe either on a man-made satellite or a mili tary moon base, armed with the only atomic weapons available to mankind. With their infallibility guaranteed by national impartial ity, these godlike astronauts' would maintain a stern vigil over ambitious individuals, nations, or power groups which might seek Mr. Smith recently has returned to the United States with his family after many years as a businessman in Argentina. ,,' lllVER PlANNER~ HARRY L. SMITH to grasp more than their quota of worldly wealth or power. Once judged guilty of aggression, such troublemakers would be blown to smi thereens. Thus would world peace, freedom, and prosperity be maintained forever.

Two hundred and fifty years ago, Jo:p.athan Swift, the world's greatest political satirist, devised a similar plan. His hero, Gulliver, on his third trip to strange lands, was cast up on the island of Balni barbi. This large island was ruled by a king who lived with his court on a flying island called Laputa. This second island was about four and a half miles in diameter, and could be raised, lowered, or pro41 42 THE FREEMAN October pelled by force of attraction or repulsion imposed by an adjustable lode stone or magnet attached to the under side of the island. The king, like all kings, was in fallible and had divine rights. In case of insurrection on the part of any town or city in his domain of Balnibarbi, he had a number of recourses. He could station his flying island over the offending city, cutting it off from rain or sunshine to the detriment of crops and the economy. If the rebellion persisted, large rocks would be dropped on the inhabitants and their dwellings destroyed. As a final punishment, the king might order his island to plop down on the wayward metropolis, flatten ing it completely and killing all its inhabitants. This last extreme was seldom used, since the king's ministers usually had property in each town, as did the king. Fur thermore, there was some danger of destroying his floating home and vantage point.

In addition to maintaining law and order by this unique method, the king and his court controlled the economy of the main island through rule by expert. Gulliver spent some time on the floating island and later descended to the main kingdom where he was befriended by a lord who was out of favor at court. This lord took him on a tour of the kingdom which was in a sad state of dis order brought about by hair brained schemes of the govern ment planners. However, this lord's own lands were prosperous and well tended by using proven methods. His failure to adopt gov ernment procedures had caused his fall from favor. Gulliver de scribes the lord's account of con ditions as follows: That about forty years ago certain persons went up to Laputa, either upon business or diversion, and after five months continuance, came back with a very little smattering in mathematics, but full of volatile spirits acquired in that airy region.

Tha t these persons upon their return began to dislike the management of everything below, and fell into schemes of putting all arts, sciences, languages, and mechanics upon a new foot. To this end they procured a royal patent for erecting an Acad emy of Proj ectors [planners] in Lagado [the capital city]; and the humour prevailed so strongly among the people, that there is not a town of any consequence in the kingdom without such an academy. In these colleges the professors contrive new rules and methods of agriculture and building, and new instruments and tools for all trades and manufac tures, whereby, as they undertake, one man shall do the work of ten; a palace may be built in a week, of materials so durable as to last for ever without repairing. All the fruits 1965 GULLIVER AND THE PLANNERS 43 of the earth shall come to maturity at whatever season we think fit to choose, and increase an hundred fold more than they do at present, with innumerable other happy proposals.

The only inconvenience is, that none of these projects are yet brought to perfection, and in the mean time, the whole country lies miserably waste, the houses· in ruins, and the people without food or clothes. By all which, instead of being dis couraged, they are fifty times more violently bent upon prosecuting their schemes, driven equally on by hope and despair; that as for himself [the conservative lord], being not of an enterprising spirit, he was content to go on in the old forms, to live in the houses his ancestors had built, and act as they did in every part of life without innovation. That some few other persons of quality and gentry had done the same, but were looked on with an eye of contempt and ill-will, as enemies to art, ig norant, and ill commonwealth's-men, preferring their own ease and sloth before the general improvement of their country. By this last, Swift did not mean to imply that he was against true progress. As the giant king of Brobdingnag had said to Gull iver on an earlier voyage: "Who ever could make two ears of corn, or two blades of grass to grow upon a spot of ground where only one grew before, would deserve better of mankind, and do more essential service to his country, than the whole race of politicians put together."

Finally, Gulliver admits to the reader rather sheepishly that at one time in his youth he, too, had been a planner. Anxious to visit the planning academies of Balnibarbi, he takes leave of his friend the lord which he relates as follows: In a few days we came back to town, and his Excellency, consider ing the bad character he had in the Academy, would not go with me him self, but recommended me to a friend of his to bear me company thither. My lord was pleased to represent me as a great admirer of projects, and a person of much curiosity and easy belief; which indeed was not without truth, for I had myself been a sort of projector in my younger days. Thus, we see that similar men talities are still with us: that the mind which would rule the world with an international satellite based police force, is the same mind which would plan our daily lives. While it cannot be said that the United States has as yet lost out to the "projectors," much of our planet "lies miserably waste,"

with strangulated and languishing economies, as can be found in parts of Asia, Europe, the Middle East, and South America, all vic tims of state planning. + 13. The ~Vemocratic " Elite CLARENCE B. CARSON THERE have been strange and in consistent developments in the movement toward what is billed as democracy in twentieth century America. The phrase that all men are equal has been a rallying cry of professed democrats. They have proclaimed their shock at the ex istence of distinctions, discrimina tion, and hierarchies. Leveling has been much in favor among them. Yet these democrats appear to have developed myopia where ce:r tain kinds of distinctions are con cerned. This is most pronounced where the presidency of the Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books.

Mr. John A. Sparks, a student at Grove City College, assisted with the research for this article. 44 United States is concerned. For example, following the assassina tion of President Kennedy, and the subsequent events in Dallas, various columnists announced in shocked tones that there was no Federal law providing for the punishment of assassins or mur derers of a President. Such cases fall under state law. This, the commentators declared, was hard ly the way things should be. The matte.r should be corrected by making assaults upon the Presi dent a Federal crime. Closely related to this is the employment of an extensive Secret Service to guard the President. Millions of dollars are spent an nually to this end, and the amount has been recently greatly in creased. Lengthy lists of potential assassins have been compiled, and 1965 THE "DEMOCRATIC" ELITE 45 a concerted effort is being made to make the list as complete as possible. T~e men assigned to guard the-President are expected to serve as human shields of his body if the occasion warrants such action.

It is not my purpose here to make any evaluation or judg ment of such actions. They may or may not be justified. However, it would be diffi.cult to do so from a udemocratic" or equalitarian standpoint. If all men are equal, what would justify giving more protection to one man than an other? Why should a guard place himself between the President and an assassin.'s bullet? Is it a more heinous crime to kill a. Presi dent than it is to kill anyone else? If not, why should it be made a Federal crime to do so? In short, the attention and care lavished upon the President is ·hardly i.n keeping with the democratIc ethos. Here is another anomoly. Su preme Court decisions .are made in the name of democracy and hailed as being "democratic." For example, the famous· decision of Brown v. Board of Education of Topeka, et. ale was preceded by the following argument, among others, by lawyers for the appel lants (who were seeking a de cision for integration of the schools in question) : The importance to our American democracy of the substantive ques tion can hardly be overstated. The question is whether a nation founded on the proposition that "all men are created equal" is honoring its com mitments to grant "due process of law" and "the equal protection of the laws" to all within its borders when it, or one of its constituent states, confers or denies benefits on the basis of color or race. 1 Mr. Chief Justice Warren, who gave the opinion for a unanimous court, declared: "Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the, importance of education to our democratic society."2 Again, it is not my purpose to evaluate the decision in question.

My concern is with the use of the words "democracy" and "demo cratic" in connection with it. No branch of the general government is so remote from popular control as is the judiciary. It is the least "democratic" of all the branches. The members of the courts are appointed by the President, by and with the advice and consent of the Senate. They have life ten ure in their offices, and can only be removed from office by actions taken in both houses of 1 Quoted in Benjamin M. Ziegler, ed., Desegregation and the Supreme Court (Boston: D. C. Heath, 1958), p. 68. 2 Ibid., p. 78.

46 THE FREEMAN October Congress. The special function of the courts is to maintain a gov ernment of laws, and it was thought by the Founders that they would be more likely to do so if they were not subjected to popular pressures. Federal court decisions, by the-ir nature, are authoritarian and autocratic. That is, they are sup posed to be made on the' basis of the authority of the Constitution and precedent. They are autocrat ic in that ordinarily the members of the courts are not answerable to anyone for the decisions that they make. Their powers are not absolute, but they are as ne'ar to it as any granted under the Con stitution. On the face of it, "de mocracy" is not a word one would associate with the Supreme Court. A third strange development should be described also. As America has moved closer and closer to what is supposed to be democracy, the tendency has been for more and more: power to be concentrated in the central gov ernment. Local and state govern ments have yielded up, or had taken from them, many of their governmental functions. In like manner, individuals and volun tary groups have lost exclusive control of many of their affairs as the general government has un dertaken to regulate and control them. It is not immediately clear why such a course of development should be styled democratic.

If by democracy is meant gov ernment by the people, it would appear that a, counter movement would be more nearly democratic. That is, individuals and groups could better control their affairs and govern themselves at the local level. Local governments are sure ly more: sensitive to the wishes of the electorate than are govern ments far removed from them. State governments might be ex pected to reflect more accurately the wishes of their inhabitants than would the F'ederal govern ment. Changing the Meaning These anomolies can best be cleared up by an understanding that "democracy" is used largely as a word cover for an ideological thrust. Melioristic reformers have been bent upon remaking society along certain lines. They have used the materi.als at hand to ef fect their ends. The belief in de mocracy by Americans was a major constituent element of the materi als at h~nd. A new conception of democracy, however, had to be developed and propagated before it could be used in this way. It had to be wrested from its indi vidualistic context and collectiv ized. It had to be changed from a means into an end. It had to be in1965 THE "DEMOCRATIC" ELITE 47 strumented to the purposes of re form.

It is tempting to charge the re formers with the cynical manip ulation of a hallowed concept, with the malicious bending of words to their own ends. It is a temptation, however, that should be resisted. To appearances, at least, reform ers have quite often been as con fused as those they were drawing into their confusion. The, intellec tuals who provided the theories of reform were on a flight from reality. They were cut loose from methods of analysis and thought which would have enabled them to think clearly. It may be more accurate to think of them as feel ing their way to usages of democ racy that would accord with their ideological aims than to conceive of them as coldly planning lin guistic coups. At any rate, the idea of de mocracy was confused. from the outset in the United States. As I have shown, the Jeffersonians and Jacksonians used "government" in an ambiguous sense, in order to conceive of themselves as demo crats. Moreover, there were mysti cal elements in the conception.

Jean Jacques Rousseau is usually credited with, or blamed for, in truding mystifying elements into the conception of democracy. He introduced the idea of a general will into thought about the' matter. This general will was a kind of pseudo-metaphysical concept. It involved the notion that there is a general will in society, that the aim of a society should be to discover this and for individuals to bring themselves into accord with it. The general will was not simply the wishes of a majority of the electorate; it was that which all would wish for themselves if they but knew what they willed. No method was ever agreed upon for discerning the general will, but here was a fruitful idea that could be used, with variations, by dictators, majoritarians, techno crats, and assorted democrats. All modern notions of democracy are freighted with mystical and intel lectually impenetrable conceptions.

Building on Illusions Reformers. took over the exist ing illusions about democracy in America, and added to them. Per haps the chief illusion taken over is that the United States is a de mocracy. This illusion has already been explored in. some detail, so it needs only summary treatment here. These United States, taken together, are a constitutional fed erated republic. Those who govern do so on the' basis of the repre sentative principle. The people do not actually govern, nor has there ever been any reason for suppos48 THE FREEMAN October ing that they do. The power and authority of the courts derive from the Constitution, not from any supposed democratic charac ter of decisions issued by them. Perhaps the-most important il lusion added by the reformers is that socialism can be democratical ly achieved. There is some evidence that many reformers believed this in the early years of the move ment in America. In the late nine teenth and early twentieth cen turies much of the effort of re formers was devoted to making . America more democratic. This was particularly true of those known as populists, but it was only to a lesser degree true of the Progressives. The platform of the Populist Party in 1892 called for, among other things, a secret or Australian ballot, the direct elec tion of Senators, legislation by initiative and referendum, and the limitation of the President to one term in office. To this program the Progressives added and pressed for a provision for the recall of judges. Also, there had been a movement for a long time for fe male suffrage. The Progressives took up this clamor as a part of their platform. The Bull Moose Party platform in 1912 called for a national presidential primary.

Some major changes were made in consequence of these efforts. The Seventeenth Amendment, ratifled in 1913, provided for the dir ect election of Senators. The Nine teenth Amendment, ratified in 1920, extended the vote to women. Some local governments and states adopted the initiative and ref erendum procedures for some mat ters, and a goodly number of states provided for presidential primaries. Extending the Electorate But these populistic devices only partially solved one of the problems of reformers. A wider suffrage did enable them to elect reformers to office-sometimes. Even this was not an unmixed blessing, as reformers were short ly to learn. The electorate some times displayed strange tastes. They preferred an experiment in national prohibition to participa tion in a League of Nations. They preferred a "return to normalcy" to various and sundry redistribu tionist schemes. Still, reformers could be more readily elected to office when there was a more in clusive portion of the populace within the electorate. At least, the overall trends of this century would tend to indicate this.

Nor is the reason far to seek. The more extensive the electora,te the more-readily can it be swayed by demagoguery. If the property less can vote, they are more apt than those who have property to 1965 THE "DEMOCRATIC" ELITE 49 favor assaults upon it. The less the electorate is restricted to those who have demonstrated pra.ctical judgment, the more readily will it adopt or favor impractical schemes. Centralization of Power Even so, the major obstacle for social reform was not surmounted. The extension of the suffrage and the adoption of populistic devices did not mean that government would be by the people. There were still the governors and the governed. Indeed, most of the populistic devices - such as the initiative and referendum -, if they had been adopted, would have made socialistic reforms impracti cal to carry out, if not impossible. Reformers envisaged a planned, controlled, and directed economy.

This required the centralization of power, the concentration of au thority, and centralized direction. Democracy would tend to diffuse power, to locate decision-making with the numerous individuals who compose the electorate, and to make extended concerted action in a particular direction exceed ingly unlikely. ~oreover, the reconstruction of society is a complicated and deli cate undertaking. As Fabians (to use the term generically) have con ceived the matter, it is to be done slowly. This would mean with a tenacity and with eyes fixed on distant goals which few men dem onstrate. In short, the ordinary run of men cannot direct the gov ernment in this undertaking. One writer put the matter succinctly some years ago: The task of the government of a democratic society implies a wisdom and understanding of the compli cated life of modern societies very far removed from the simple "horse sense" which is sufficient for the running of small and simple democ racies. It is clear that a modern state can do its job only with a lot of expert help, expert statesmen, ex pert administrators. We must nowa days go on and say "expert econo mists and expert scientists." Perhaps we must go further and say "expert sociologists."3 To state it less obliquely, democ racy and socialism are antithetical goals. More precisely, democratic means are not suited to the achieve ment of socialistic ends.

Transforming Means into Ends Yet the thrust toward the reali zation of an ideology which should be called socialism has been car ried on in the name of democracy. Two things were done to make it possible to avoid confronting this anomaly, to keep the name while 3 A. D. Lindsay, The Modern Demo cratic State (London: Oxford University Press, 1943), p. 267.

50 THE FREEMAN October working for and accepting the substance of something else. First, democracy was transformed into an end. Second, the business of government was increasingly turned over to an elite. It may be regrettable, but there is nothing particularly unusual about means being transformed into ends. People do it regularly, and in numerous instances. A house is a thing to live in, an automobile a conveyance to get one from one place, to another, money a means of acquiring goods. Yet men will quite often treat these as ends in and for them selves. There may even be some thing wholesome and preservative in this tendency. Certainly, a house should become a home-something that has value and meaning be yond its accommodative useful ness. Things need much care and attention, and it may be that if we think of them only as means we will neglect them. Voting Becomes an End in Itself Rather than a Means of Choosing It would hardly be worthy of comment, then, if all that we're involved were the transformation of democracy from a means into an end. Any such transformation does, of course, tend to lead away from reality. But the transforma tion of democracy involved a sec ond remove from reality. As we have seen, the United States was not a democracy. Insofar as some of the means for governing were democratic, they fitted into a larger pattern. of diverse means.

The form of government could only be conceived of as democratic, descriptively, by abstracting some methods from the context of American government. Thus, the conception of American democracy was, and is, an abstraction. When it was made into an end, the a.b strac'tion was thingified. Some examples will help to clar ify this. Voting is a very impor tant practice within the American system of government. In this way, many of those who govern are chosen. They are limited in their exercise of power by the fact that they must stand for elec tion from time to time if they are to continue in office. Not only is government limited in this, way, but it receives popular consent for action by this device. Nothing should be clearer than that voting is a, means for making choices, giving the consent of the elector ate, and limiting those in power. But it is often treated as an end today. Spot advertisements on ra dio and television, notices in news papers, and posters and billboards exhort Americans to vote, though it does not matter for whom they vote. This is to treat voting as if it had meaning in and for itself, 1965 THE "DEMOCRATIC" ELITE 51 as if it were an end, not a means.

The abstraction is taken a step farther when this "democratic" procedure is taken from its gov ernmental context and extended to the action of voluntary groups. The following actually occurred. Someone rose in a faculty meeting and made a motion that each mem ber of the faculty should pay a certain amount into a flower fund, this amount to be withheld from the paychecks. The motion was seconded, and after some little discussion the motion was acted upon favorably by the faculty. The action was later nullified when an alert business manager pointed out that the enforcement of this act would be illegal. In fact, the faculty had assumed governmental powers, the powers of taxation. But, one might object, the pro cedure was democratic, was, it not? It certainly was, but it was not action in accord with the Amer ican system. If the faculty assumed the powers of taxation, there was no limit to the extent of such powers, no constitutional author ization, no independent judiciary, no procedure for investigations and hearings, no veto powers to prevent precipitate action. This was an excellent example of the abstraction of procedures, from their whole context.

Actually, though, such pseudo governments do exist in America, and have for some time. Labor unions have' been empowered to act as pseudo-governments, with powers of taxation and enforce ment. Farmers vote restrictions upon themselves and other farm ers, and indirectly tax all of us. Indeed, elections abound and are apt to occur at any time or place where two or three are gathered together. Some of these are in nocuous enough, but others turn any assemblage into a lobbying group or pseudo-legislative body. It would be highly unusual for anyone to arise when a vote was proposed and challenge, the, appro priateness of the p,rocedure. They are accepted as if they were j us tified in and for themselves. Dewey' 5 Contribution It may be that men have a tendency to turn means into ends, but this development in democracy was not simply the result of some inclination rooted in human na, ture. It served a, purpose. It was promoted and propagated. Re formers articulated a vision of democracy as a goal or an end.

Many men contributed, first and last, to this development but none more consistently and vigorously than John Dewey. Note how, in the following, he makes democracy an end and a goal: . . . A democracy is more than a form of government; it is primarily 52 THE F.REEMAN October a mode of associated living, of con joint communicated experience. The extension in space of the number of individuals who participate in an in terest so that each has to refer his own action to that of others, and to consider the action of others to give point and direction to his own, is equivalent to the breaking down of those barriers of class, race, and na tional territory which ke'pt men from perceiving the full import of their activity.4 More, A society which makes pro vision for participation in its good of all its members on equal terms and which secures flexible readjust ment of its institutions through in teraction of the different .forms of associated life is in so far demo cratic. Such a society must have a type of education which gives in dividuals a personal interest in so cial relationships and control, and the habits of mind which secure so cial changes without introducing disorder. 5 In short, democracy is not only an end, but it has an end or aim social control and social recon struction.

Emphasis on Qualify In particular, the end of democ racy has been most often thought • 4 John Dewey, Democracy and Educa hon (New York: Macmillan 1916) p. 101. " 5 Ibid., p. 115. of as equality. That is, democracy has often been defined as equality, and programs for providing equal ity have been described as demo cratic. One writer described the phenomenon, with obvious approv al, in this way some years ago: There is excellent historical and psychological ground for the suppo sition that democracy, whatever it may mean of fraternity, must at least be an effort to embody equality in action. American modifications made in the democratic form may be interpreted as approach toward or recession from equality. What we have only now been considering in America as expansion of govern mental regulation, even up to the creation of what has been called "the service state," has been done pri marily in the name of equality of opportunity. From the "Square Deal"

of Roosevelt, through the "New Freedom" of Wilson, up to and into the "New Deal" - this has all been an adventure in equalization. In fact, the general bent of American democ racy has been the extension of lib erty in the name of equality for the sake of solidarity.6 One may take issue with his use of "liberty" in connection with these developments, but he has aptly described the animating aim of the programs . 6 T. V. Smith, The Democratic Tradi tion in America (New York: Farrar and Rinehart, 1941), p. 17.

1965 THE "DEMOCRATIC" ELITE 53 The provision of equality could, and has, become an all embracing goal. When governments are used to do this, they must engage in innumerable activities. Wealth must be more or less redistrib uted; production and distribution of goods must be directed; prices must be more or less controlled; individuals and groups must be regulated so as to prevent dis crimination, and. so on. Such a goal as actual equality, if it could be achieved, could only be reached by the extended and concentrated effort of those who were acting with the force of an all powerful state. It would require the loca tion of such power in the hands of men, and it would have to be centrally directed. Steps toward Control Several things had now been done to "democracy" by these' ab stracting processes. First, the methods associated with it had been made into ends-- voting for the sake of voting, for instance.

Second, it had been changed into a substantive goal, more or less divorced from its procedural methods. That is, if "true democ racy" is equali ty, the methods of democracy are surely secondary. Third, the achievement of this goal required extensive and ex tended social reform. Fourth, the reforms required by "democracy" would be themselves "democratic." It follows, then, that whatever has to be done to achieve the goals is "democratic," however far re moved it may be from democratic proced ures. As a writer observed in an earlier quotation, the effort must be directed by experts - by an elite, if you will. The above is the line of reason, or unreason, by which something so uncongenial to democracy as an elite could be justified. But government by an elite was not only uncongenial to democracy; more important, it was also uncongenial to the Amer ican way, and to Americans. Americans liked to manage their own affairs, both private and pub lic. The notion of having their affairs managed by experts might not be' expected to be too popular.

Still, it has come to pass that an elite increasingly governs, and their responsibility to the popu lace is often quite indirect, if not nonexistent. The Theory of an Elite Elitist ideas have been very prominent in European thought for the past century. As one his torian says, "The ideal of an elite guiding mankind toward a better life in a new society has played a role" in many social theories. "Marxism had its elite in the Communist Party, and Nietzsche 54 THE FREEMAN October longed for an elite of individualis tic supermen."7 Perhaps the most extensive theory of an elite set forth was by Vilfredo Pareto in a three volumned work called A Tract of General Sociology. He held that man is fundamentally irrational or that most men are-, that he is governed by "residues" and "der ivations" - residues being, rough ly, inherited beliefs, and deriva tives being particular formula tions from these which serve to motivate behavior and attitudes.

An elite could govern through its knowledge of the psychology of the masses. "The main business of this elite must be to manipulate residues through controlling their derivations. Here propaganda came into its own, for the residues were irrational and thus the der ivations had to appeal to the ir rational in man .... Thus if meat inspection was desired, the ap peal could not be to civic pride but instead to the fear of death through poisoning."s America has had no Pareto. The nearest thing to him was probably Thorstein Veblen. Veblen did set forth a theory,· or, in the peculiar argot of progressives, a predic tion, of an elite. His elite was 7 George L. Mosse, The Culture of Western Europe (Chicago: Rand Mc Nally, 1961), p. 293. 8 Ibid., p. 295. made up of industrial technicians, and when it ruled it would be a technocracy. Veblen held that in creasingly business was managed and guided by technicians. These had been brought in the service of what he called "absentee own ers," the holders of corporate stock, and so forth. But he ex pected that in time they would perceive that these owners con tributed nothing to production.

When they did so, they might be expected to revolt by way of a general strike of technicians and take over the industries. He did not profess to know when it would occur. "But so much seems clear, that the industrial dictatorship of the captain of finance is now held on sufferance of the engineers and is liable at any time to be discon tinued at their discretion, as a matter of convenience."9 When they took over, they would admin ister the industrial system for the benefit of the general welfare, so Veblen thought, not for the profit motive. The "Soft Sell" in America Of course, American reformers did not generally openly advocate government by an elite, or press for the formation of a technoc racy. Instead, they acclimated 9 Thorstein Veblen, The Engineers and the Price System (New York: Vik ing, 1921), p. 82.

1965 THE "DEMOCRATIC" ELITE 55 Americans to the idea in a more piecemeal fashion, and talked in terms of more congenial ideas. They spoke of leadership, of ex perts, of civil service, and of pub lic administration. Americans were, and are, much devoted to things scientific, and it was con vincing to appeal for experts and technicians in government affairs. Indeed, in the 1920's, the intro duction of such methods in gov ernment was often referred to as being businesslike. The simplest illustration of the application of these ideas to gov ernment can be found at the local level of government. The city manager system was a direct out growth of the idea of having ex perts govern. The movement for city manager systems got under way in the early twentieth cen tury, and was part of the general reform movement led by Progres sives. The system is well described in the following words by an en thusiastic advocate: . . . A small council is elected at large and chooses a city manager. It may dismiss him but may not con trol his acts. The manager appoints the necessary city officers and acts for the city in much the same way that the general manager would for an ordinary corporation. He is re sponsible only to the councilmanic directors .... The amateur adminis trator, chosen on political grounds, is displaced by the expert brought in from the outside to manage the city.

Politics is adjourned. At least this is the hope.1O Without perceiving the irony of it, this writer says: "The return to simplicity is hopeful whatever may be its details. The earliest type of city government in the United States was that of a single body. . . . Power and responsibil ity were concentrated. . . ." In short, "In essentials we are now back where we began .... " 11 He did point out in an earlier para graph, however, that the city manager system might well be oligarchic. But he seemed mainly concerned that this situation would result from lack of public interest. To which one might re ply, it is oligarchic, or, more pre cisely, monarchic, whether the public is interested or not. City Planning Developed A corollary movement was the city planning movement. The aim was centralized control of the de velopment of cities and the draw ing up and execution of master plans. One advocate stated the aims in this way: In a big way, city planning is the first conscious recognition of the 10 Lindsay Rogers, "Government by City Managers," World's Work, XLIV (September, 1922), 519.

11 Ibid., p. 524.

56 THE FREEMAN October unity of society. It involves a social izing of art and beauty and the con trol of the unrestrained license of the individual. It enlarges the power of the State to include the things men own as well as the men them selves, and widens the idea of sov ereignty so as to protect the-com munity from him who abuses the rights of property ... .12 These wonders were to be achieved by expert planners: City planning involves a new vi sion of the city. It means a city built by experts, by experts in archi tecture, in landscape gardening, in engineering, and housing; by stu dents of health, sanitation, transpor tation, water, gas, and electricity supply; by a new type of municipal officials who visualize the complex life of a million people as the build ers of an earlier age visualized an individual home. 13 Extending the Pattern to the National Level This vision was, of course, transplanted to the nation as a whole. The idea of governing by an elite of leaders and experts was transferred there also. The President has most often been conceived of as the leader. The constitutional role of the Presi12 Frederick C. Howe, "The Remaking of the American City," Harper's, CXXVII (July, 1913), 186-87.

13 Ibid., p. 187. dent is considerable, but the office has grown mightily in power and prestige in this century. Theo dore Roosevelt and Woodrow Wil son contributed to its stature. Theorists have come forward, too, to proclaim the role of leadership inherent in the office'. The following, written in 1921, exemplifies the tenor of such thought: Thus the President is the one of ficial whose position marks him at the present time as the national lead ere Any man, no matter how obscure he may be to-day, will on the mor row of his election to this high office step into the blinding radiance of universal scrutiny. The writer continues: The legal functions of the Presi dent's office are so eminent that he cannot escape the responsibilities of executive action, however much he may be inclined to avoid them. His constitutional powers alone make him the pivot upon which all the administrative machinery operates.

He appoints all the heads of depart ments and may direct their maj or policies. His power of appointment to all the greater offices is far-reach ing. He can recommend, shape, and veto legislation. . . . In short, he is the most potent constitutional func tionary in the wor Id.l 4 14 Samuel P. Orth, "Presidential Lead ership," Yale Review, X (April, 1921), 453.

1965 THE "DEMOCRATIC" ELITE 57 Moreover, All these constitutional powers have been vastly augmented by prac tice and custom. The President to day can do innumerable things that George Washington or Thomas, J ef ferson would never have dared do even if they had thought of them. The constitutional conception of the President is that of a' chief execu tive, an administrator; custom has added to this conception that of lead ership, of initiation. 15 Already, then, the idea of presi dential leadership had taken shape, an idea which has been used to provide a head for the exercise of centralized authority. Experts Turned Bureaucrats The President was to be as sisted, of course, by numerous scientists, social scientists, ex perts, and technologists. Charles A. Beard made what well may be the classical argument for the use of' technologists in 1930. Arg uing in the manner of the his toricist, he maintained that con ditions of life had changed in America. The major source of these changes had been techno logical innovations. In consequence of these, according to him, gov ernmental functions had been greatly augmented. He declared, Under the pressure of new forces, 15 Ibid., pp. 453-54.

government itself has become an eco nomic and technical business on a large scale. It comes into daily con tact with all industries, sciences and arts. As a purchaser of goods . . . , operator of battleships, arsenals, canals and wireless, stations ... , regulator of railways, telegraph lines and other means of transportation and communication, it must com mand ... competence equal to that of corporation managers .... 16 Thus, he concluded, "Few indeed are the duties of government in this age which can be discharged with a mere equipment of historic morals and common sense." 17 The matter is not one for des pair, however. "Fortunately, in introducing these bewildering complexities into government, technology has brought with it a procedure helpful in solving the problems it has created: namely, the scientific method .... Though undoubtedly limited in its appli cation, the scientific method prom ises to work a revolution in pol itics no less significant than that wrought in society at large by mechanics." 18 The mechanics of the scientific method in govern ment would be, of course, experts turned bureaucrats.

16 Charles A. Beard, "Government by Technologists," New Republic, LXIII (June 18, 1930), 116. 11 Ibid. 18 Ibid.

58 THE FREEMAN October Democratic Reform We now have the key for solving the problems originally posed in this article. Namely, how could the Supreme Court make "demo cratic" decisions? How could pro ponents of democracy and equality promote a privileged position for the President? How could cen tralized government be-advanced in the name of democracy? On the face of it, these are incongruities. An explanation has been made, however, and it remains only to sum it up. Democracy was trans formed into an end. As an end, government was to act to. realize it. All actions that have as their end the effecting of democracy are then democratic. Thus, how ever autocratic the exercise of authority by the Supreme Court, if it helps to realize an equality of condition, it is "democratic." The realization of "democracy" requires central direction; hence, a leader. The President is that leader in the' United States, and his protection becomes important because of his essential role in bringing about democracy. In this way, too, an elite could become "democratic" because of its neces sity to the bringing about of sub stantive democracy.

More broadly, "democracy" was instrumented for social reform. Indeed, social reform was justified because it was supposed to bring about democracy. Thus, men have yielded up the control of many of their affairs in the name of de mocracy. Local governments have lost many of their prerogatives in the name of democracy. An ubiquitous bureaucracy makes numerous rules and regulations affecting the lives and liberties of Americans. But it is staffed by a "democratic" elite. ~ The next article in this series will have to do with "Capturing the Hearts of Men."

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN The Independent Sector Do "anything that's peaceful," says Leonard Read - meaning that men should try to solve their problems, either individually or in voluntary association, without putting a gun at their neighbors' heads to make them pay for it. This, in the time of Alexis de Tocqueville, was good American doctrine. But who be lieves it today? The answer is that a lot of people do, but they don't know what to do about it. Our health problems seem so vast, our cities are such jungles, our racial groups are engaged in such bitter strife, that the average individual is cowed into letting the "public sector" take over, with hopes that the "private sector" will somehow continue to make enough money to finance everything from hospital care to subsidizing poor people's rents. Plans Gone Astray The trouble with this formula is that it has a reverse Midas touch, turning everything it touches into dross and tarnished brass. As has been aptly said, slum clearance means "Negro removal."

The centers of big cities knocked down by the Federal bulldozer, are filched by legalized means from small merchants and sold at cut rates to monopolists. Able-bodied men are paid relief for not work ing, and their wives, subsisting on what comes without effort, breed children who continue on the re lief rolls as a matter of inherited tradition. Commodity subsidies are paid out in a program originally designed to help the poor farmers, but 80 per cent of the money goes to the million farmers whose aver age annual income is more than $9,500. Meanwhile, our overregu lated railroads become more and more decrepit, and our subsidized merchant marine, beset by strikes, disappears from the seas. Surveying the dreary landscape, both conservatives and the new style collectivist liberals react with apathy. The conservatives have no 59 60 THE FREEMAN October program. The liberals wonder how so much public debt and inflation can have bought so very little. And philosopher Paul Goodman, a col lectivist liberal in good standing, writes: "Throughout society, the centralizing style of organization has been pushed so far as to be come ineffectual, economically wasteful, humanly stultifying, and ruinous to democracy."

The Voluntary Way Into this picture steps Richard C. Cornuelle with a book designed to bring Tocqueville up to date. Mr. Cornuelle gives his work a most provocative title, Reclairning the American Dream (Random House, $3.95) . The trouble with our think ing, says Mr. Cornuelle, is that we have fallen into the habit of two value descriptions. We talk of the "public sector" (meaning govern ment) and the "private sector" (meaning free enterprise), forget ting that a vast "independent sec tor," devoted to public purposes but paid for by private individuals, exists in the in-between land that used to be such an honored part of the landscape in Tocqueville's century. What is original about Mr. Cor nuelle's book is its clear-sighted ability to marshall convincing de tail. He proves his case that the "independent sector" is capable of "stunning social accomplishments." As he says, a national private organization practically wiped out polio. The Mormon Church took care of all the wel fare needs of its members throughout the worst depression years. Alcoholics Anonymous is al ways there to help an alcoholic who will admit that he needs help.

Cleo Blackburn, without asking the Federal government for a cent, organized slum dwellers in Indianapolis into teams and set them to using the technical meth ods of Indiana's prefabricated housing industry to build houses for themselves. The banks lent money for the land and materials, and took the work of the building teams as a "sweat equity" down payment on mortgages. The Possibilities Mr. Cornuelle multiplies his in stances with such enthusiasm that it will surprise me if he fails to create a new movement that will attract both conserva tives and modern-style liberals into a new "third force" camp. If fully mobil ized, says Mr. Cornuelle with ex hilarating conviction, the "inde pendent sector" could wipe out poverty, put all willing and able people to work, solve the farm problem, give everyone good medi cal care, stop juvenile crime, re new our urban landscape, lever a wider distribution of stock owner1965 THE INDEPENDENT SECTOR 61 ship, provide plenty of good schools and cultural outlets, wipe out segregation, pay reasonable re tirement benefits to all, and even give us a good foreign policy by carrying an independent crusade for human welfare and personal dignity abroad.

Signs of Progress Is Mr. Cornuelle indulging in wild utopianism when he indulges in such comprehensive list-mak ing? Our government seems to think so: vide the recent break through staged almost without op position by the Great Societarians who profess to speak for liberal ism. But the "public sector," in practice, does so poorly for indi viduals that it is a rare community whose citizens don't have to look to the independent and private sectors· to minister to their needs. In the course of newspaper columning over the past three years I have come upon scores of in stances which parallel those listed by Mr. Cornuelle. In Savannah, Georgia, the wife of a utility mag nate borrows the money to buy up a decrepit portion of an old city's downtown area - and, surpris ingly, turns it into a tasteful real estate venture that not only satis fies human needs at low cost but also earns a profit. In New Haven, Connecticut, a group of citizens turns an old business college into a fine liberal arts institute, Quin nipiac College, by charging enough to cover the education it dispenses and, simultaneously, let ting the students find their own food and lodging "off campus," as was the centuries-old style in con tinental Europe. In Milwaukee, Wisconsin, the teenagers, with an initial push from Elmer Winter of Manpower, Inc., have found more than a thousand jobs a summer for adolescents over the past two years. In Vermont, lumber com panies lease their more maj estic mountain land for ski centers, where thousands disport them selves at popular prices. In Colo rado and in the Poconos of Penn sylvania, the Baptist Church main tains camps for its young people and lets the more indigent among them pay their fees by a minimal amount of work. In Los Angeles, members of the Western Student Movement volunteer their teach ing services in a program de signed to rehabilitate dropouts.

All of these instances, and many more like them, have come to my casual .. attention even though, un like Mr. Cornuelle, I was not busy with any systematic search for them. The "independent sector" keeps turning up rich evidence every where of response to the old Amer ican idea that voluntary associa tion can take care of almost any62 THE FREEMAN October thing. Testing his theory before writing about it, Mr. Cornuelle himself organized United Student Aid Funds, Inc., to guarantee bank loans made to boys and girls seeking college educations. In a space of three years USA Funds, Inc., has guaranteed 68,000 loans totalling $40 million - proving to Mr. Cornuelle's satisfaction that the need for "Federal aid to edu cation" is an illusion. Attention, Churchmen Near the close of his book Mr. Corn uelle, himself reared in a par sonage, puts two sets of statistics in poignant juxtaposition. Almost 118 million people in 320,000 re ligious congregations in America are told there is nothing much for them to do but "be pious and pay their taxes." Meanwhile, there are a million people in the country who are listed as "unemployable cases." This amounts to about 3 per church. In other words, if each church in America were willing to help three people "out of helpless poverty. into productive employ ment," a formidable problem "would come tumbling down like the walls of Jericho."

This is something to think about for the clergymen who are joining marches on Washington to stimu late bigger Federal relief pro grams that invariably end by in stitutionalizing unemployment. ~ ~ MERCHANTS MAKE HISTORY by Ernst Samhaber, New York: The John Day Co., 1964, $6.95, 396 pp. Reviewed by Robert M. Thornton THIS BOOK is neither a dry com pilation of dreary facts and fig ures, nor a treatise on economics; it is the absorbing story of the in fluence of trade upon history - an exciting tale of merchants travel ing into strange and exotic lands, venturing forth over dangerous seas, mountains, and deserts, and risking their fortunes, if not their lives, to buy and sell. Scanning the annals of trade since the beginnings of recorded history, Mr. Samhaber, a mer chant and scholar, finds proof that government interference in eco nomic affairs, whatever the' inten tions may be, always does a great deal of harm in the long run. Di rect harm is wrought by political interventions, and then govern ments typically try to repair the damage by inflating the currency.

This cure compounds the disease! As the author observes, "How tempting always are the gains of inflation and how terrible and dis astrous are its invariable conse quences !" There are, generally speaking, two ways in which government may interfere with the market: it may grant merchants and others 1965 OTHER BOOKS 63 special privileges in the form of monopolies, tariffs, exchange con trols, import and export quotas, and the like; or, on the other hand, it may assault the mer chant class by taxation, legisla tion, regulation, and confiscation. In either case, the public suffers. But when merchants are let alone - not pampered and not abused the public prospers. Rarely, over the centuries, has government kept hands off. Usually, competi tion causes apprehension in those involved, and some businessmen run to the government for protec tion. Any privileges they receive from government are paid for by the consumers in the form of higher prices and a scarcity of goods.

The value of the merchant, ex plains Mr. Samhaber, and the rea son he should never be arbitrarily hampered, is that he, like money, acts as a lubricant in the economy. Present-day economies are incon ceivable without merchants, just as they would be impossible without a medium of exchange (money). Barter has great limitations and will do only for the simplest econ omy. Complex transactions re quire money and merchants. The latter bring together, over long distances and periods of time, the buyer and the seller. This is what distinguishes merchants from other men of business .. They are not concerned with banking, pro ducing, or retailing; they are en gaged simply in buying goods to be resold, hopefully, at a profit. As to what would happen if there were no merchants, read the wonderful little story Mr. Sam haber tells at the beginning of his splendid book. It is worthy of another free-trader named Bastiat! ~ • UNIVERSITY ECONOMICS, by Armen A. Alchian and William A.

Allen, Belmont, California: Wads worth Publishing Co., 1964, 924 pp., $7.95. Reviewed by Dr. GeO'rge M. Wattles, Rockford College. University Economics is a refresh ing and worthy addition to the spate of texts intended to guide students who wish to understand principles of economics. Like the reversible raincoat, it may also perform a second function reason ably well. The layman could hardly find a more thorough and instruc tive reference book for his private study. A word of caution to all purchasers: Buy a copy from the second printing. Unfortunately, the first printing contains a pro fusion of typographical errors. Students of economics will ap preciate the many practical ques tions which follow each chapter. They will learn much from the unique section which gives an64 THE FREEMAN October swers to about one-half of the questions. By observing which questions are answered and which are given indefinite answers, the careful reader will perceive the caution and respect with· which these authors approach their sub ject. More than most of their fel low authors, Alchian and Allen are careful to separate the science of economics from all loose and opin ionated use of economic shibbo leths. They are particularly care ful to avoid the impression that study of economics will lead us to panaceas.

The forte of this book is its de tailed discussion of micro-eco nomics - the economic behavior of individual persons and firms. Ap propriate emphasis is given to the importance of private property. The effects of attenuation of our property rights, whether directly, indirectly, or by threats, is de scribed more clearly than in any similar work. For example, the reader will understand why his regulated public utility behaves as it does. Instead of intemperate criticism of governmental interference in the market place, these authors wisely rely on reference to proven and basic economic principles. They lead the reader to his own sound conclusions. The paucity of space devoted to discussion of popular current economic issues is both a strength and a weakness. Some readers may be disappointed. In the long run, however, the student will come to appreciate the relative emphasis on fundamentals. He will find that his knowledge of economics is vital as he seeks to comprehend the panorama of problems ahead, and he will perceive the economic facet of issues which had previously ap peared to have none.

Among the more worthy discus sions, one must cite those which involve popular concern about price rigidity, "excessive" adver tising expenditures, and pro ducers' control of product design and product price. The analysis of monopoly utilizes the important distinction between firms whose market power results from gov ernment action and those whose advantage is subject to competi tive market forces. The omnipresent topic of infla tion is another which is treated with rare skill and perception. A clear separation is made between causes and effects of inflation. The areas of international trade and balance of payments are ade quately handled but are not clearly superior to similar chapters in cer tain other texts. None of us can read this well written text without adding depth to our understanding of our own economy, and of every other. ~ Francis E. Mahaffy 3 Clarence B. Carson 6 Howard Kershner 21 Tom Rose 23 Muriel Osterhaus 28 Hans F. Sennholz 30 W. M. Curtiss 37 Herbert Spencer 42 Leonard E. Read 50 Paul L. Poirot 53 NOVEMBER 1965 The Causes of Violence The Flight from Reality 14. Capturing the Hearts of Men Legalized Coveting .

Inflation Man's Priceless Heritage . Who Fixes Wages? . For the Birds? The New Liberalism "Under Public Ownership, We, the People, Own It!" . Social Security Re-examined . Books: On and Off the Reservation Other Books . John Chamberlain 60 63 Send lor this UNIQUE fREE BOOKLET "SAVINGS: The Greatest Economic Charity" When we think of charity, we usually think of helping someone and receiving only the satisfaction of having helped someone in need. Yet this is only one form of charity. There's another. You can read all about this interesting concept in an unusual new booklet by the well-known economist F. A. Harper, entitled ··Savings, The Greatest Economic Charity." For your free copy, without obliga tion, come in or mail the coupon below. CR6Af'Es1' ';CONO""C CIIARf1" . State _ "If It's SafetyYou Want Most-First Compare Then Save At Coast" Planned rate for 2nd half 1965 is 4.85 % per year, compounded DAILY,paid semi-annually.

Savings held 1 year at this rate earn 4.970/0. MAIN OFFICE: 9th & Hill, Los Angeles, Calif. 90014 • Tel.: 623-1351 I ITO: Coast Federal Savings and Loan Association, Dept. F, 9th & Hill, L.A., Calif. 900J ] Please send me a free copy of Name(s) ··Savings, The Greatest Economic (please print) Charity." I would like to open a savings ac count. Enclosed is my check (or money order) for $- . Address, _ o Individual Account o Joint Account City .111" Civil disobedience may be antici pated, suggests a minister, when the government itself becomes an instrument of plunder p. 3 111" Dr. Carson traces the steps by which the democratic "elite" have ap pealed to mass emotion to implement Utopia p. 6 ,111" And Dr. Howard Kershner describes the problem as "Legalized Coveting" ........ p. 21 111" Tom Rose, being from Missouri, will have to be shown otherwise if he is not to reject inflation on every count p. 23 111" A California housewife discovers that the key to liberty is in her hands ........ p. 28 Y' The whys and wherefores of wage determination are analyzed by Professor Sennholz p. 30 111" Dr. Curtiss handles FEE's College Business Fellowship Program and ex plains its value to all involved ....p. 37 111" The modern emphasis on "liberal ism" calls for reviewi ng Herbert Spencer's classic distinction between the old and the new versions ....p. 42 ,111" The difficulty is that no one as sumes responsibilty for what. is "publicly" owned p. 50 111" Each revision of the Social Security Act means further departure from the basic principles upon which personal security depends p. 53 ,Y' The twelfth in FEE's series of bound volumes of Essays on Liberty is the subject of John Chamberlain's review p. 60 111" And Robert Thornton commends The Nature of the American System by Rushdoony . p. 63 Anyone wishing to communicate with authors may send first·c1ass mail in care of THE FREEMAN for forwarding.

NOVEMBER 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No. 11 Pres·ident, Foundation for Economic Education illanag'ing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited goYernment, founded in 1946, with offices at Irvington-on-Hudson, New York. Any interested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the means of maintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Singlecopy/-so-centsj 3 for $1.00j 25 or more, 20 cents each. .

Permission is hereby granted to anyone to reprint any article in whole or in part, providing customary credit is given, except liThe Flight from Reality," and "legalized Coveting." Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

VIOLENCE in the streets of some of our large urban centers has stimu lated an investigation of the under lying causes of these riots, blood shed, hatred, disrespect for life, property, and the laws of society. Until we learn the causes, it will be hard to come by the cure for the disorder. To some, the obvious cause is poverty. But poverty does not of itself produce violence. While the mobs were rioting in the United States, I was visiting in an African home. The four children and their parents, as well as the chickens, shared one small room in the hut. The Reverend Mr. Mahaffy has served since 1945 as a missionary of the Orthodox Pres byterian Church in Eritrea, East Africa. Their beds consisted of mats on the hard earth with a piece of cloth or a block of wood for a pillow. But as I sat on the floor with them, eating a coarse bread with hot pepper sauce from a common dish, there was a pleasant exchange of banter followed by more serious discus sion and study. The deep poverty of this African family did not lead to violence; rather, they all mani fested the most gracious hospital ity and sincere friendship. In Africa, violence frequently charac terizes the activity of the newly educated and more economically advanced young people; the poor people more often retain their tra dition of gracious hospitality and friendliness. There is no direct re4 THE FREEMAN November lationship between poverty and violence in Africa - or .America.

It is my conviction that the causes of violence often lie in the philosophy of the welfare state. so ciety, promoted by politicians and widely accepted by many people. Recently, a religious periodical reported that a Christian college received a large grant of Federal funds toward building a library. A student of that college wrote of Federal grants to provide on-cam pus jobs for the students. This col lege would be classed as a conserva tive school in its political and religious outlook. Not one of the professors would think of support ing open violence but would roundly condemn it. All would agree that the Moral Law of God summarized in the Ten Command ments provides the absolute norm for conduct. Yet the supporters of such Federal subsidies to educa tion, like all supporters of the wel fare state, are unwittingly endors ing violence as a way of life.! Perhaps the shooting of police men· and civilians, the plundering of stores and burning of buildings seem remote from the promotion of the welfare state society via Federal subsidies. The one mani fests open and naked force against 1 Leonard E. Read, "Violence as a Way of life," Essays on Liberty, (Irv ington, N. Y.: Foundation for Econom ic Education, 1962), Vol. IX, p. 303.

the Iives and property of others; the other seemingly advocates Fed eral funds for worthy, peaceful ends. But both alike are manifesta tions of violence and are the fruits, in differing degrees of maturity, of the same basic philosophy. Redistribution by force The measures of the welfare state are means for redistributing the wealth. The recipients may be the aged who receive Medicare, for eign nations who are given tractors and money in foreign aid, urban dwellers for whom new houses are built, farmers who sell their grain to the government at a subsidized price, private or government school beneficiaries of state and Federal grants, children who receive free or subsidized lunches, or those businesses whose projects are gov ernment financed. Whatever the means of redistribution may be, the recipient receives what has been seized by violence in taxes col lected from others. He receives the fruit of legal plunder.

This legal plunder of property by the state is rooted in disrespect for life; for to seize property is to violate the life sustained by that property. Carried to its logical con clusions, the recipient of legal plunder assumes a right to the property and thus to the life of his better-situated neighbor. When legal plunder becomes the accepted 1965 THE CAUSES OF VIOLENCE 5 norm of everyday life, it is little wonder that more naked violence occasionally breaks out in our cities. The perpetrators of the vio lence have been taught through effective propaganda that they have a right to the fruits of the labor of others. When they feel that the agents of the redistribution have stinted in the distribution of these fruits to them, they take into their own hands the logistics of the division, speeding up the process by open violence and plunder. They are only carrying out to its logical conclusion the principle of violence involved in Federal subsidies to some at the expense of others. They are engaging in illegal pIunder and violence to accomplish what the welfare sta te does by means of legal plunder.

Dr. Ludwig von Mises has clearly pointed out the fact that socialism leads naturally to vio lence, bloodshed, and war. 2 Whether this socialism be that of Nazi Germany, Fascist Italy, Rus sia, China, or the compulsory col lectivism of our welfare state so ciety, tbe final result is disruption into open violence. Such violence is only the fruit of the more subtle (and hence in many respects more 2 Ludwig von Mises, Human Action (New Haven: Yale University Press, 1949),pp. 449, 680-84, 820. dangerous) violence of redistribu tion. The causes of violence often lie in the philosophy of compulsion that characterizes all types of so cialism. And because socialism in volves violence, it flouts the moral law which restricts the use of force against others to the restraint of evil. Restoring Moral Law and Order The solution to the problem of violence does not lie in attributing it to poverty and promoting fur ther violence by way of urban re newal and Federal subsidies. The solution is to abandon violence as a way of life. Required is a renewed respect for law rooted in respect for God, the Law-Giver, not only by individual citizens subject to the law, but especially by those citizens who have been delegated the power of the sword for the suppression of violence among us.

It is still true that "righteous ness exalteth a nation: but sin is a reproach to any people."3 True righteousness will evidence itself not· only in refraining from vio lence on the streets of our cities but in aband.oning the philosophy of violence which characterizes the redistributionist activities of the welfare state. • 3 Proverbs 14 :34 14. Capturing the Hearts of Men CLARENCE B. CARSON · .. And Christianity, by the lips of all its teachers, ought with all its emphasis to say to society: "Your present industrial system, which fosters these enormous inequalities, which permits a few to heap up most of the gains . .. needs important changes to make it the instrument of righteous ness." WASHINGTON GLADDEN, 1886 I take this as my thesis: Christianity is primarily concerned· with this world, and it is the mission of Christianity to bring to pass here a kingdom of righteousness and to rescue from the evil one and redeem all our social re lations.

· .. The mission of the Church is to redeem the world, and to make peace with it only on its unconditional surrender to Christ. RIC H A R D T. EL Y, 1889 · .. Church and State are alike but partial organizations of humanity for special ends. Together they serve what is greater than either: humanity. Their common aim is to transform humanity into the kingdom of God. WALTER RAUSCHENBUSCH, 1907 MELIORIST REFORM in America has usually been advanced with reli gious zeal. It has quite often been forwarded as a moral crusade. The political conventions of Populists and Progressives had something Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books. 6 of the atmosphere of revival meet ings. Reform programs have fre quently been enveloped in a senti mental gloss of morality which frightens the timid away from challenging them and permits their instigators to adopt postures of not-to-be-questioned rectitude.

Reformers have pictured them selves (and undoubtedly thought 1965 CAPTURING THE HEARTS OF MEN 7 of themselves) as champions of the poor, the downtrodden, the dispossessed, the underdog, the meek, and the maltreated. They have proClaimed their cause as just and have assumed that their motives were pure. Above all, they have identified their reformist mission with the mission of Chris tianity, have sanctified their re forms by this identification, and have drawn many people into their effort by an appeal to Christian charity. Religion has been "instru mented" for the purpose of social reform and reconstruction. The pressure of organized religion has been brought to bear increasingly upon governments to use their po litical power to reconstruct so ciety. Churches and churchmen have supported the unionization of labor, the forced redistribution of wealth, coerced integration, and a host of particular programs for rebuilding society along the lines of the socialist vision. The task here is to describe summarily how this transformation of religion came about, to tell how social con cern developed among some cler gymen, how a new theology was constructed to justify social recon struction, and how the organized churches were drawn into this ef fort. In short, it is the story of how many in the churches and many religious institutions came under the sway of and became subservient to reformist ideology.

To turn it around, it is the story of how the moral zeal of religion was brought to bear upon social reconstruction, advancing by emo tion things that could hardly have been advanced by reason. Imperfect Man It is the story, in the main, of the social gospel movement. But before telling it, some explanation of the nature of what was in volved in it is in order. There is a tension created by the Christian revelation. On this point, all stu dents of the life and teachings of Christ may agree. Believers have ever found themselves and their ways insufficient when held up be side the account of these as found in the Bible. Men are not as they should be. They are, in the tradi tional language, condemned, lost, tried, found wanting, and con victed. As the Apostle Paul, the foremost interpreter of the mean ing of the revelation, said: "For there is no distinction; since all have sinned and fall short of the glory of God." There is, then, a gulf between what men are and what they should be.

Nowhere does this gulf stand out in relief more clearly than in the Sermon on the Mount. Since this message was frequently cen tral in the thought of the preach8 THE FREEMAN November ers of the social gospel, it will be helpful to quote a few passages to demonstrate its character. You have heard that it was said, "An eye for an eye and a tooth for a tooth." But I say to you, Do not re sist one who is evil. But if anyone strikes you on the right cheek, turn to him the other also; and if anyone would sue you and take your coat, let him have your cloak as well; and if anyone force you to go one mile, go with him two miles. Give to him who begs from you, and do not refuse him who would borrow from you. You have heard that it was said, tty ou shall love your neighbor and hate your enemy." But I say to you, Love your enemies and pray for those who persecute you, so that you may be sons of your Father who is in heaven; for he makes his sun rise on the evil and on the good, and sends rain on the just and the un just. For if you love those who love you, what reward have you? Do not even the tax collectors do the same?

And if you salute only your breth ren, what more are you doing than others? Do not even the Gentiles do the same ? You, therefore, must be perfect, as your heavenly Father is perfect.l There is much more of a similar character, but the above passages may serve as examples. There could hardly be a more vivid con trast between what men ordinarily accept as sufficient for virtuous 1 Matthew 5: 38-48, RSV. and just behavior and what is re quired by Christianity. This gap, nay, this yawning gulf, between what men are and what they should be has produced great ten sions in those who would be Chris tians. Some men have attempted by extraordinary moral heroism to bridge the gulf. In early times, there were hermits who went apart from the world, denied the demands of the flesh, persecuted their own bodies, and in this way attempted to live spiritually at the expense, to some extent, of the physical. Still others went into monasteries and nunneries to es cape somewhat the baleful lure of the world and the flesh. Through out the ages, there have been those who have tried to attain to perfec tion by way of self-abnegation in one form or another.

A Higher Moral Code Fundamentally, though, Chris tians have usually agreed that Jesus Christ bridged the' gulf be tween man and God with his Sac rifice, that what is impossible for man can be accomplished, and has been, by the Grace of God. A way was provided for the resolution of the tension, though this is not sup posed to have relieved those who are Christians from the acceptance of the norms for behavior revealed in Scriptures and from ordering their lives according to them.

1965 CAPTURING THE HEARTS OF MEN 9 It must be made clear that the norms proclaimed by Jesus are a Revelation. They are not such as men might discover by studying the nature of the universe, the na ture of man, and the nature of so ciety. This is; no natural morality. Men do not naturally go an extra mile when they have been com pelled to go one. Indeed, they natu rally resist compulsion in the first place. They do not naturally add their cloaks to the penalty when they have been sued for their coats. It is difficult to imagine any thing less natural than to turn the other cheek when one has been struck. Nor is there an order in the universe that automatically and of necessity rewards these norms of beha vior. Those who prosper in this world do not al ways give to beggars and lend to those who would borrow from them. On the contrary, those who prosper have ordinarily managed their affairs much more circum spectly and less generously. It is not economical to run one's affairs according to these norms.

It does not appear that social order could be maintained without resisting evil. All orderly societies, so far as I know, have rested on some rough approximation of jus tice as consisting of an eye for an eye. This would appear to be the natural mode of dispensing justice. It is not clear how social order could be maintained except in this way. In the nature of things, society cannot dispense justice by awarding freezers to those who have stolen refrigera tors. The assault upon property would not only be legalized but re warded as well. It is so unlikely as to be impossible for anyone to ar rive at such norms for behavior by a natural study and the use of human reason. Thus, these norms constitute a Revelation. Guides for Human Action That Are Beyond Man's Laws Several points need to be made clear about the character of the content of the Revelation. First, there is no implied condemnation of natural law, the natural order, or positive law. Jesus made it clear in the Sermon on the Mount (Mat thew 5 :17) that this was no p'art of his intention. He said, "Think not that I have come to abolish the law and the prophets; I have come not to a.bolish them but to fulfil them." Nor in what followed did he condemn the laws as they had been handed down and established.

For example, he said (Matthew 5: 27-28): "You have heard that it was said, 'You shall not commit adultery.' But I say to you that every one who looks at a woman lustfully has already committed adultery with her. in his heart." This was not a call for social re10 THE FREEMAN November construction. There. was, in the saying, no claim that the law against adultery was not as it should have been. Certainly, no one could logically interpret the passage to say that it would be all right now to commit adultery. His commandments are more tlhan, not instead of. Jesus was revealing the norms in terms of which actions may be virtuous, not in human terms but in God's. There is no virtue, he was saying, in obedience to the law. Any sensible person would do this to avoid the penalties attached to it. (The same would go for nat ural law or conformity to the or der in the universe.) Men do con ceive of such actions as virtuous quite often, but this is from their perspective as men and limitations as men.

Second, these commandments can only apply to individuals and voluntary groups. They have to do with actions that are virtuous. They are virtuous because they are not compelled, because there are no earthly or natural sanctions for them, because no earthly re wards nor penalties necessarily attend them, because they are freely done. If these norms were made a part of the order that men or natural law enforce, they would lose their virtuous character. Then even the Gentiles (that is, non Christians) would usually obey them, for it would be expedient to do so. Third, these norms are of such character that they cannot effec tively be made a part of the order of positive law in society. At tempts to do so can only produce disorder and chaos. To see this, one need only imagine a law re quiring that if someone seeks your coat you must give him your cloak also. The penalty for not do ing so might appropriately be a fine of 10,000 dollars or ten years in prison, or both. Can there be laws against lustful glances, com pelling the turning of the other cheek, requiring that one love his enemies, and so forth? If not, these norms cannot be made a part of the social order.

The Social Gospel The Revelation is of another realm than that of natural law, of an order in the universe, or of positive law. It is a revelation of God, of the realm of the spirit, of the arena of love, of that which is unbounded by expediency or the narrow and limited views of men while they sojourn on earth. It does not condemn nor deny the ef ficacy of the order that is estab lished for men on this earth. It does not bid them erect an order that is in keeping with the Revela tion. Instead, it proclaims the norms in terms of which human 1965 CAPTURING THE HEARTS OF MEN 11 behavior stands condemned, in terms of which man stands in need of Grace, in terms of which indi viduals may gauge their acts. Debasing the Spiritual The social gospel inverts the Gospel. It turns Divine norms into norms for human society. It turns the condemnation of individuals into a condemnation of the social order and converts the impetus of Christianity into pressure for so cial reconstruction and revolution.

The holy tension between what a man is and what he should be is transformed into a temporal ten sion between the present society and the one that should exist. The social gospel movement was, and is, a headlong flight from reality. In the first place, it was a flight in that it used the impetus of religion to buttress the general flight involved in melioristic re form efforts. Secondly, it was a flight from the religious base upon which it rested. To be more spe cific, it transformed the highest spiritual goals into a quest for material improvement. The central doctrine of the so cial gospellers has been that the Kingdom is to come on earth. One of their favorite scriptural quota tions has been the one command ing Christians to seek first the Kingdom of Heaven. They pray for and propose to work for the coming of the Kingdom. Yet their efforts have been devoted, in the main, to the amelioration of the material conditions of life. They have favored shorter work weeks, higher pay, a more equal distribu tion of the wealth, various and sundry governmental programs for the abolition of poverty, and so forth. Indeed, they maintain that by ameliorating the conditions of life - by social regeneration - they will provide the foundations for the spiritualization of life. A para phrase of their rendition of the scriptural injunction should read something like this: Seek ye first material well-being and the King dom of Heaven will be added unto you.

In the third place, theirs is a flight from the higher morality upon which their admonitions are based. Their call for social recon struction is in considerable· part a call for the use of governmental power to produce their ends. Inso far as they succeeded, they would remove the moral character from the acts that they approve. They would make it compulsory to do what otherwise might be done willingly. If it is a requirement of law that the cloak be given as well, no virtue would attach to the giv ing of the cloak. Even the "Gen tiles" would do it, for it would be expedient to do so. ]doreover, the reconstruction of 12 THE FREEMAN November society in terms of the. Revelation, if it could be done, would remove the opportunity for performing moral acts. Only those who have property may give generously of it; only those who have money may lend it to all would-be bor rowers; only those who have choice as to the disposal of their time and energies may go the sec ond mile. The social planning, the assault upon property, the confis cation of savings involved in the social reconstruction advocated by the social gospellers would remove the opportunity for acts of char ity. Indeed, if "social justice," as many of them have defined it, pre vailed, there would be no occasion for charity. More succinctly, there would be no morality. Life would be reduced to expedient calcula tions in terms of rewards and pun ishments established by positive law.

Fourthly, they have been using the religious motif to advance the politicalizing of all life. It is not necessary to imagine the conse quences, in this case. They are al ready occurring. Religion is being driven out of public affairs, by court decision, even as the power of government is being used to achieve ends which are proclaimed as religious and moral. To see this, one need only recall the school prayer decisions and the integra tion decisions of the courts. However illogical this may appear, to those who do not wear ideological blinders, it follows logically from the use of governmental power to achieve supposedly spiritual ends. When this is done, the political modes are advanced at the expense of religious ones, and independent religion cannot survive the polit icalizing of life. Compulsion can only be advanced at the expense of independence, and religious ac tivities cannot be exempted from this rule.

Thoughtless Leadership How, then, could so many min isters and religious leaders have been drawn into the social gospel movement? How could so many church organizations have been drawn into the effort? How could so many churchgoers have come to believe that it is the business of the church to support and advance governmental ameliorative pro grams? In a general way, these questions have already been an swered in earlier articles. The breakdown of philosophy, the spread of irrationalism, the loss of a firm grip upon physical and metaphysical reality, the develop ment of utopian notions, the vi sion of man's being able to create conditions to his liking set the stage for the flight in religion. One point needs to be made em phatically: The social gospel never 1965 CAPTURING THE HEARTS OF MEN 13 has been an -intellectually respect able doctrine, any more than has the generality of meliorist and revolutionary ideas. Its propon ents did not proceed by a careful analysis of Scriptures. They were under the sway of a philosophical monism which bent them toward the confusion of all things. The spiri tual and the material, the moral and the legal, the eternal and the temporal were fused in such a way as to obliterate all nec essary distinctions. 2 Their theol ogy has always been vague, their grasp of economics exceedingly in secure, and -their understanding of politics virtually nonexistent.

The social gospel movement got underway in the latter part of the nineteenth century. The big names in its development were Washing .. ton Gladden, Richard T. Ely, W. D. P. Bliss, George D. Herron, and Walter Rauschenbusch. These shared with and drew from the ideas of such men as Henry Ge.orge, Edward Bellamy, and Henry Demarest Lloyd, who are not so closely identified with the movement in religion. But there were many others who partici pated in and contributed to this development in the latter part of the nineteenth century. In the pre2 See, for example, the discussion of this in James Dombrowski, The Early Days of Christian Socialism in America (New York: Columbia University Press, 1936), pp. 14-15. face to what has become the stand ard work on the movement, the author points out that "many have assumed that social Christianity was the accomplishment of a handful of clergymen who at the opening of the twentieth century challenged religious conservatism by the proclamation of the social content of their faith. Study of an extensive and varied literature indicates, however, not only that the social gospel originated in the early years of the gilded age but also that its prophets were legion and their message an integral part of the broad sweep of social and humanitarian efforts. . . ."3 The spreaders of the social gospel were not careful thinkers. Gen erally, they had picked up a vari ety of socialist, progressivist, and meliorist assumptions, accepting them as valid without subjecting them to analysis or test against Scripture or economic· and politi cal reality.

Overcoming Poverty Through Compulsory Redistribution To challenge the philosophical soundness of the social gospel is not to question the sincerity of its preachers. There is no reason to doubt that many of them were 3 Charles H. Hopkins, The Rise of the Social Gospel in American Protestant ism, 1865-1915 (New Haven: Yale Uni versity Press, 1940), p. vi.

14 THE FREEMAN November passionately devoted to their cause, that they were absolutely convinced of the rightness of what they said, and that they meant well quite often. They saw suffer ing and hardship and believed that those who attributed it to an unj ust order were correct. They saw or read of hunger and disease and thought that this was related to institutional arrangements. There was poverty in the midst of a land in which some had great wealth. They assumed that the remedy for this lay in some sort of redistribution. Their concern for others made them particularly susceptible to utopian visions and socialist dreams. The social gospellers captured the hearts of men by their descrip tions of suffering and hardship. Washington Gladden accepted Henry George's thesis that pov erty was increasing as industrial progress took place. Note his characterization of conditions among those in the depths of pov erty: . . . Below these still, there is an other large class of the really poor, of those whose earnings are small, whose life is comfortless, who have nothing laid by, who are often com ing to want .... This class of the very poor - those who are just on the borders of pauperism or fairly over the borders - is rapidly grow ing. Wealth is increasing very fast; poverty, even pauperism, is increas ing still more rapidly.4 Walter Rauschenbusch intro duced the element of pathos in his descriptions: The fear of losing his job is the workman's chief incentive to work.

Our entire industrial life, for em ployer and employee, is a reign of fear. The average workingman's family is only a few weeks removed from destitution. The dread of want is always over them, and that is worse than brief times of actual want .... While a workman is in his prime, he is always in danger of losing his job. When he gets older, he is almost certain to lose it. The pace is so rap id that only supple limbs can keep up. Once out of a job, it is hard for an elderly man to get another. Men shave clean to conceal gray hairs. 5 Not only were conditions bad, according to social gospellers, but they were getting worse. A som ber tone of impending crisis characterizes much of their writ ings. Gladden declared: Such, then, is the state of indus trial society at the present time. The hundreds of thousands of unem ployed laborers, vainly asking for 4 Washington Gladden, Applied Chris tianity (Boston: Houghton Miffi-in,1886), pp. 10-1l.

5 Walter Rauschenbusch, Christianity and the Social Crisis (New York: Mac millan, 1907), pp. 235-36.

1965 CAPTURING THE HEARTS OF MEN 15 work; the rapid increase of pauper ism . . .; the sudden and alarming growth of the more violent types of socialism, are ominous signs of the times. 6 Rauschenbusch pointed out that while there had been hardship in volved in the development of in dustry in America, this was miti gated somewhat by the availabil ity of cheap land (the frontier thesis), but this was now a thing of the past and trouble lay ahead. He put it this way: But there is nothing in the nature of our country that will permanently exempt us from the social misery created by the industrial revolution elsewhere .... The influences which formerly protected us and gave us a certain immunity from social misery are losing their force. Weare now running the rapids faster than any other nation. We do everything more strenuously and recklessly than others. . . . If we are once headed toward a social catastrophe, we shall get there ahead of schedule time. 7 Driving Toward Socialism The preachers of the social gos pel attributed the cause of suffer ing and hardship to the existing order. The crisis was approaching because of the hardening of the lines of the order. The existing so cial order was so made up and 6 Gladden, Ope cit., p. 16l.

'l Rauschenbusch, Ope cit., p. 219. bent by those who benefited from it that it would bring America to revolution and destruction if some thing were not done about it. While Gladden was more moderate in his indictment of the estab lished order than later advocates of the social gospel were to be, he did believe that the system led to the difficulties. Though he dis avowed the complete socialist pre scription, he thought they were right when they pointed to certain tendencies and ascribed them to the system: The tendency of wages to sink to starvation point, the tendency of the workmen's share of the national wealth to grow constantly smaller, the tendency of commercial crises and depressions to become more fre quent and disastrous ... - all these are, as I believe, the natural issues of an industrial system whose sole motive power is self-interest, and whose sole regulative principle is competition. 8 George D. Herron was less re strained but saying essentially the same thing in his indictment: The inevitable result of the system of wages and competition will be to increase social inequalities; to in crease the wealth of the few and the poverty of many .... The present industrial system could not exist were it not for the fact that great multitudes of the unemployed have 8 Gladden, Ope cit., pp. 69-70.

16 THE FREEMAN November been brought to this country sys tema tically and purposely, for the sake of reducing wages and produc ing a state of poverty. 9 As Herron said elsewhere, "The economic system denies the right of the sincerest and most sympa thetic to keep their hands out of the blood of their brothers."lo Rauschenbusch's indictment was no less severe: If it were proposed to invent some social system in which covetousness would be deliberately fostered and intensified in human nature, what system could be devised which would excell our own for this purpose? Competitive commerce exalts self ishness to the dignity of a moral principle. It pits men against one another in a gladiatorial game in which there is no mercy and in which ninety per ce:rt of the combatants finally strew the arena.!l The Anticapitalistic Mentality The villain of the piece, depend ing upon the inner urge of the moment, was capitalism, private property (they differed as to the extent of the condemnation of this), the profit motive, competi tion, monopoly, and all of the as sorted demons of socialist anal9 Quoted in Dombrowski, op. cit., pp.

187-88. 10 George D. Herron, Between Caesar and Jesus (New York: Crowell, 1899), pp. 24-25. 11 Rauschenbusch, op. cit., p. 265. ysis. The anticapitalistic mental ity, as Ludwig von Mises has called it, flowered luxuriantly among the social gospellers. It is difficult to recognize the business man in the following allusions, or illusions, of Edward A. Ross, a sociologist with a religious em phasis: Today the sacrifice of life inci dental to quick success rarely calls for the actual spilling of blood. How decent are the pale slayings of the quack, the adulterer, and the pur veyor of polluted water, compared with the red slayings of the vulgar bandit or assassin! Even if there is blood-letting, the long range, tentac ular nature of modern homicide eliminates all personal collision. What an abyss between the knife play of brawlers and the law-defying neglect to fence dangerous machin ery in a mill, or to furnish cars with safety couplers p2 Yet the difference between busi nessmen and common criminals, we gather, is in the magnitude of the offense of the former.

One other indictment of capital ists will serve to illustrate the character of these generally. Rauschenbusch said: When men of vigorous character and intellectual ability obey the laws 12 Ray A. Billington, et. al., eds., The Making of American Democracy, II (New York: Holt, Rinehart and Win ston, 1962, rev. ed.), 35-36.

1965 CAPTURING THE HEARTS OF MEN 17 of Capitalism, and strive for the prizes it holds out to them, they win power and great wealth, but they. are placed in an essentially false rela tion to their fellowmen, the Chris tian virtues of their family stock are undermined, their natural powers of leadership are crippled, and the greater their success in amassing wealth under capitalistic methods, the greater is the tragedy of their lives from a Christian point of view.13 The "New Theology" The condemnation and rejection of the existing order was, of course, prelude to the calling for a new order. Advocates of the so cial gospel were all bent upon so cial reconstruction, in one degree or another. Some were avowed so cialists, some unavowed, and others were to appearances less radical in their aims. But they appealed to Christianity as the justification for making over or modifying the social order. The theory was not particularly com plicated. Most of the early pro ponents of the social gospel held that society is an organism. In dividual men are products, more or less, of the environment. In order to save men, then, it is necessary to redeem the society by reconstructing it along Christian 13 Walter Rauschenbusch, Christianiz ing the Social Order (New York: Mac millan, 1912), p. 315.

lines. When this work of recon struction had been accomplished, the Kingdom would have come. Those who were engaged in the task of rebuilding society were working for the coming of the Kingdom. Existing society was criticized from the scriptural van tage point of strictures such as those found in the Sermon on the Mount. The new order would in corporate these into the social structure. There should be no doubt that this bringing of the Kingdom, as they understood it, involved radi cal social reconstruction for the preachers of the social gospel. Walter Rauschenbusch has usually been accorded the position of theo logian of the social gospel. In his book, A Theology for the Social G08pel, he declared: Since love is the supreme law of Christ, the Kingdom of God implies a progressive reign of love in human affairs. We can see its advance wher ever the free will of love supersedes the use of force and legal coercion as a regulative of the social order.

This involves the redemption of so ciety from political autocracies and economic oligarchies; the substitu tion of redemptive for vindictive penology; the abolition of constraint through hunger as part of the indus trial syste'm.... The highest ex pression of love is the free surrender of what is truly our own, life, prop erty, and rights. A much lower but 18 THE FREEMAN November perhaps more decisive expression of love is the surrender of any oppor tunity to exploit men. No social group or organization can claim to be clear ly within the Kingdom of God which drains others for its own ease, and resists the effort to abate this fundamental evil. This involves the redemption of society from private property in the natural resources of the earth .... 14 The above passage gives the flavor of the bombast, but the tangle of gratuitous assumptions and ac cusa tions may obscure the mes sage. He has stated the aim some what more succinctly elsewhere.

The vision which he would see ful filled has "the purpose and hope of founding on earth the Reign of God among men. Faith in the Kingdom of God commits us, not to an attitude of patient resigna tion, not to a policy of tinkering and palliatives, but to a revolu tionary mission, constructive in purpose but fearless in spirit, and lasting till organized wrong has ceased. "15 The Reign of Love - by Force Reign of love there might be, according to the vision, but it was 14 Quoted in Gerald N. Grob and Rob ert N. Beck, eds., American Ideas, II (New York: Free Press of Glencoe, 1963),217. 15 Rauschenbusch, Christianizing the Social Order, p. ~24. to be preceded by a reign of men. The advocates of the social gospel were also advocates of greatly in creased governmental activity. Even Washington Gladden, who expressed some doubts as to the coercive route to moral redemp tion, favored an extended and ex tensive role for government. He observed: The limits of governmental inter ference are likely to be greatly en larged in the immediate future ....

It may become the duty of the state to reform its taxation, so that its burdens shall rest less heavily upon the lower classes; to repress monop olies of all sorts; to prevent and punish gambling; to regulate or con trol the railroads and telegraphs; to limit the ownership of land; to mod ify the laws of inheritance; and possibly to levy a progressive income tax ... .16 Those who came somewhat later, however, had no qualms about us ing the power of the state to usher in the Kingdom. 17 Richard T. Ely declared that it is "as truly a re ligious work to pass good laws, as it is to preach sermons; as holy a work to lead a crusade against filth, vice, and disease in slums of 16 Gladden, op. cit., pp. 100-0l. 11 Several decades later, Reinhold Nie buhr argued that collectives may act im morally to attain "social justice," since they are by nature immoral. See Moral Man and Immoral Society (New York: Scribner's, 1932), passim.

1965 CAPTURING THE HEARTS OF MEN 19 cities, and to seek the abolition of the disgraceful tenement-houses of American cities, as it is to send missionaries to the heathen."1s He approved of what he called coer cive philanthropy. "Coercive phil anthropy is philanthropy of gov ernments, either local, state, or national. The exercise of philan thropy is coming to an increasing extent to be regarded as the duty of government."19 George D. Her ron called for the thoroughgoing use of the state for religious pur poses. Government has a right to exist ence and authority for no other end than that for which God sent his only begotten Son into the world. It is the vocation of the states, as the social organ, to so control property, so administer the production and dis tribution of economic goods, as to give to every man the fruit of his labor, and protect the laborer from the irresponsible tyranny of the pas sion of wealth. 2o Rauschenbusch declared that "em bodying a moral conviction in law is the last stage of moral propa ganda. Laws do not create moral convictions; they merely recog18 Richard T. Ely, Social Aspects of Christianity (New York: Crowell, 1889), p.73.

19 Ibid., p. 92. 20 Quoted in Howard H. Quint, et. al.) eds., Main Problems in American His tory, II (Homewood, Illinois: Dorsey, 1964), 67. nize and enforce them."21 In prac tice, of course, devotees of the so cial gospel have usually supported the whole panorama of reform programs. Church Movements for Political Action However strange these doctrines may seem, there is good reason for exploring them. They have had a tremendous impact upon Amer;.. ica. In the course of time they be gan to be taken up and spread by churches and organizations with in them. In the latter part of the nineteenth century, the social gos pel movement was restricted to a reIatively small number of minis ters, sympathetic reformers, founders of small magazines, ~nd radical organizations. But by 1912 Walter Rauschenbusch could re joice that the social gospel was catching on.22 There were many signs of this. As early as 1887 the Episcopalians set up a Church As sociation for the Advancement of the Interests of Labor. In 1901 the Congregationalists provided for a labor committee. The Pres byterian Church established a de partment of church and labor in 1903. In 1908 the Methodist Epis copal Church came out for organ21 Rauschenbusch, Christianity and the Social Crisis, p. 363.

22 Rauschenbusch, Christianizing the Social Order, ch. II.

20 THE FREEMAN November ized labor. 23 The Federal Council of the Churches of Christ in America, organized in 1908, adopt ed a reformist creed from the be ginning. Among the things for which it stood were: For equal rights and complete jus tice for all men in all stations of life .... For a living wage as a minimum in every industry, and for the highest wage that each industry can afford. For the most equitable division of the products of industry that can ultimately be devised .... For the abatement of poverty.24 Many changes were being wrought under the religious im petus. Rauschenbusch pointed out that the "Young Men's Christian Association used to stand for religious individualism. The mere mention of 'sociology' once excited ridicule. Today the association has developed a splendid ma chinery for constructive social service .... "25 The missionary ef fort was being changed by the new ideas. The emphasis was be ginning to shift toward social service, medical missionaries, and so forth. In due time, more and 23 See Harold U. Faulkner, The Quest for Social Justice, 1898-1914 (New York: Macmillan, 1931) , pp. 219-22.

24 Quoted in Rauschenbusch, Christian izing the Social Order, PP. 14-15. 25 Ibid., pp. 17 -18. more ministers came under the sway of the social gospel, and church organizations began to wield their influence both for gen eral and for particular social reforms. Beneath the Sugar Coating Of course, as these ideas were adopted by the old established churches, they were usually given more ambiguous wording and less radical formulation. After aU, many of the founders and advo cates of the social gospel were so cialists. George D. Herron was dedicated to what has been called Christian socialism. Anyone con versant with socialist doctrines will be able to discover them in more or less pure form in Rau schenbusch's work. There is a definite gradualist slant to the writings of Gladden. The "respect able" churches did not accept such doctrines in the blunter form ulations of them. Yet to the ex tent, and it has been considerable, that the churches, their ministers and spokesmen, have adopted these doctrines and advocated the pro grams based on them, to that ex tent have they been drawn into the effort to bring about socialism in America. For these doctrines depend for their justification upon the rhetoric of socialism; they are meaningful within the intellectual framework of socialist doctrines; 1965 CAPTURING THE HEARTS OF MEN 21 the particular programs have long been devices for gradually moving toward socialism.

Men's hearts have been captured by the inversion of the Gospe}, and they have been drawn into the orbit of reformism by doctrines ideologically derived from social ism but phrased in the language of religious concern. This was another step in the domestication of socialism in America. ~ The next article in this series will have to do with "Remaking the Minds of Men." ""eliJf" HOWARD E. KERSHNER A MINISTER said to me recently that many of his parishioners could not afford to buy their monthly railroad tickets to go to their jobs in New York and that the government should subsidize the railroads. I said that would mean seizing some of the wealth of many who are forced to live in the noisy, crowded, dirty cities because they cannot afford to go to the country, and giving some of it to his parishioners who wanted to live in the more desirable suburbs. Dr. Kershner is President of the Christian Freedom Foundation. This article is from his weekly column, "It's Up to You," June 28, 1965.

I said, "If you wish to be honest about the matter, advise your parishioners to explain to their friends that they need help to buy their railroad tickets and ask each one to subcribe 50¢ or $1 a month for that purpose." The minister replied, "But no one would do that." "Of course not," I replied, "but you are proposing to put your hand into the pockets of these peo ple and take the money from them by the coercive power of govern ment. That is both coveting and stealing. " These people would hardly have returned to their homes after their 22 THE FREEMAN November unsuccessful effort to get their neighbors to subsidize them until a group of farmers would knock on the door and say, "We cannot afford to sell our produce at the market price. Will you contribute 50¢ a month so we can have more than the market affords ?" You reply, "I would like to help you but I have difficulty paying my own grocery bill and I am sorry I cannot do anything for you."

But you do. The farmers organize a pressure group, go into politics, and take from the public $6 to $8 billion a year to subsidize farming. After the farmers were gone, another group would knock on your door and explain that they want to build houses for them selves but need some help. You would tell them you are having some difficulty meeting payments on your own house and you can not help. But you do, for the coer cive power of government seizes some of the wealth of us all in order to subsidize construction of new homes. In one way or another most of the homes being built to day are subsidized by government. Another group would call upon you and want help with their rent, but you tell them your own hous ing problem is quite enough. But through the power of government they compel you to subsidize them. So, a very large part of our rental housing property is subsidized by government.

We have formed an almost in numerable number of pressure groups, each using political power to see how much of the wealth of others it can get for its members. When government forgets its re sponsibility and begins to seize the wealth of some of its citizens for distribution to others, this process will go on until the last bone of the last taxpayer is picked bare. We shall destroy ourselves and decline if we cannot recover from the temptation to covet and steal from one another. To be sure, it is done legally, but this does not alter the essential nature of the act. Three men can gang up politically and legally seize the wealth of a fourth, but it is covet ing and stealing, nevertheless. Those who practice it are violating the Commandments of God and in so doing they will destroy themselves and their society. ~ TOM ROSE INFLATION is one of the most im portant, yet least understood, is sues of our day. Contrary to what we might be led to believe by the news media and some high eco nomic advisors, inflation is not a rise in the general level of prices (often referred to as an increase in the cost of living). Inflation is simply an increase in the supply of money. This increase in the number of dollars in relation to the goods and services that are put up for sale causes people to bid up prices. Thus, a general rise in prices is the effect of inflation.

More dollars is the underlying cause of the higher prices. We first must recognize this cause-effect relationship before we can understand the problems and dangers of inflation. Likewise, once we understand this relation ship, we can easily see through Mr. Rose is Director of Economic Education, Associated Industries of Missouri. the fog created by statements like the following, made by high-placed people in our nation, when the in flation (money expansion) has al ready taken place! "Fortunately, we have been free from inflation and the expectation of imminent inflation." . .. or "The deficits in the last three years have clearly not been infla tionary." Statements such as these give people the mistaken idea that in flation and a rise in prices are identical when, in truth, it is in flation that produces higher prices. It is because Americans have ac cepted such statements as true that we have engaged in worthless battles to fight rising prices, when the real culprit has been an in flated money supply. In other words, we, like Don Quixote, have become excited about phantom windmills only to leave the real problem untouched. As a doctor 23 24 THE FREEMAN November would say, we have been trying to cure the fever instead of the ill ness.

What Causes Inflation? Expansion of our money supply (inflation) takes place through our banking system. The Federal government can, and does, cause new dollars to be created through IOU's (bonds) that it issues. This is how the process works: 1. Congress votes to let the gov ernment spend more money during the year than it will collect in taxes. This authorizes the U. S. Treasury Department to print up enough IOU's (bonds) to cover the difference between taxes col lected and the amount of money it will spend. (At this point in flation has not yet occurred.) The Treasury Department sells these IOU's through dealers to anyone who will buy them. If you or I buy one of these bonds, this act is not inflationary because we use dollars that we have saved. In other words, we just transfer dollars that are already in exist ence. Our purchase does not add to the money supply. 2. But when a commercial bank purchases or loans money on these government IOU's, new checkbook money can be created because the bank may pay for the bonds by creating a deposit. (It is at this point that inflation actually occurs.) In addition, the official re serve ratio, which is set by the Federal Reserve Board, tends to have a multiplier effect of about six to one on the new money. All this newly created money competes with your dollars and my dollars to buy existing goods and services.

It is this inc'reased dollar competi tion that causes prices to go up. Some Results of Inflation As we have just seen, when gov ernment causes an artificial in crease in the number of available dollars, the increase tends to re duce the value of existing dollars. It's like adding water to lemonade. Volume increases but the lemon ade becomes weaker, and it takes more of the weaker lemonade, to do the same job. But that's not all that happens. In addition: 1. Inflation insidiously transfers wealth and purchasing power from the pockets of savers to those who borrow. The value of money that has been saved becomes less as dollars become more numerous. Borrowers later can repay their loans with cheaper dollars. This is one way in which government can cause wealth to be secretly transferred from one person to another-a process that must seem unfair to aging persons who have toiled and saved during a lifetime only to have the value of their savings melt away.

1965 INFLATION 25 Another way in which inflation secretly transfers wealth is that the normal distribution of income is upset. The newly created dollars cause prices and wages to rise first in the areas and industries where the government spends them. People who first receive the newly created money get a chance to buy goods and services before the inflated money supply causes a general rise in prices. As the new money begins to circulate and causes people to bid up prices, the unfortunate people at the tail-end of this cycle are faced with the problem of paying higher prices before their incomes go up. And when their incomes finally rise, another cycle of inflation and ris ing prices is already started, so they are always behind. Thus, cer tain people in the economy get a government - bestowed advantage over the others. 2. Inflation kills incentive to save. When savers realize that their dollars buy less when paid back after a period of time, they tend to spend their extra dollars instead of saving them. Or, as an alternative, they increase the amount of interest charged to bor rowers to make up for the future loss of purchasing power. The high rates of interest charged in countries with advanced inflation is an example of this. For instance, if the going rate of in terest is 5 per cent, but lenders expect the purchasing power of money to drop by 10 per cent during the next year, they will want to charge interest of about 15 per cent for use of their money.

In other words, as the incentive to save goes down, the cost of inducing people to save goes up. 3. Inflation works to lower our standard of living by reducing the productive capacity of our econ omy. Our high standard of living in America is supported by our tools of production, the machines that produce our goods and serv ices. These tools come into being only through self-denial. Someone, many someones, must be willing to save and invest part of their income in productive tools instead of spending it all on consumer goods and services. Thus, if lack of incentive to save induces people to spend all of their current in come, worn-out tools aren't re placed fast enough. Productive capacity drops, and this brings about a lower standard of living. People generally aren't aware of how thin the line is that sep arates those countries that have progressing economies from those with stagnant or declining econ omies. Investigation will show tha t the so-called underdeveloped nations are the ones where people 26 THE FREEMAN November have not had the needed motiva tion to save part of their incomes for investment in tools of produc tion. Thus, these nations have economies whose productive capac ities can't catch up with their booming populations. The United States could easily find itself in the same spot if our people were led to reduce substantially the percentage of their incomes that is saved. And the difference be tween these countries and the United States is the motivation that individuals have to save.

4. Inflation causes boom-bust cycles like we saw in 1924-38. At first, inflation produces conditions that seem favorable to everyone. Profits go up because selling prices tend to keep ahead of business costs for a while. This induces businessmen to increase plant in vestment, which causes employ ment to expand. Wages start go ing up, fewer businesses fail, and people. generally come to believe that the key to continual prosperity has been found. But then demand for the various factors of produc tion - land, labor, and capital goes up. This increased demand causes their prices to rise. And these prices are business costs. As business costs rise" profits go down, plant investment is cut back, and employment drops. This is the "bust" half of the earlier "boom." This readjustment lasts until costs come down and busi ness activity again becomes prof itable. 5. Inflation distorts business re sults, which is one reason for the above boom-bust cycle. Real profits aren't nearly as big as they appear because they are overstated. Part of a company's reported profit (the amount it pays taxes on) is only "paper profit" and must be si phoned off and put with its de preciation allowance to buy higher priced equipment as old machines wear out. If the company didn't use part of its profit to do this, its productive tools would gradu ally become so old and worn out that it could no longer compete in the market place. It would lose money and finally be forced out of business.

In addition, fluctuating price cost relationships make it more difficult for a company's cost ac countants to accurately evaluate the profitability of interlocking business operations. Thus, early losses are not noticed, and needed business adjustments are delayed. This delay causes a less effective use of resources which increases costs. 6. Inflation promotes greater intervention in the economy. As inflation-produced recessions get 1965 INFLATION 27 underway, business gets blamed for the downturn, and people turn to government for help. They mis takenly hope that government can come up with quick and painless solutions for the very economic problems that government caused in the first place! Business still carries an undeserved stigma for the Great Depression of the 1930's. The resulting govern men tal in tervention leads to price, wage, and other controls that reduce in dividual freedom and initiative.

These controls further complicate private enterprise activities, and an endless chain of controls is un derway. The result is a continued centralization of power in the Fed eral government, such as we are seeing toda~ 7. Inflation hurts people of mod est means (the working man) most. It is "the little guy" who is the net creditor in our society and who gets hurt during the "boom" as well as in the "bust." When prices rise, his dollars - which are mostly invested in savings ac counts, insurance, and other fixed dollar assets - lose purchasing power. When the "bust" finally comes and he is put out of work, his relatively small dollar savings might not be enough to enable him to meet loan payments on his home or car. Thus, he runs a grave risk of losing his built-up equity to the financial institutions that loaned him the money to buy them. 8. Inflation paves the way for dictatorial control of a nation in much the same way that'~ Hitler and Mussolini rose to power forty years ago. It divides people into conflicting factions. Instead of vol untarily cooperating to solve im portant problems, various groups tend to become antagonistic toward each other.

The end result of continued in flation is to weaken a nation in every respect: Its economic and social structure, its productive ca pacity, and the standard of living of its people. Thus is a country's economy disrupted and made ripe f or easy takeover. More effects of inflation could be cited, but they all point in one direction: to the final concentra tion of all power in the central government. This dangerous tend ency can be reversed if we rec ognize that long-term expansion of our money supply can be brought about only through the Federal government and its agen cy, the Federal Reserve System. Thus, our government must be held responsible for inflation though we, as citizens, remain fi nallyaccountable for what we allow our government to do. ~ Man's Priceless Heritage MURIEL OSTERHAUS HAVE YOU EVER stopped to con sider what a phenomenal gift you have in that remarkably maneu verable instrument you call your hand? How like us humans to casually take for granted this amazing tool which so faithfully serves us all the days of our lives, for better or for worse as the mind wills it. How fitting that the first thing a baby really notices in the strange new outside world is that fascinating bit of wonder ment which waves and floats and sometimes jerks in the air above it like some pretty pink-petaled built-in mobile. Yet this same soft tiny hand, so seemingly fragile, shows surprising strength and ten acity when a giant grown-up finger reaches out to its miniature daintiness!

Mrs. Osterhaus, a California housewife, attrib utes this article to a FEE Seminar she attended recently. 28 Think what it must have been like thousands of years ago for the man living like an animal with no clothing, no shelter, no food save that which he could wrest from nature with his only tool-his gnarled, scarred, bare hand. In time his brain, superior to that of other living creatures, began to reason out ways and means for making his lot an easier and more rewarding one. He ingeniously devised ways of augmenting the power and usefulness of his hand by using a stone or a broken branch of a tree, and then by fashioning a crude axe and other rough tools of invaluable worth to his hitherto limited capabilities. The development of man and the emergence from the animal state was painfully slow, with innumer able setbacks over the ages; but now, millennia later, miracles too vast and complex for any single 1965 MAN'S PRICELESS HERITAGE 29 human being to comprehend even an infinitesimal fraction of their wonders are all around us as com monplace as the long-ago Stone Age axe.

To what do we really owe all these extraordinary achievements so painstakingly won? Is it per haps to a master plan of some all encompassing human authority which has dictated to man what he mayor may not do with his natural abilities? Most emphati cally not! For the most astound ing forward strides have been made when man's mind and hand were least fettered, leaving him free to experiment with his own individual ideas and talents. N0 where, in the history of the hu man race, has this progress been so marked as during the compara tively brief span since the found ing of our own country under seemingly insurmountable hard ships and frustrations. Today, we Americans would do well to take a moment out from our high-pressured existence to really examine our soft and cul tured hands and to mentally "transport" ourselves back over the centuries and reflect on the accomplishments of these like im plements of our forebears. In ret rospect we would see so clearly that individual man can literally be stopped at nothing - even to build ing "a stairway to the stars" just so long as he is a free agent left to express with his mind and his obedient hand whatsoever "im possible" dream may arouse his imagination. The infinite bounty of our God-given natural resources is far beyond our understanding and is the material key, of course, to human progress.

If the hand of each human being were allowed and encouraged to follow the opportunity afforded its own purely individual destiny, and if the mind guiding it were in tune with the omniscient Mind which planned and created the universe, the affairs of our world would be as orderly as the stars in their courses. Each man would by nature develop his own poten tial to the good of himself and, concordantly, of his fellow men by fitting comfortably and happily into the beautiful, fruitful, and harmonious pattern originally de signed by the invisible hand of God. ~ }. Kesner Kahn THE NEW concept of a Free Society is one where everything is free - except people.

HANS F. SENNHOLZ ONE of the fundamental pillars of the individual enterprise system is market pricing. Without it, there can be no economic freedom, no free economy, no enterprise system called capitalism. With it, there can be no comprehensive economic regimentation called so cialism. Some prices directly relate to the economic actions of compara tively few buyers and sellers. Others, however, are of utmost importance for nearly all individ uals. This is true especially of the prices of human labor, commonly called wages, salaries, professional fees, and honoraria. From the point of view of the buyer, they are called "labor costs." The socialists profess moral an guish and disgust about this prop osition that applies the economics of price to human labor. "How heartless and merciless," they proDr. Sennholz heads the Department of Eco nomics at Grove City College, Pennsylvania. 30 claim, "to apply economic calcula tion and cost consideration to la bor exertions that encompass a person's moral, intellectual, and physical efforts, in fact, his whole person!"

It is true that when I sell my own labor, all these considerations influence my mode of action. I wish that all the buyers of my labor would, for once, disregard their own calculations of useful ness and cost, and attach an ex ceptionally high value to my serv ices. I could then revel in leisure and luxury and, in turn, pay no at tention to other people's labor costs. But in our world of reality, which is a world of material limi tation, the buyers of my services do apply their yardsticks of use fulness and cost, as I apply my own valuation to the services of all others. When I buy an auto mobile, I judge its transportation utility for myself and my family.

1965 WHO FIXES WAGES? 31 When I choose a certain manu facturer's model, color, and year, I do not inquire about the human labor embodied in the car. I do not care to know how many hours of countless different kinds of la bor went into the production of the vehicle itself as well as into the materials and tools which it required. And even if I would in quire into the quantity and qual ity of the labor embodied in the car, I would not offer to disregard all considerations of usefulness and cost on account of that labor. In fact, I would not offer to pay double the customary price, or even one dollar more, by reason of knowing more about the human labor spent on its construction. Man j udges material goods and services according to their use fulness to his moral, intellectual, and physical well-being. In par ticular, man judges labor services according to their utility for well being, no matter whether they are embodied in material goods or are rendered directly.

Consumers Prevail What, then, is the value of my labor in the labor market? If it is not my wishful thinking and daydreaming that determine its value, who judges my labor? It is the businessmen who combine the factors of production - land, la bor, and capital - in the manufacture of material goods and the rendition of services. These busi nessmen who buy human labor, in turn, receive their orders and scales of valuation from the con sumers who are the ultimate judges of economic value in the market place. Millions of consumers deter mine the economic value of the services rendered by such enter tainers as Elizabeth Taylor and Patti Page. And simultaneously, they determine the income of these "stars." A businessman who contracts to buy entertainment services has no choice but to pay the maximum remuneration set and paid by the millions of people who seek entertainment. If, through her appearance in a moving picture, Elizabeth Taylor adds one million dollars in box office receipts to the value of the picture, her promoter-employer has no choice but to pay her in proportion. For if he were to offer her appreciably less, other pro moters who compete with him would bid up the price until Miss Taylor's income reflected the en tertainment value attached to her role by the millions of movie goers.

The same principles apply to all other professions and occupations. The income of medical doctors is determined by the patients who seek their services; it reflects the 32 THE FREEMAN November dollar amount people are willing to spend on medical services. A patient who seeks treatment of his common cold, for instance, seeks professional help at the low est possible cost. At a given sup ply of general practitioners, he may have to spend $5 for an of fice call, which becomes the mar ket price for such services and, simultaneously, the doctor's in come. If, at a given supply of general practi tioners, more peo ple would seek the doctor's help, the price for his services, and consequently his income, would tend to rise. If, on the other hand, more qualified men and women would enter the medical profes sion, at a given demand for such services, the market price, and consequently also the doctor's in come, would tend to decline.

The same principles of price and income determination apply also to unskilled labor. As long as human labor is useful in the prod uction of material goods or the rendition of direct services, there will be an active demand for it. This demand is completely en compassed by the usefulness or utility of the labor. As Elizabeth Taylor's income is determined by the cash value of the moving pic tures that contain her entertain ment services, so is the income of the laborer who repairs the kitch en sink or sidewalk. No one, including the laborer of various skills and experiences, can earn more than the value of his product or service rendered; and no one earns much less in our com petitive individual enterprise sys tem. The intense competition among numerous promoters and producers closes any potential gap. As the competing film producers are bidding up Miss Taylor's in come until it reaches the very limit of her acting value, so do thousands of businessmen bid up the prices and wages of every la borer. The competition is especial ly intense for common labor be cause of its general usefulness in practically every economic enter prise.

Manifold competition among employers holds my income in ac cordance with my contribution to economic production. It is true, employers are fallible men who may occasionally overestimate or underestima te the value of my services. In case they overestimate them, the ensuing losses from my employment may cause an instant reduction of my wages, or my dis missal. In case they underestimate my productive value, they may in deed earn a profit on my employ ment. But then, competition for my services will tend to raise me again to the very limit of my pro ductive worth. In a free society, the worker 1965 WHO FIXES WAGES? 33 himself has the means to insure that his income coincides with his personal productivity. This is his mobility, his freedom to move about in the labor market. If I should feel that my work is not appreciated, that I produce-more than I recei ve, that I could be more productive in other employ ment, I am free to seek another position in which my productivity is higher or my present prod uc tivity is appraised more highly.

Numerous employment agencies would eagerly assist me. Socialist Objections The socialists would dispute this application of economic prin ciples to human labor. They would deny that the competition among employers tends to dri ve wage rates up to the point of product and service value. Businessmen tend to restrain this kind of com petition, socialists assert, and con sequently the working man is un derpaid and exploited. In the first place, I would reject the implicit charge of collective conspiracy on the part of millions of businessmen. Morally and in tellectually, they do not differ sig nificantly from other members of society; and I resent any depic tion of millions of our fellow men as stonehearted monsters eagerly conspiring to grind others down. But even if it were true that employers collectively endeavored to exploit their co-workers, they would soon see it is to their own advantage to compete with each other. Let us assume that a col lege instructor produces an annual net income of $10,000 in student tuition and, therefore, draws a $10,000 salary. Now, if all Ameri.

can college presidents were to con spire to cut instructors' salaries to $1,000 per year, in order to fill their own pockets or construct more dormi tories and lecture halls, new competition would soon void the restraint agreement. For it would be profitable for any col lege that needs instructors to raise its bid to $2,000, then $3,000, and $4,000, and so forth, thus to earn $8,000, $7,000, and $6,000 re spectively, rather than watch other colleges earn $9,000 on the man. In fact, it would be profit able for this college to raise its bid to $9,999 and thus earn one dollar rather than nothing. New colleges in need of a faculty, col leges that would like to expand on accoun t of the low instruction costs, would be inclined to bid for the necessary labor. In no time at all, new competition would drive instructors' wages up toward the limit of each instructor's produc tive worth. Furthermore, instructors are protected by their ability to move.

Can anyone imagine college pro34 THE FREEMAN November fessors holding still while the president cut wages? With the speed of a modern jet, they would desert the classrooms and dis perse throughout American indus try. The socialists refuse to see all this; they reiterate their notions of labor exploitation and aim to indoctrinate anyone willing to lis ten. Their favorite target is the common laborer who earns less than all others. But he is earning less because he is producing less, not because he is exploited. On the contrary, because his labor has such general usefulness, so that even housewives can employ him, in every town, village, and home, the competition for his service is the keenest. How can anyone deny that there is keener competition for such labor than for that of a professional person, for instance, a Ph.D. in astronomy? The socialists retort that the common laborer lacks the mobility that permits him to find the best possible market. But, in the United States, even the laborer owns an automobile, or at least has access to modern means of public transportation. And his mobility may well be greater than that of persons more likely to own real property that may hamper their freedom to move.

Another standard argument of the socialist is that common laborers are ignorant of the market opportunities; they do not know where and at what rate they can best market their labor. In reality, this assumption of the worker's ignorance and stupidity badly un derrates him. After all, the worker can read the want ads in his daily paper - or find a friend who can read. Workers learn from each other what other employers are paying for similar labor services. The socialist argument for unionization is that the individual worker is utterly defenseless against the tremendous "holding power" or reserves of industrial ists - that the workers must unite and face the "monster" in a collec tive assault. But such generaliza tion hardly squares with reality. The great number of bankruptcies of all kinds of enterprise disproves the notion that all businessmen have holding power. Many live "from hand to mouth" and en counter great difficulty in meeting their current obligations. But even if it were true that the worker has fewer reserves, what differ ence does it make in the deter mination of wages? Even if the college that employs me as econ omics instructor has greater "holding power" than I, the poor teacher, my. salary would still be subject to the competition among all institutions of learning and to my own mobility in the labor mar1965 WHO FIXES WAGES? 35 keto Whether or not I have re serves, my wage will be deter mined by the willingness of peo ple to buy higher education.

In trying to prove that labor is exploited, socialists use one argu ment that I find especially irk some. They describe in darkest colors the labor conditions of mil lions of immigrants. These poor and ignorant persons, we are told, suffer exploitation and abuse, without a voice of protest, in an alien country that is preying on their timidity and misery. As an immigrant, I resent these socialist charges and reject them. Who, pray tell, has shown greater mo bility in the labor market than the immigrant who has moved many thousands of miles, crossed oceans and borders, learned different languages and customs, in order to find the best possible market for his particular l:l,bor services? With such impressive record of mobility, he could move again, to another state or county, even to another country or back to his na;. tive land, at the first sign of ex ploitation. The allegation that anyone has taken advantage of him, ground him into poverty and misery, is absurd.

Exploitation Abroad The socialists, however, do not readily withdraw their charges of capitalist exploitation. They point to the miserable labor conditions and incredibly low wages in un developed countries. Do these not represent examples of human ex ploitation? It is true, of course, that Asia and Africa are bur dened with poverty and misery. But these cannot be placed on the doorsteps of the market system. The peoples of .Asia and Africa long have labored under utterly different systems of economic or ganization, such as tribal com munism or feudalism. And today, they prefer state socialism over the market order which they de spise and denounce. Any exploita tion and misery they suffer must be attributed to the systems they have embraced - not to compet itive capitalism. But what about those countries in Europe and Latin America that are organized along lines of the market order and yet labor in relative poverty? Do they not re veal the presence of labor exploita tion?

Many Latin American countries suffer not only from the remnants of feudalism but also from radical government intervention. Under these institutional handicaps, la bor productivity has stayed rela tively low. The capital invested in production facilities is relatively scarce when compared with that of the U.S.A. Consequently, labor productivity is lower in those 36 THE FREEMAN November lands, and wage rates fall short of American rates. The American worker earns a higher income than his European or Latin American counterpart because of his higher labor pro ductivity. And this higher pro ductivity is the result, not of such ambiguous qualities as IQ, know how, diligence, or physical strength, but greater help from capital in the form of better tools, equipment, machines, and other facilities of production. The American worker may be equipped with $20,000 worth of power tools, representing 10,000 units of horse power, while his South American neighbor labors with crude tools and equipment. Consequently, the American worker produces much more per hour of labor and, there fore, earns much more than his unfortunate neighbors.

Why is it that Americans have more capital invested per worker than in any other country? The ultimate reason for their higher investment and productivity must, of course, be sought in the dif ferent economic systems. These, in turn, are conditioned by the different political, social, and eco nomic philosophies. During more than 150 years of American his tory, the people enjoyed an un precedented degree of individual freedom and unhampered enter prise, with safety for private property and capital investment. People were free to save and in vest, build and create, without an omnipresent and omniscient state. Private property was safeguarded, so that it could be invested to im prove working and living condi tions. Europeans, too, under the ideo logical and economic leadership of Great Britain, had made a con spicuous beginning on this road of individual freedom and private property. But toward the end of the nineteenth century, they re lapsed into various manifestations of collectivism. Enmeshed in ideas and notions of social conflict, the desirability of economic equality, redistribution of wealth and in come, government supervision and control, they have reverted toward socialism, conflict, and war. Their governments have dissipated capi tal resources and hampered indi vidual economic development. And that trend, unfortunately, is sweeping over America, too.

The important fact is that the differences in political, social, and economic outlook explain the dif ference in income and wealth. The "know-how" that once set America apart from the rest of the world is not technological, nor biological, but the knowledge that freedom best serves the interest of individuals and of mankind. ~ For the Birds? w. M. CURTISS BUSINESSMEN have been mildly shocked by recent indications of a growing disrespect among college students for business as a voca tion. "The word on the campus," according to one reporter, "is that business is for the birds." Is this a reasonable conclusion? And, if so, what can be done about it? Some of this apparent lack of in terest in business might be attrib uted to the growing opportunities for college graduates in other fields. Nevertheless, many busi nessmen are conceTned that their image on campus should be so unat tracti ve. Recruiters return from college interviews, reporting stu dent scorn for business as a voca tion, with businessmen pictured as working in a high-pressure, con formist atmosphere with super ficial values. Some describe busiDr. Curtiss is Executive Secretary of the Foundation for Economic Education and super vises the Business Fellowship Program outlined in this article.

ness as an "intellectual Siberia." Statistics seem to support these alarmist views. One-fourth of the college graduates go on to gradu ate school, and the proportion is growing; 84 per cent of a recent graduating class at Harvard went to grad uate school. Some of these, of course, will find their way into business; but greater opportuni ties in teaching, research, and gov ernment service, both domestic and foreign, also open up to the gradu ate student. From one leading col lege, nearly as many graduates en tered the Peace Corps as went di rectly into business. Furthermore, recruiters for business say the top men in the graduating class are "getting away." As one recruiter put it: "N0 sooner does a man show any ability at all than the profs are on his back to get him into teaching or research." There can be no doubt that opportunities for col lege graduates, outside of business, 37 38 THE FREEMAN November have increased tremendously. In teaching alone, the opportunities have mushroomed. With a growing proportion of a rapidly increasing population going to colleges and graduate schools, teaching and ad ministra tive staff s must grow apace.

To Man the "Great Society" Government becomes ever more involved in the "great society," with worldwide military installa tions, welfare services at home, public housing projects, highways, hospitals, regulatory agencies, to mention just a few. All these tax supported activities draw heavily upon the young talent emerging from our colleges. This should come as no surprise to anyone who is aware that the government takes more than two-fifths of our produc tion. And beyond this powerful magnet of seemingly unlimited funds, the government further ex ercises the power to draft some of its manpower. In view of the widening oppor tunities for college graduates out side of business, businessmen must face up to this growing competi tion. Some are attempting to strengthen their recruiting pro grams. A few offer summer jobs to students with a hope of attract ing them to permanent spots after graduation. And some are discover ing that serious students may be less interested in promises of lavish entertainment and fringe benefits than in genuine and lasting intel lectual satisfactions that can be had by contributions in the world of business.

But how does one overcome the idea, said to be prevalent among a growing number of graduates, that "business is a dirty word"; that "business is for the birds!"? If the image is correct, then of course this is the image that should prevail. But if this is a mis taken image, as many business men and others believe, then it should be corrected. How do young people formulate their ideas about business? Some simply observe what goes on around them. Some of their im pressions doubtless are gained in their homes. But a great many are guided by what they hear from their teachers, both in high school and college. If a professor believes that the world of business is popu lated by a high proportion of dim witted, money-grubbing, material istic individuals, then it would not be surprising if his students come to hold such views. Improvements Underway It is to offset such a possibility tha t business firms, often in coop eration with colleges, have devel oped a variety of programs aimed at improving the business image 1965 FOR THE BIRDS? 39 among teachers and the academic image among businessmen.

A single teacher may influence several thousand young students in his classes and by his writings. This, of course, is as true of Eng lish, science, history, and mathe matics teachers as it is of those who teach economics or political science. All may have a bearing on the stu dent's image of business. One of the newer developments for recruiting young men from col leges, and at the same time im proving the business image on the campus, is to be found in the "Uni versity Relations" departments in business firms. Small firms can hardly afford the luxury of such specialization, but a number of large firms can and do, and with apparent success. Some firms have made it possible for a professor, on sabbatical or on leave, to spend a "year in indus try." This can be especially bene ficial to both parties if the profes sor has matured to the point where he can make a genuine contribution to the operation of the business.

For a young man just out of gradu ate school, the danger is that he may find himself doing some rou tine job which may be important to the operation of the business, but which may not give him the per spective of a firm which he seeks. Some college deans have been wary of such programs, fearing they may permanently deplete their staff of teachers. In a few instances, a "swap pro gram" has been arranged, where a businessman tries his hand at teaching and a professor at busi ness. This can be most profitable to both; but circumstances would seem to limit this arrangement for many individuals. A program which holds great promise, and already has shown beneficial results, is the industry education seminar. Dr. Thomas J. Hailstones, Dean of Business at Xavier University in Cincinnati, describes his experience with such seminars in the May/June, 1965, issue of Steelways. He tells of bringing together 50 or 60 econom ics professors and business execu tives for the express purpose of "rubbing their intellects together."

For the professors, he says: "Text book principles take on new mean ing and excitement for the college professor when they are seen in practice in their original context. The enthusiasm and knowledge of the professor is enhanced when he analyzes and discusses the com plexities of problems with his in dustrial counterpart. I have watched that enthusiasm and knowledge carried back to the classroom." The advantages to business are obvious. An outgrowth of many of the various programs which bring pro40 THE FREEMAN November fessors and businessmen together is often a consultant relationship between the professor and a busi ness firm. The special talents of a professor thus may be called into use from time to time and over a period of years. This, of course, can be directly beneficial to the re la tionship between "town and gown." FEE's Business Fellowship Program Shortly after World War II, the Foundation for Economic Educa tion started a program to bring college professors and business men together during the summer months. The eighteenth year of this program has just been com pleted, and arrangements are now being made for the summer of 1966.

In this Program, a professor, selected by a firm from a number of applicants, spends six weeks at the headquarters of the firm in an effort to gain a comprehensive view of the entire operations of the busi ness. In 1965, 72 professors from 66 different colleges and univer sities spent the summer with 54 business firms located throughout the country. Nearly 1,200 profes sors have had this experience dur ing the past 18 years. Most of them are teachers of economics, busi ness, and related subjects pertain ing to the broad principles of busi ness and the philosophy of management with all its ramifications. A few have come from English de partments - especially business communications - and from politi cal science, sociology, guidance and placement, and history. The Foundation's role is merely one of bringing the two parties to gether. The Foundation encour ages business firms to sponsor such fellowships and accepts ap plications from the professors.

One necessary detail in processing the applications is to attempt a matching of the specifications listed by business firms with spe cial requests of professors. The business firm pays the professor his traveling expenses and a sti pend intended to cover his living expenses for the six weeks. The financial contribution of the firm is substantial, though this may not fully offset the costs to the professor of other employment op portunities he has had to forego, plus the added expense of main taining his family at home during his absence. What Are the Benefits? It is always difficult, if not im possible, to measure the benefits of such a program. Each profes sor is invited to report his experi ences to the business firm at the close of his study. These reports vary from a simple thank-you letter to a detailed, extensive an1965 FOR THE BIRDS? 41 alysis of some special problem of management. A well-done project, of course, may be of direct bene fit to the business and a source of considerable satisfaction to the professor.

But the greatest benefits, both to business firms and to the pro fessors, are somewhat intangible and pertain to the long run. A pro fessor has an opportunity to check his textbook theories against what actually happens, and this helps him to become a more effective teacher. If he is a counselor or placement officer, he can advise his students with more confidence. In their reports on their fellowships, a number of professors have said: "This was the most profitable sum mer I have ever spent." A business firm may receive help from a professor that will show up on the operating state ment. However, this is rare and an "extra dividend," if it occurs. A number of heads of businesses have said it is beneficial to have a professor come in from the outside and question management men about their work. It encourages the men to view their jobs in the perspective of the entire business. The chief benefit is that such business orientation may help the college professor do his job better.

If so, his students may become bet ter recruits for the business com munity.And, above all, these col lege-business fellowships should help to create a more faithful business image on the campus. ~ EDITOR'S NOTE: To David Lawrence and his editorial in U. S. News and World Report of August 23, we are indebted for the reminder of Herbert Spencer's classic presentation of the case for individual liberty. The following excerpts are from the collection of Spencer's essays, written during the latter nineteenth century and repub lished by Caxton Printers in 1940 as The Man Versus The State (213 pp. $3.50 cloth; also available from the Foundation for Economic Education, Inc., Irvington-on-Hudson, New York.) The New Liberalism HERBERT SPENCER IT SEEMS NEEDFUL to remind everybody what L.iberalism was in the past, that they may perceive its unlikeness to the so-called L.ib eralism of the present .... They do not remember that, in one or other way, all these truly Liberal changes diminished compulsory cooperation throughout social life and increased voluntary coopera tion. They have forgotten that in one direction or other, they di minished the range of governmen tal authority, and increased the area within which each citizen may act unchecked. They have lost sight of the truth that in past times Liberalism habitually stood 42 for individual freedom versus State-coercion.

And now comes the inquiry How is it that Liberals have lost sight of this? How is it that Lib eralism, getting more and more into power, has grown more and more coercive in its legislation? How is it that, either directly through its own majorities or in directly through aid given in such cases to the majorities of its op ponents, Liberalism has to an in creasing extent adopted the policy of dictating the actions of citizens, and, by consequence, .diminishing the range throughout which their actions remain free? How are we HERBERT SPENCER The Bettmann Archive to explain this spreading confu sion of thought which has led it, in pursuit of what appears to be public good, to invert the method by which in earlier days it achieved public good? Unaccountable as at first sight this unconscious change of policy seems, we shall find that it has arisen quite naturally. Given the unanalytical thought ordinarily brought to bear on political mat ters, and, under existing condi tions, nothing else was to be ex pected .....

For what, in the popular appre hension and in the apprehension of those who effected them, were the changes made by Liberals in the past? They were abolitions of grievances suffered by the people, or by portions of them: this was the common trait they had which most impressed itself on men's minds. They were mitigations of evils which had directly or indi rectly been felt by large classes of citizens, as causes to misery or as hindrances to happiness. And since, in the minds of most, a rec tified evil is equivalent to an achieved good, these measures came to be thought of as so many positive benefits; and the welfare of the many came to be conceived alike by Liberal statesmen and 44 THE FREEMAN November Liberal voters as the aim of L.ib eralism. Hence the confusion. The gaining of a popular good, being the external conspicuous trait com mon to Liberal measures in earlier days (then in each case gained by a relaxation of restraints), it has happened that popular good has come to be sought by Liberals, not as an end to be indirectly gained by relaxations of restraints, but as the end to be directly gained. And seeking to gain it directly, they have used methods intrinsically opposed to those originally used ....

Things to Come But we are far from forming an adequate conception if we look only at the compulsory legislation which has actually beenestab lished of late years. We must look also at that which is advocated, and which threatens to be far more sweeping in range and strin gent in character. We have lately had a Cabinet Minister, one of the most advanced Liberals, so-called, who pooh-poohs the plans of the late Government for improving in dustrial dwellings as so much "tin kering"; and contends for effec tual coercion to be exercised over owners of small houses, over land owners, and over ratepayers. Here is another Cabinet Minister who, addressing his constituents, speaks slightingly of the doings of philanthropic societies and religious bodies to help the poor, and says that "the whole of the people of this country ought to look upon this work as being their own work": that is to say, some exten sive Government measure is called for.

Again, we have a Radical mem ber of Parliament who leads a large and powerful body, aiming with annually-increasing promise of success, to enforce sobriety by giving .to local majorities powers to prevent freedom of exchange in respect of certain commodities. Regulation of the hours of labour for certain classes, which has been made more and more general by successive extensions of the Fac tories Acts, is likely now to be made still more general: a meas ure is to be proposed bringing the employes in all shops under such regulation. There is a rising demand, too, that education shall be made gra tis (i.e., tax-supported), for all. The payment of school-fees is be ginning to be denounced as a wrong: the State must take the whole burden. Moreover, it is pro posed by many that the State, re garded as an undoubtedly compe tent judge of what constitutes good education for the poor, shall undertake also to prescribe good education for the middle class shall stamp the children of these, too, after a State pattern, concern1965 THE NEW LIBERALISM 45 ing the goodness of which they have no more doubt than the Chi nese had when they fixed theirs.

Then there is the "endowment of research," of late energetically urged. Already the Government gives every year the sum of £4,000 for this purpose, to be distributed through the Royal Society; and, in the absence of those who have strong motives for resisting the pressure of the interested, backed by those they easily persuade, it may by-and-by establish that paid "priesthood of science" long ago advocated by Sir David Brewster. Once more, plausible proposals are made that there should be organ ized a system of compulsory in surance, by which men during their early lives shall be forced to provide for the time when they will be incapacitated. Nor does enumeration of these further measures of coercive rule, looming on us near at hand or in the distance, complete the account. Nothing more than cursory allu sion has yet been made to that ac companying compulsion which takes the form of increased taxa tion, general and local. Partly for defraying the costs of carrying out these ever-multiplying sets of reg ulations, each of which requires an additional staff of officers, and partly to meet the outlay for new public institutions, such as board schools, free libraries, public museums, baths and washhouses, rec reation grounds, &c., &c., local rates are year after year in creased; as the general taxation is increased by grants for educa tion and to the departments of science and art, &c. Everyone of these involves further coercion restricts still more the freedom of the citizen. For the implied ad dress accompanying every addi tional exaction is - "Hitherto you have been free to spend this por tion of your earnings in any way which pleased you; hereafter you shall not be free so to spend it, but we will spend it for the general benefit." Thus, either directly or indirectly, and in most cases both at once, the citizen is at each fur ther stage in the growth of this compulsory legislation, deprived of some liberty which he previous ly had ....

Impact on the Individual In the first place, the real issue is whether the lives of citizens are more interfered with than they were; not the nature of the agency which interferes with them. Take a simpler case. A member of a trades' union has joined others in establishing an organization of a purely representative character. By it he is compelled to strike if a majority so decide; he is forbid den to accept work save under the conditions they dictate; he is pre46 THE FREEMAN November vented from profiting by his su perior ability or energy to the ex tent he might do were it not for their interdict. He cannot disobey without abandoning those pecuni ary benefits of the organization for which he has subscribed, and bringing on himself the persecu tion, and perhaps violence, of his fellows. Is he any the less coerced because the body coercing him is one which he had an equal voice with the rest in forming?

In the second place, if it be ob jected that the analogy is faulty, since the governing body of a na tion, to which, as protector of the national life and interests, all must submit under penalty of so cial disorganization, has a far higher authority over citizens than the government of any private or ganization can have over its mem bers; then the reply is that, grant ing the difference, the answer made continues valid. If men use their liberty in such a way as to surrender their liberty, are they thereafter any the less slaves? If people by a plebiscite elect a man despot over them, do they remain free because the despotism was of their own making? Are the coercive edicts issued by him to be regarded as legitimate because they are the ultimate outcome of their own votes? ... This reply is, that these multi tudinous restraining acts are not defensible on the ground that they proceed from a popularly-chosen body; for that the authority of a popularly-chosen body is no more to be regarded as an unlimited au thority than the authority of a monarch; and that as true Liber alism in the past disputed the as sumption of a monarch's unlim ited authority, so true Liberalism in the present will dispute the as sumption of unlimited parliamen tary authority ....

Not the Form of Government, But the Restraints Imposed The liberty which a citizen en joys is to be measured, not by the nature of the governmental ma chinery he lives under, whether representative or other, but by the relative paucity of the restraints it imposes on him; and that, whether this machinery is or is not one he shared in making, its actions are not of the kind proper to Liberalism if they increase such restraints beyond those which are needful for preventing him from directly or indirectly aggressing on his fellows - needful, that is, for maintaining the liberties of his fellows against his invasions of them: restraints which are, therefore, to be distinguished as negatively coercive, not positively coercive .... Paper constitutions raise smiles on the faces of those who have ob1965 THE NEW LIBERALISM 47 served their results; and paper social systems similarly affect those who have contemplated the available evidence. How little the men who wrought the French Revolution and were chiefly con cerned in setting up the new gov ernmental apparatus, dreamt that one of the early actions of this ap paratus would be to behead them all! How little the men who drew up the American Declaration of Independence and framed the re public, anticipated that after some generations the legislature would lapse into the hands of wire-pUll ers; that its doings would turn upon the contests of officeseekers; that political action would be everywhere vitiated by the intru sion of a foreign element holding the balance between parties; that electors, instead of judging for themselves, would habitually be led to the polls in thousands by their "bosses"; and that respect able men would be driven out of public life by the insults and slanders of professional politi cians ....

The working of institutions is determined by men's characters; and the existing defects in their characters will inevitably bring about the results above indicated. There is no adequate endowment of those sentiments required to prevent the growth of a despotic bureaucracy .... How Unselfish Are They? But without occupying space with indirect proofs that the mass of men have not the natures re quired to check the development of tyrannical officialism, it will suffice to contemplate the direct proofs furnished by those classes among whom the socialistic idea most predominates, and who think themselves most interested in propagating it; the, operative classes. These would constitute the great body of the socialistic or ganization, and their characters would determine its nature. What, then, are their· characters as dis played in such organizations as they have already formed? Instead of the selfishness of the employing classes and the selfish ness of competition, we are to have the unselfishness of a. mu tually-aiding system. How far is this unselfishness now shown in the behavior of working men to one another? What shall we say to the rules limiting the numbers of new hands admitted into each trade, or to the rules which hinder ascent from inferior classes of workers to superior classes? One does not see in such regulations any of that altruism by which so cialism is to be pervaded. Con trariwise, one sees a. pursuit of private interests no less keen than among traders. Hence, unless we suppose that men's natures will be 48 THE FREEMAN November suddenly exalted, we must con clude that the pursuit of private interests will sway the doings of all the component classes in a so cialistic society.

With passive disregard of others' claims goes active en croachment on them. "Be one of us or we will cut off your means of living," is the usual threat of each trades-union to outsiders of the same trade. While their members insist on their own freedom to combine and fix the rates at which they will work (as they are per fectly justified in doing), the free dom of those who disagree with them is not only denied but the assertion of it is treated as a crime. Individuals who maintain their rights to make their own contracts are vilified as "black legs" and "traitors," and meet with violence which would be mer ciless were there no legal penalties and no police. The Closed Shop Along with this trampling on the liberties of men of their own class, there goes peremptory dicta tion to the employing class: not prescribed terms and working ar rangements only shall be con formed to, but none save those be longing to their body shall be em ployed; nay, in some cases, there shall be a strike if the employer carries on transactions with trading bodies that give work to non union men. Here, then, we are variously shown by trades-unions, or at any rate by the newer trades unions, a determination to impose their regulations without regard to the rights of those who are to be coerced. So complete is the in version of ideas and sentiments that maintenance of these rights is regarded as vicious and tres pass upon them as virtuous. * Along with this aggressiveness in one direction there goes submis siveness in another direction. The *Marvellous are the conclusions men reach when once they desert the simple principle that each man should be al lowed to pursue the objects of life, re strained only by the limits which the similar pursuits of their objects by other men impose. A generation ago we heard loud assertions of "the right to labor,"

that is, the right to have labor pro vided; and there are still not a few who think the community bound to find work for each person. Compare this with the doctrine current in France at the time when the monarchical power culminated; namely, that "the right of working is a royal right which the prince can sell and the subjects must buy." This con trast is startling enough; but a con trast still more startling is being pro vided for us. We now see a resuscitation of the despotic doctrine, differing only by the substitution of trades-unions for kings. For now that trades-unions are becoming universal, and each artisan has to pay prescribed monies to one or another of them, with the alternative of being a non-unionist to whom work is denied by force, it has come to this: that the right to labor is a trade-union right, which the trade-union can sell and the individual worker must buy!

1965 THE NEW LIBERALISM 49 coercion of outsiders by unionists is paralleled only by their subjec tion to their leaders. That they may conquer in the struggle they sur render their individual liberties and individual judgments, and show no resentment, however dic tatorial may be the rule exercised over them. Everywhere we see such subordination that bodies of work men unanimously leave their work or return to it as their authorities order .them.N or do they resist when taxed all round to support strikers whose acts they mayor may not approve, but instead, ill treat recalcitrant members of their body who do not subscribe. How far Will They Go? The traits thus shown must be operative in any new social organi zation, and the question to be asked is, What will result from their operation when they are relieved from all restraints? At present the separate bodies of men displaying them are in the midst of a society partially passive, partially antago nistic; are subject to the criticisms and reprobations of an independ ent press; and are under the con trol of law, enforced by police. If in these circumstances these bodies habitually take courses which over ride individual freedom, what will happen when, instead of being only scattered parts of the community, governed by their separate sets of regulators, they constitute the whole community, governed by a consolidated system of such regu lators; when functionaries of all orders, including those who officer the press, form parts of the regula tive organization; and when the law is both enacted and adminis tered by this regulative organiza tion?

The fanatical adherents of a so cial theory are capable of taking any measures, no matter how ex treme, for carrying out their views: holding, like the merciless priesthoods of past times, that the end justifies the means .. And when a general socialistic organization has been established, the vast, ramified, and consolidated body of those who direct its activities, using without check whatever coer cion seems to them needful in the interests of the system (which will practically become their own in terests) will have no hesitation in imposing their rigorous rule over the entire lives of the actual work ers; until, eventually, there is de veloped an official oligarchy, with its various grades, exercising a tyranny more gigantic and more terrible than any which the world has seen. ~ I .•. A CLICHE OF SOCIALISM: "Under Public Ovvnership, We, the People,Ovvn It I" LEONARD E. READ PUBLIC OWNERSHIP and govern ment control are synonymous terms - two ways of expressing an identical concept.

The popular notion is that a re source or service is the possession of we, the people, when it is un der government ownership and dispensation, and that we, the peo ple, are objects of exploitation when resources are under private ownership and willing exchange. Socialism - public ownership-will continue to expand as long as this notion dominates. In Brazil, for instance, private exploration and refining of oil re sources are denied to both domestic and foreign entrepreneurs. Gov ernment has a monopoly of this industry. As a consequence, Bra zilians innocently exclaim, "0 pe troleo e nosso" - the oil is ours! But if they will only look in their gas tanks, they'll discover two gallons from private enterprising foreigners to each gallon of what they· naively call "ours." The rea50 son for this? Government owner ship and operation produces only one-third the quantity required for local consumption; some 200, 000 barrels must be imported daily.

Had our Indians followed the Brazilian type of logic, they could have exclaimed, 500 years ago, "The oil is ours," even though they were unaware of this untapped re source. Or, to suggest a compa rable absurdity, we can, after planting the American flag on the moon, claim that satellite to be "ours." I only ask, what's the point in avowing ownership of any unavailable resource or ser vice? Public ownership, so-called, con trary to popular notions, is defi nitely not we-the-people owner ship. If it were, we could exchange our share in TVA or the Post Office for dollars, just as we can exchange a share of corporation stock for dollars. At least two conditions are nec1965 "UNDER PUBLIC OWNERSHIP, WE, THE PEOPLE, OWN IT" 51 essary for ownership to exist: (1) having title, and (2) having con trol. In Italy, under fascism, titles to assets remained in private hands but control was coercively assumed by the state. The titles were utterly meaningless. Without control, ownership is pure fiction.

While in some vague way "we, the people," are supposed to have title to TVA, for instance, we have not even a vestige of control. I no more control that socialistic ven ture in power and light than I control the orbiting of men into outer space. "But," some will counter, "neither do you control the corporation in which you hold stock." True, I do not perform the managerial function, but I do con trol whether or not I'll retain or sell the stock,. which is to say, I control whether or not I will share in the gains or losses. Further, I am free to choose whether or not to work for the corporation or to buy or refrain from buying its products. My control in the non governmental corporate arrange ment is very real, indeed. Who, then, does control and thus own TVA, the Post Office, and the like? At best, it is a nebulous, shifting control-often difficult to identify. Rooted in political plun der, government ownership and operation is an irresponsible con trol; that is, there is never a re sponsibility in precise alignment with authority. The mayor of a city may have complete authority over the socialized water system, but responsibility for failure is by no means commensurately as sumed by him. He "passes the buck," as they say. Most people crave authority provided responsi bility doesn't go with it. This ex plains, in part, why political office is so attractive and why "we, the people," do not even remotely own what is held in the name of public ownership.

One truly owns those things to which he holds exclusive title and exclusive control, and for which he has responsibility. Let any American inventory his posses sions. These will be, preponder antly, those goods and services ob tained from private sources in open exchange: power and light, cameras, autos, gasoline, or any of the millions of goods and ser vices by which we live. The things that are privately owned by others are far more available for one's own title and control than is the case in "public ownership." Public ownership often creates distracting and, at the same time, attractive illusions. For instance, people served by TVA are using twice as much power and light as the national average. Why? TVA charges less than half the price. Because of lower production costs? Indeed, not! The rest of us around 52 THE FREEMAN November the nation are taxed to cover the TVA deficit. But power and light acquired in this manner can no more classify as "ours" than can any good or service forcibly ex torted from true owners. To grasp what this socialism means if ap plied to everything, merely take a look at the Russian "economy."

Or take another example: The political head of New York City's socialized water system rej ected metering on the ground that water is a social service to which Goth amites are entitled as citizens. The illusion: How nice to live where much of the water is for free! Yes, except that the New York City water district, astride the mighty Hudson, is having a water famine. Now, this is public owner ship, pure and simple. But observe that the "public" ownership of water has all but dried up the availability of water for private use. What kind of a social service is it that, by depriving individuals of title and control, finally denies them the service! If private availability - owner ship in the sense of use, title, con trol-is what interests us, then we will do well to preserve private ownership and an open, willing exchange market. For proof, mere ly take a look in the gas tank, or the closet, or the garage, or the pot on the stove! ~ Reprints available at 2 ¢ each.

Problems of Compulsion AMENDING the Social Security Act to exempt the Amish from coverage and taxation, on grounds that insurance is contrary to their religion, embraces the idea that different laws shall apply to different religions. Personally, I want the same law to apply to all-regardless of religion or race. But if that concept of justice is to prevail in the United States with its compulsory Social Security laws, the peace ful Amish farmers must be deprived of their freedom to worship God as they think right. If Social Security were voluntary instead of compulsory - and if all its costs were paid by those who choose to join - Congress would not be faced with this issue of different laws for different religions. DEAN RUSSELL RE-EXAMINED PAUL L. PorROT IN A SENSE, it might be said that the Social Security program of the United States is the best in the world. At least, it would be diffi cult to name another country in which so high a proportion of per sons over 65 years of age can re tire in such comparative luxury at taxpayers' expense. Many older persons are simply amazed at how well they can manage on their So cial Security payments, while the more skeptical of those now ap proaching or already beyond re tirement age continue from long habit to make other provisions to save on their own - for those lean years in later life.

The tenacious American tradi tion of private saving and invest ment in productive property large ly explains why a system of social ized security might appear to func tion more effectively in the United States than in most other coun tries. Economically advanced and comparatively prosperous indus trialized societies can bear a great deal of socialistic intervention that would be unthinkable in undevel oped countries. The question is: "How much intervention can be borne in the United States?" Illusions to Be Exposed In examining that question, let us first clear away any possible il lusions concerning the Social Se curity program. It should be ob vious to all by now that· Social Se curity is in no sense of the word a savings program whereby a por tion of a person's property is set aside to be returned to him for use at some later date. Nor is Social Security at all like an insurance program with several persons pool ing their savings in some cumula tive fashion to cover contingencies and catastrophes that might befall certain members at indefinite fu ture dates.

In other words, Social Security involves no fund or stockpile of goods and services from which por tions may be drawn. It is purely and simply a compulsory income tax; property is taken from nearly 53 54 THE FREEMAN November all productively employed persons and redistributed - sometimes to those same persons, but primarily to others-according to a formula based on present and past earnings of the recipients. Social Security is nothing but the compulsory redis tribution of property on a day-to day basis. Who Pays? A second possible illusion has to do with the incidence of the tax. Who is really paying it? This seems reasonably clear in the case of "self-employed" persons; but otherwise, there is the widespread misconception that the employer pays half of it. The harsh eco nomic fact, of course, is that the Social Security tax is, to the em ployer, just another part of the cost of hiring labor. If he didn't hire the man, he wouldn't have to pay the tax. But if he could hire without paying the Social Secur ity tax, one of three things must happen: (1) he could hire more help for· the same total wage cost; (2) he would be obliged by competition among employers to pay higher wage rates to get the help he needs; or (3) he would be obliged, again by competition, to sell his products at lower prices in order to clear the market. In any event, with rare and strictly tem porary exceptions, the saving to any employer - if he were relieved of Social Security tax liability would be passed along to employ ees either in the form of increased wages or in the form of reduced prices for goods and services in the market place. In effect, then, the employee does pay all of the Social Security tax levied on his account, including the half he might have thought his employer was contributing.

The foregoing also should help to clear up the illusion that Social Security offers something-for nothing to everyone. It is true, in strictly materialistic accounting terms, that some of the early beneficiaries under the program were eligible for heavy windfalls at ratios of 20:1 or higher. But it is also true that scarcely any per son now under 50 years of age stands a chance of getting back with interest his "investment" in Social Security. Some will have to pay for the multibill ion-dollar windfall accruing to those early beneficiaries. The youngsters are the ones now scheduled for gener ous portions of nothing-for-some thing - at an annual cost of $746 a year on any job paying $6,600 or better, when the "health and welfare" tax presumably "levels off" at 11.3 per cent. Though pre cise calculations are impossible for any program that is subject to the whims of politics, it appears now that a young man just enter1965 SOCIAL SECURITY RE-EXAMINED 55 ing the labor force could, for the same amount, buy from private life insurance companies two or three times as much old-age secur ity as his Social Security taxes are scheduled to yield.

In the face of these stark real ities, how can such a program re tain its popularity among Ameri cans? The answer apparently may be attributed to another illusion about the nature of things in gen eral and economics in particular. IIEconomics ll of Redistribution Economics used to be a study in scarcities, based on the assump tion that human wants are unend ing and that the means of satis fying such wants are limited. The problem was to obtain the most efficient use of scarce resources land, labor, capital-to maximize the yield of goods and services most wanted by consumers. It was believed that human beings pos sess a certain digni ty, entitling them to respect as individuals, each capable of knowing his wants and more or less self-responsible for their fulfillment. The institu tions of private property and vol untary exchange grew out of and implemented the belief in the dig nity of the individual.

In that context, economics con cerned the ways and means of sat isfying the most urgent wants of individuals through the responsible individual ownership, use, and willing exchange of scarce goods and services. The individual's own ership of property, including his freedom to offer his services for sale, affords him entry to the mar ket. The first rule of the .market is that each buyer also must be a seller - that all participants are suppliers seeking to gain what each wants most by giving up that of his own which he values least. In other words, self-interest is best served by serving others. And the free market price for each com modity or service is the price which most nearly balances the combined demand at that price against the available supply at that price. The market price thus serves as the signal to consumers to step up or to curb their use of various items and encourages pro ducers to concentrate on the out put of items most sought by con sumers. Thus, shortages and sur pluses are averted and waste of scarce resources minimized in the market economy. Such, briefly, was the essence of economics in the classical sense, with emphasis al ways. on the most efficient and pro ductive use of all available re sources.

The material abundance flowing from the competitive market econ omy following the industrial revo lution has led some so-called econ56 THE FREEMAN November omists to the erroneous conclusion that the problem of production has been solved. The "new-eco nomics" is primarily concerned with the redistribution of wealth so that society may be able to con sume all that it is capable of pro ducing. They see that the wants of individuals are unending, but seem to overlook the continuing scarcity of means to satisfy such wants. Market prices, to them, are but barriers to the deserving poor; and they reject the first rule of the market: that a buyer must first have something to offer in exchange. But to take the prop erty of those who have earned it by efficiently serving others, for redistribution to those who offer nothing in exchange, can only be accomplished by compulsory meth ods. The Public Sector Thus, the "new economics" calls for government action to break down the institutions of private property and voluntary exchange.

Goods and services are to be allo cated, not by competitive market pricing, but by the coercive meas ures of the "welfare state." The false premise is that producers will keep on "coming to market" with useful goods and services, despite the certainty of being con fronted there by armed bands de manding something for nothing. This is the illusion of the "new economics," perfectly exemplified by the Social Securi ty program. There is no denying the desirabil ity of security for older persons; almost everyone would like that. But one of the quirks of human nature is that a great many in dividuals will not voluntarily fore go current spending and consump tion in order to save or put aside enough of their own property to yield a decent living after they have retired from the labor force. So, if all people are to be guaran teed an income in old age, it will be necessary to force people to pay for this.

Dr. J. K. Galbraith, among others, has observed this tendency of persons to use their property primarily for the things they want most; and he refers to the result as the "affluent private sector" of the economy. On the other hand, noting that a great many persons neglect spending for the things he believes they ought to want - such things as providing for income during old age - he finds this "public sector" relatively starved. As the financial statements of a great number of life insurance companies will attest, there are persons perfectly willing to save for their 'old age; and it is a profit able business to serve those will ing customers. Many other types of business also efficiently and 1965 SOCIAL SECURITY RE-EXAMINED 57 profitably cater to the wants of those who desire to save and in vest in productive private enter prise as a source of future income. But there is no profit to be had in supplying a commodity or service to persons who are unwilling to pay for the item. Businessmen won't and can't voluntarily con tinue such an operation. So, if old age security is to be guaranteed to those who do not choose to pay for it, the losing operation will have to be conducted in "the public sector," taking property from those who have earned it, for re distribution to others - by force.

Subsidized Poverty Now, we are gaining consider able experience under the· "public sector" in the United States, with government at all levels currently spending for us some two-fifths of our total earnings. Much of this "public sector" spending, of course, goes for our education - some $40 billion a year of tax monies. And there are those who contend that education spe cifically, and the advance in knowl edge generally, together account for nearly half of the growth of "real national income." If that were true, it would represent a sizable dividend from the "public sector." However, there is one small problem in that the better educated we become, the less we seem to be able to care for our selves in our old age and other times of adversity. The "public sector" spending for social wel fare payments of all kinds has now climbed to $47 billion a year. Some $17 billion of that goes for payments under the Old Age, Sur vivors, and Disability Insurance (OASDI) feature of the Social Security program. But, unfortun ately, the need for other types of social welfare seems to increase even faster than the need for So cial Security. The conclusion would seem to be that the starva tion of the "public sector" is of a type that is aggravated by feeding it; the subsidizing of poverty in creases it.

To question the propriety of various government spending pro grams is not to deny the useful ness of education and the advance ment of knowledge nor to malign the charitable instincts of those who wish to devote their own re sources to the assistance of others. But a reasonably educated person cannot escape the fact that the wherewithal of capital formation and the means for charitable un dertakings both stem from the same source; namely, the savings of productive individuals. The ac cumulation of a surplus of person al property beyond one's immedi ate needs is the foundation of cap italism and the only true founda58 THE FREEMAN November tion upon which the principles and practice of charity can stand. This is the reason why true charity cannot flow from the com pulsory processes of government. To promote the welfare of one per son at the expense of another is no contribution to the general wel fare. The framers of the Constitu tion of the United States sought to guarantee the rights of individ uals to own property. They under stood that whatever government can do to secure those individual rights to property is a contribu tion to the general welfare - and that no government can promote the general welfare in any other manner.

When government resorts to the tactics of a Robin Hood, it has ceased to be a protector of prop erty or a guarantor of security. Instead, it becomes the instrument of plunder by which one citizen or special interest group may loot the earnings and savings of others. Government cannot create secur ity in this fashion, by taking one man's earned security and giving it· to others in accordance with politically determined need; it only destroys security. What starts out as a popular pastime of soaking the rich turns into a program of taxing every one who works for a living. And as socialism advances, the weak and dependent find themselves competing with the youthful and strong who also have been driven by hunger to the public trough. Such competition in sheer despera. tion is far more ruthless than that which is sometimes frowned upon in the open market. When people lose respect for the lives and prop erty of one another, then the weak and dependent may expect to be early victims of murder and theft.

Self-Reliance Is Best If the less productive members of a society truly seek security, let them rally to the defense of the freedom of choice and freedom of action of those who work for a liv ing and who are personally pro ductive. Let them voluntarily deal with one another in a market place kept free of compulsion. Such vol untary trading directs the instru ments of production and the means of economic security into the hands of those most capable of serving all mankind. It stimulates every individual to develop his own talents to their maximum productivity. It encourages saving instead of squandering. The free market, and not its displacement by governmental controls, is the only route to the kind of personal security which makes for harmoni ous social relationships. A feeling of personal security depends upon something more than the legal guarantee of a hand1965 SOCIAL SECURITY RE-EXAMINED 59 out in time of need. Security is an attitude not necessarily satisfied by an "equal share" or even by an abundance of material goods and services. To be truly secure is to be without cause for anxiety, and that kind of security stems from the mind of an individual who knows that he has done his very best with what was properly his own. Such security is fed by one's respect for the rights of others to life and property, a respect upon which is based one's own claim to those rights.

Though older persons may not serve well in the armed forces, or in defense plants, or in the various other activities incidental to the support of big government, that need not preclude their being loved and respected as individuals. That is not sufficient reason for a law which tends to put an end to in dividuality and its expression at age 65. If the young men and women of today's generation have lost a sense of love and respect for their aging parents, that is some thing which the government can not restore through its devices of compulsion. That is a form of in security which must be borne by parents if they have failed to teach their children to respect the sanc tity of the individual and the rights to life and private property. The same time-weathered code of ethics which advocates honoring one's father and mother recom mends respect for the life and live lihood - the private property - of others. To violate any part of that code destroys the meaning of the rest of it. Society cannot enforce a law which guarantees security to the aged by denying the producer the right to the product of his own efforts. The best that society can do is to give the individual a chance to honor and respect his elders. This means allowing the individual his choice concerning the use to be made of his own life and his own productive efforts. It is possible for an individual to honor and respect others who are tolerant of his freedom to choose.

But rare indeed is the individual who can extract love and honor from others by compulsory means! Such things as love, respect, honor, and justice in the relation ships between persons are measur able and meaningful only to the extent that individuals voluntarily reject an opportunity to dislike, disrespect, dishonor, or deal un justly with others. And old-age security also falls into that cat egory-. Since a weak person can not force a strong person to help him, it would seem wise to put the appeal on some basis other than coercion. This means retrieving the responsibility for old-age se curity from the hands of govern ment. ~ A REVIEWER'S NOTEBOOK WE, meaning the white man, have "reservation fever," says R. J. Rushdoony, quoting an old Indian who thinks the descendants of his old conquerors are pretty far gone in stupidity. The "reservation" is the Welfare State - which means that it actually encompasses the planet with a few exempt bits of acreage labeled Hong Kong, the Bahamas, and West Germany. We want it easy - but a reservation implies that there must be some thing outside the reservation to keep it going. Somebody has to do the work.

The subtitle of this Essays on Liberty: Volume XII (Foundation for Economic Education, $3.00 cloth, $2.00 paper) might be "On and Off the Reservation." It is a handbook of reservation practices, compiled more often than not with a bland imperturbability that is more effective than open sarcasm. It is also an arsenal of argument that will show any reasonably in60 JOHN CHAMBERLAIN telligent white man how to get off the reservation. If the Sitting Bulls of the "cradle to grave" state con tinue to win their battles, it will only be because the contributors to this volume have been effectively boxed out by the reservation keep ers. Even this possibility won't help the Sitting Bulls in the long run, for a world given over to total reservation practice is a logical im possibility. Let us repeat: some body has to feed the reservation. Looking about him at the steadily increasing amount of res erva tion practice - or socialism, to give it its exact title - that we now have, Leonard Read says there is no use in "engineering or planning socialism's uprooting." I take it that he means you can't legislate the TVA or the Federal Post Office out of existence. But what you can do is to look to the state of your own mentality. When we pursue high purposes, says Mr. Read in his essay on "Unscrambling So1965 ON AND OFF THE RESERVATION 61 cialism," "natural forces do their clean-up work for us as a dividend for having set our sights aright."

Correspondence by Phone Since my own mind always runs back from the abstract to the con crete, I've been trying to think how "high purposes" can start private maHcarrying to compete with the public post office when the law gives the government amaH mo nopoly. SuddenlyMr . Read's words about "natural forces" doing "clean-up work" struck home with the realization that few people write real letters any more. I know I don't. It gets easier every day to by-pass the post office. You can be sure of keeping in touch with your "correspondents" by subscribing to an answering service. You can have a phone in the back seat of your car. You can even get "ship-to shore" facilities if you· want to combine office work with cruising on the deep. All of this costs a hit more than dictating and mailing letters. But who knows, maybe there will be a "voice delivery" service tomorrow that will tape a businessman's output of dictation for the morning and deliver it by telephone or wireless, to the in tended recipients for a mere pit tance. The costs of the privately owned telephone companies con tin ue to go down; the Federal Post Office continues to be in the red.

At some point people will stop writing all but the most routine letters. So I'll take Mr. Read's word for it that "nature" is against the ex tension of socialism as long as some men keep their wits about them and their minds clear. The working of this law seems to be assured as long as there is a bit of freedom permitted. In his essay in this vol ume called "Flying Socialism," Sam H. Husbands, Jr., tells how the state-owned airways of Europe act as feather-bedding preserves for unnecessary employees. The British Overseas Airways Corpo ration, a government monopoly, oc cupies a position that is roughly similar to that of the privately owned Pan American Airways. Well, in 1963 "Pan American flew more than 2.6 times as many rev enue passenger miles (8,069,397, 000) as did BOAC (3,023,470,000), but with only 20 per cent more per sonnel." The figures comparing Air France and TWA, and the German Lufthansa with National, make the same sort of case for private enterprise. With 12,224 employees, Lufthans~ gets 132,608 revenue passenger miles per employee. Na tional, with only 4,416 employees, flew 390,816 revenue passenger miles per employee in 1963. Since the airlines, both public and pri vate, use the same type of equip ment, it is obvious that the private 62 THE FREEMAN November companies know how to use it bet ter. But it is the private companies that have the incentive to take the leadership in technological as well as personnel improvement, getting there first with the best and safest planes. The pressure for rate re ductions has come from Pan Amer ican and TWA, which shows that "nature" forces its "clean-up work"

as "a dividend for having set our sights aright." A Couple of Questions This twelfth volume of Essays on Liberty contains 49 separate contributions by 31 separate au thors, and there is no possible way to be fair to everybody within the scope of a review. At the risk of be ing specifically unfair to a couple of contributors, I'd like to argue that William Cage, in his "The Right to Pray," misses a constitu tional point when he says that prayers in school are "outside the realm of ·government competence." No doubt they should be under any rational concept ofa public institu tion, which admittedly has no busi ness discriminating against certain peoples' opinions. But our Founding Fathers were not concerned with complete ra tionality or with universal philo sophical consistency when they were writing the First Amend ment; they were merely concerned with prohibiting something to the Federal government which they were quite willing to let the states do for themselves. Thus, the First Amendment says that "Congress"

shall pass no law infringing on re ligious freedom or establishing a state church. Patently it would be illegal under the Constitution for the Federal government to pre scribe, or even to permit, prayers in any nationally supported school system. But, strictly interpreted, the Constitution says absolutely nothing about forbidding states or municipalities to allow prayers in their schools. They are not included in the word "Congress." Indeed, the Tenth Amendment (which was not repealed by the vague "equal rights" clause of a later amend ment) would seem to guarantee in dividual state preference in this matter. I am not arguing against Mr. Cage's libertarian logic here; I am merely defending the constitution ality of something that he finds philosophically abhorrent. Carried to its logical conclusion, Mr. Cage's argument would call for the aboli tion of all public education, whether it is prayerful education or not.

But the Founding Fathers were not perfect libertarians; they be lieved in some public education, and Thomas Jefferson, for one, made provision for both moral and religious teaching in his blueprint for a state university.

1965 ON AND OFF THE RESERVATION 63 With John C. Sparks's "Zoned or Owned?" I have no real quarrel. Zoning is, as he insists, an in fringement of the property right. It does not surprise me to learn that suburbs within the city limits of Houston, Texas, which does without zoning, have higher prop erty values than the zoned areas that lie just beyond the municipal boundaries. But my quibble with "Zoned or Owned?" is this: what if you have used your contractual right to buy property in an area that has already been zoned? The zoning restrictions. will have been funded, so to speak, into the price you have paid for the property. Thus, a sudden repeal of a zoning limitation (say, one that insists that three acres go with each home) might lop dollars off an in vestment made in good contractual faith. The question here is whether a man has a right to keep a state of affairs which he has paid for in an honest deal made under a bad law for which he was not responsible. ~ ~ THE NATURE OF THE AMERI CAN SYSTEM by Rousas J. Rush doony (Nutley, New Jersey: The Craig Press), 181 pp. $3.75.

Reviewed by Robert M. Thornton HERE is a vigorously written de fense of the American system of decentralization, limited sovereignty, checks and balances, and constitutionalism - a system of government in which power is not concentrated in anyone person or body of persons. Power is dis persed, because no man - in the eyes of the Founding Fathers can be trusted with discretionary power over his fellows. "Speak not of the goodness of man," warned J efferson, "but bind him down from mischief with the chains of the Constitution." This settled conviction of the men who shaped our institutions reflects the Chris tian view of man as a flawed crea ture with great limitations; a being incapable of perfect knowl edge and wisdom, denied a lofty, Godlike objectivity, too self-cen tered to meet the claims of uni versal love. It is in this, sense of the term cultural rather than sectarian that Rushdoony argues that this nation was modeled along the lines of a Christian commonwealth. He recognizes that the "presupposi tions of all man's thinking are in escapably religious, and they are never neutral." That is to say, everyone entertains a premise as to the nature and destiny of man, whether explicit in his thought or not.

In this book as in his previous works, Rushdoony gets down to bedrock; an<\; whether you agree with him or not, he cannot justiy 64 THE FREEMAN November be accused of inconsistency or su perficiality. He contributes to our understanding of the system under which we live, and he makes it perfectly clear that those church men who wish to replace the American sy-stem with some brand of collectivism for assumed Christian motives are sadly mistaken. The free society is no utopia, but it is both a desirable thing in its own right and the only form of so cial organization compatible with a religion which cherishes convic tions about the importance of the individual person. ~ Through the Wringer FROM WASHINGTON'Seagerness to protect the consumer, you would think that clever manufacturers were constantly gypping the poor fellow, squeezing out his hard-earned dollars in return for a lot of new but shoddy products. So a recent research study is interesting.

Bjorksten Research Laboratories of Madison, Wisconsin, took a look at what happened to 27,000 new products that manufac turers hopefully put on the market during 1964. It found that, in one of the most prosperous years in history, four out of every five new items were so unpopular with consumers that they proved unprofitable. As a result of the failures, the researchers report, the unsuc cessful manufacturers sustained losses totaling more than $3 bil lion. Which may have raised some questions, in their minds at least, as to just who put whom through the wringer. From The Wall Street Journal, August 24, 1965 "As a Man Thinks ... /' . V. Orval Watts 37 Selective Justice . Sudha R. Shenoy 47 The Effort of Every Man Henry Hazlitt 35 56 60 John Chamberlain William Henry Chamberlin 49 Books: Index for 1965 "Farm Prices Are Made in Washington" . Don Paar/berg 16 DECEMBER 1965 The Bogey of Automation .

Christian Economics: Myth or Reality? B. A. Rogge 3 The Flight from Reality: 15. Remaking the Minds of Men . Clarence 8. Carson 19 Germans Vote for Economic Freedom Send for this UNIQUE fREE BOOKLET "SAVINGS: The Greatest Economic Charity" When we think of charity, we usually think of helping someone and receiving only the satisfaction of having helped someone in need. Yet this is only one form of charity. There's another. You can read all about this interesting concept in an unusual new booklet by the well-known economist F. A. Harper, entitled lISavings, The Greatest Economic Charity." For your free copy, without obliga tion, come in or mail the coupon below. cRE.4TESf' ECONOMIC CH.4RJ'1'Y "If It's SafetyYou Want Most-First Compare Then Save At Coast" Planned rate for 2nd half 1965 is 4.85 % per year, compounded DAILY,paid semi-annually. Savings held 1 year at this rate earn 4.970/0.

MAIN OFFICE: 9th & Hill, Los Angeles, Calif. 90014 • Tel.: 623-1351 Coast Federal Savings and Loan Association, Dept. F, 9th & Hill, L.A., Calif. 900: Name(s) (please print) Address, _ D Joint Account City ___State. _ ~ Dr. Rogge outlines some of the problems confronting any Christian who presumes to function ecomonical Iy in other than a free market fashion. .......... p. 3 ~ An agricultural economist explains the fallacy in the notion that llfarm prices are made in Washington." .......... p. 16 ~ The various educational techniques employed by reformers to remake the minds of men are examined in this chapter of Dr. Carson's series on The Flight from Reality p. 19 "" Henry Hazlitt recalls and explains Macaulay's observation that the self serving efforts of free men can find ways around a lot of interventions. . p. 35 "" Dr. Orval Watts outlines the philo sophical premises upon which he would base his teaching of economics to students preparing for careers in business. .. p. 37 ~ Today's ··social justice," this thoughtful young student from India reminds us, is all too often a cloak for tyrannical discrimination. .. .. p. 47 ~ William Henry Chamberlin inter prets the results of the recent German election to be a great victory for a man of principle, and for the principles of liberty he espo~ses. p. 49 ~ George Terborgh's study of the sig nificance of automation is the subject of John Chamberlain's review this month p. 56 "" And for your convenience in spot ting your favorite articles and authors of the past year, you'll find the annual index. . ;. p. 60 ~nyone wishing to communicate with authors may send first-class mail in care of THE FREEMAN for forwarding.

DECEMBER 1965 LEONARD E. READ PAUL L. POIROT Vol. 15, No. 12 President, Foundation for Economic Education Managing Editor THE FREEMAN is published monthly by the Foundation for Economic Education, Inc., a non political, nonprofit educational champion of private property, the free market, the profit and loss system, and limited goYernment, founded in 1946, with offices at Irvington-on-H udson, New York. Any Jpterested person may receive its publications for the asking. The costs of Foundation projects and services, in cluding THE FREEMAN, are met through volun tary donations. Total expenses average $12.00 a year per person on the mailing list. Donations are invited in any amount - $5.00 to $10,000 - as the nleans of nlaintaining and extending the Foundation's work. Copyright, 1965, The Foundation for Economic Education, Inc. Printed in U.S.A. Additional copies, postpaid, to one address: Single copy, 50 cents; 3 for $1.00; 25 or more, 20 cents each.

Permission is hereby granted to anyone to reprint any article in Whole or in part, providing customary credit is given, except "Christian Eco nomics: Myth or Reality?," " 'Farm Prices Are Made in Washington,' " "The Flight from Reality," "The Effort of Every Man," and" , As a Man Thinks... .''' Any current article will be supplied in reprint form if there are enough inquiries to justify the cost of the printing.

CHRISTIAN ECONOMICS Myth or Reality? ..... B. A. ROGGE I WISH to begin my discussion with some questions. What can we find in the Bible on the ethical rightness of the statement that two plus two equals four? What do the Papal Encyclicals tell us of the justice of Boyle's Law, that the volume of an ideal gas varies inversely with its pressure, other things being equal? Does Chris tian doctrine tell us that it is fair for a hydrogen atom to contain three isotopes while a fluorine atom contains but two? Or, to ap proach my own topic, is it Chris tian or un-Christian for a demand curve to be negatively inclined from left to right? Economics as a Pure Science Let me now put the general case: What does Christianity have Dr. Rogge, Professor of Political Economy at Wabash College, presented this paper at a Seminar on Economics and Ethics at Valparaiso University, February 19, 1965, sponsored by The Lutheran Academy for Scholarship and printed here with their permission.

to do with the questions of any pure science? So that there can be no suspense, I shall give the an swer immediately. The answer is, "Nothing, absolutely nothing." There can no more be a Christian science of economics than there can be a Christian science of math ematics. It was a Hindu who first introduced zero into the set of real numbers and a Greek pagan who first analyzed the process of exchange in the market place. A microscope and a telescope seem to be quite indifferent to the reli gion of those who peer through them. The law of diminishing re turns has no more relationship to the flight from Egypt than it does to the flight from Mecca to Me dina. Am I belaboring my point un necessarily? Perhaps not. The pro ponents of aU ofthe.wQrld's great religions, including Christianity, have often yielded to the tempta4 THE FREEMAN December tion of dictating answers to par ticular questions of pure science and have always been made to ap pear foolish in the process. Is the earth round or flat? Is the earth the center of the universe or isn't it?

Was the world created at 9 :00 A.M. on the morning of October 23rd, 4,004 B.C.? And, as Clarence Dar row asked, was that Central Stand ard Time or Mountain Standard Time? And as the quasi-religion ists of modern communism ask, cannot acquired characteristics be inheri ted? I would be belaboring IHy point if it were not for the likelihood that many a scientist may yet be forced to kneel in the snow outside the temple and beg forgiveness for the impertinence of his findings. If economics were only a pure science, we could now considetmy presentation at an end and say, if all were to agree with me, that Christian economics is indeed a myth and a most unnecessary one at that. But economics is both something less and something more than a pure science, and therein lies the rub. Economics as Something Less Than a Pure Science Let me begin with the implica tions of the fact that economics is something less than a pure science - but first let me define vvhat I mean by a pure science. A pure science is one that is con cernedwith ~vhat is and not with what should be. I shall refer to economics as a pure science as positive economics and to econom ics as a set of do's and don'ts as normative economics.

Now economics is something less than a pure science only in a special sense. Its goal of finding out "what is" is no different from that of physics or astronomy, and economists often use search meth ods quite like those used by the natural scientists. What makes economics something less than a pure science is its present lack of success in developing a body of laws or generalizations accepted as correct by all or almost all serious students of the subject. The state of economics today is not unlike the state of physics at the time of Galileo's recantation. Even at the level of what is, economists are so far short of agreemen t on so many funda mental questions that the well intentioned layman can almost al ways find some economist who will provide him with scientific evi dence of the correctness of what he wants to believe to be true. Let me illustrate : The question of whether a minimum . wage set by government does or does not increase the total· wage payments going to a given group of workers is a question in positive econom1965 CHRISTIAN ECONOMICS: MYTH OR REALITY? 5 ics. Yet in appearances before ministers, I have been accused of being un-Christian because my findings are that the long-run ef fect of a minimum wage is to re duce the total income of the work ers involved.

Nor can I really be angry at this. The ministers involved want very much to believe that the prob lem of poverty can be solved in part by simply passing a law in creasing hourly wage rates - and they can find economists of more repute than Ben Rogge who will tell them that this can, in fact, be done. When the scientists disagree, the layman is going to choose that scientist who tells him what he wants to hear., As a cigarette smoker who chooses to believe the findings of those who argue that there is no clear connection be tween cigarette smoking and lung cancer, I can't really throw stones at the layman who prefers some one else's findings in economics to my own. What does the fact that econ omics is still itself an underde veloped area mean to the Chris tian? If it is the economist who himself is also a Christian, it seems to me to require of him an open mind, integrity in dealing with his own findings and the find ings of others, and a refusal to let his wishes be father to his facts.

When the great English histor ian, Herbert Butterfield, visited the Wabash campus a few years ago, he was asked if there was such a thing as Christian history. He replied that there wasn't, but that there was history as written by a Christian and that the man's Christiani ty would demand of him that he display the attitudes I have just described. But what does the incomplete and confused state of economic science mean to the Christian who is not a professional economist but who wishes to use economic knowl edge in making his own decisions? It seems to me that it requires of him the same openness of mind, the same refusal to let his wishes be father to his facts that it re quires of the economist. He ought to be anxious to expose himself to various sources of economic in formation and to learn from them all that he can. Economic science may be in a primitive state, but this is only relative to some of the more mature sciences and it still has much to teach the typical nonprofessional.

I will say flatly that the typical American who calls himself a Christian' and who makes pro nouncements or joins in making pronouncements on economic poli cies or institutions, does so out of an almost complete ignorance of the simplest and most widely 6 THE FREEMAN December accepted tools of economic analy sis. If something arouses his Christian concern, he asks not whether it is water or gasoline he is tossing on the economic fire he asks only whether it is a well intended act. As I understand it, the Christian is required to be something more than well-mean ing; he is required to use his God given reason as well. Inadequate as economic science may now be, it can save the layman from at least the grossest errors and can be ignored only at real peril to the society at large. Let me summarize my thesis up to this point: I have argued that the word" Christian, is totally out of place as a modifier to any of the pure sciences. Generically, economics is one of the pure sci ences and hence this constraint must apply to the concept of Christian economics. The main thrust of this constraint is undis turbed by the fact that economics is still in a primitive state of de velopment. However, this fact re quires of the Christian, whether a professional economist or no, a certain caution, a certain open ness to various possibilities not required (at least to the same de gree) in dealing with the laws of the more precise and more mature sciences. But this fact does not ex cuse anyone, be he Christian or no, from the necessity of learning what he can about economics be fore making decisions on economic policy.

Economics as Something More Than a Pure Science This brings me to the second part of my discussion, to the im plications of the fact that eco nomics is something. more than a pure science. There is a positive economics but there is also a normative economics - an eco nomics that is concerned with ques tions of valuation, of right and \vrong action or inaction. I have denied that there can be a Chris tian positive economics; let me now ask if there can be a Chris tian normative economics. Normative economics is positive economics plus a value system. Christianity is a religion, and a re ligion need not involve a set of values - but, of course, Christian ity does. It follows that the value system in the normative econom ics of a Christian should be the Christian value system. In this sense, then, Christian economics can be very much of a reality. It will be marked, not by its choice of materials from positive econom ics, but by its choice of funda mental assumptions about the na ture of man, his purposes here on earth, and the obligations for right action imposed upon him by his Creator. I assume that these 1965 CHRISTIAN ECONOMICS: MYTH OR REALITY? 7 fundamental assumptions would be drawn from what the Christian believes to be the revealed word of God, that is, from the Bible and from such interpretations of the Bible as the particular Chris tian accepts as authoritative.

So far, so good; but as an econo mist embarrassed by the relative chaos in his own field, I cannot re sist pointing out that there seems to be more than one value system labeled "Christian." Perhaps I should rephrase my earlier affirma tion and say that not only can there be a Christian economics, there can be any number of Chris tian economics. However, I don't wish to disturb the state of happy (though perhaps superficial) ec umenism in which we seem to be basking at this time in America, and so I shall concentrate on what seem to me to be the least con troversial' the most widely agreed upon precepts of Christianity. What I want to do now is to list a number of these precepts and then keep them in mind. as I ex amine just one specific question in normative economics. If there is, indeed, a Christian normative economics (as I am arguing there is), we should be able to use it, should we not? My real purpose in doing this is not to provide you with an answer to this one ques tion but to reveal some of the di lemmas the Christian encounters in applying Christian values to problems of economic policy.

In listing these precepts, I make no claim for completeness or ab solutely universal acceptance by all Christians. I list them as the ones that seem to me and (to the best of my knowledge) to otherg as the ones most relevant to social problems. Some Basic Assumptions I begin with the assumption that 1nan is imperfect, now and forever - that he is, indeed, some what lower than the angels. It fol lows that all of his constructs must be imperfect; William Blake and the Anglican hymnal to the contrary, Jerusalem is never to be built in England's green and pleasant land. Next I place on the list the Chris tian view of man as a responsible being. In the words of John Ben nett of Union Theological Semin ary, Man never ceases to be a responsi ble being and no mere victim of cir cumstance or of the consequences of the sins of his fathers. Man has the amazing capacity through memory and thought and imagination to trans cend himself and his own time and place, to criticize himself and his en vironment on the basis of ideals and purposes that are present to his mind, and he can aspire in the grim mest situations to realize these ideals 8 THE FREEMAN December and purposes in his personal life and in society. It is this capacity for self transcendence that Reinhold Niebuhr, following Augustine, regards as the chief mark of the image of God in man that is never lost. (John Ben nett, Christianity and Communism Today, 1960,p. 118) My third of the Christian as sumptions is that of the signifi cance of man's freedom to choose.

In its most elemental form, this signifies Christ's insistence that he wanted, as followers of his way, only those who had freely chosen him and his way. I remind you of one of the most dramatic scenes in literature, the challenging of Christ by the Grand Inquisitor in The Brothers Ka,ramazov. I shall argue in a moment that this Chris tian sense of freedom is a most annoying restraint on social action and, hence, is the one precept most commonly ignored in Christian communities. Next and very importantly is the assumption of the brotherhood of man, with its clear implication of the necessity of assisting those in need. The crucial importance of this assumption in the drafting of Christian economic policy can hardly be overemphasized. I now add one of the explicit guidelines (and another very an noying restraint on social action), Thou shalt not steal. I close the list with the Christian's sense of the forgiving love of God and of the ultimate hope that comes with the knowledge that this is God's world. John Ben net, in discussing this sense in conjunction with a discussion of man's sin, puts it this way: Christian teaching about human nature per haps reveals most clearly the corrective elements in Christian ity. It corrects all tendencies toward sentimental optimism or utopianism that fail to prepare men to face the stubborn reality of evil in human his tory, and it corrects all tendencies to disillusionment or cynicism that are the opposite danger. Men who lack the perspective of Christian teaching are in danger of oscillating between utopianism and disillusionment.

The first thing that Christians say about human nature is that man and this means every man - is made in the image of God and that this image is the basis of man's dignity and promise. The second thing that Christians say about human nature is that man - and this means every man and not merely those who are opponents or enemies - is a sinner. (Bennett, Ope cit., pp. 116-7) Christian Economics: A Case Study My choice of precepts to include may have already cost me your good will, but now that we have the list, good, bad, or indifferent, let us see if we can put it to work. Here is our problem: A family 1965 CHRISTIAN ECONOMICS: MYTH OR REALITY? 9 in (say) Valparaiso, Indiana, lives in serious poverty, with not al ways enough money for food, clothing for the children, medicine or doctor's services, or for rent on their small, ramshackle house. What does Christian economics tell us to do about this? What kind of a war on poverty does it ask us to wage?

Let us turn first to the kind of answer usually given by the American society generally today (and also the kind of answer generally endorsed by the social ac tion groups of the large denomina tional organizations and of the Na tional Council of Churches). First, we should pass a law called a minimum wage law to force this man's employer to pay him a living wage. Or we should en courage the development of a union in this man's work group so that he could expect to receive a fair and decent wage .. Next, we ought to pass laws that will force such men to save for emergencies, for example, unemployment, which may be the man's real problem at the moment. If he is unemployed, the government should offer him subsidized retraining, so that he can find suitable employment. If he is in real need, as our particular man is at the moment, some com bination of local, state, and na tional relief payments should be made to him.

This is what most Christians in America today deem appropri ate, with perhaps the addition of a box of groceries collected by one of the churches to be delivered to the family each Thanksgiving and Christmas. Does any of this lack good in tent? I think not; on the surface, at least, it seems to meet the re quirement imposed by the brother hood of man. Minimum Wages Now let's go through it again to see if we've missed anything. We begin with the idea of a legis lated increase in his wage rate. Perhaps it would be wise if we first asked what the consequences of this might be. For example, could it lead to this man's losing his job altogether, either immedi ately or as the employer is forced by the higher costs of labor to mechanize the operation, if he is to stay in business at all? Well, says the economist, that will de pend in part on whether the labor market was competitive to begin with, whether the man was already getting all that he was really worth. It will depend on whether this law "jars" the employer into becoming more efficient. In other words, it will depend on a number of factors of the kind analyzed in positive economics.

My own personal knowledge 10 THE FREEMAN December both of theory and of evidence v~7ould lead me to argue that the very probable consequence of a legislated increase in wage rates will be some loss of employment opportunities, and our particular worker could well be one of those to lose his job. I might add that his chances of being thrown out of work are increased if he is a mem ber of a minority racial group. I may be wrong on this but I know of no competent economist who would deny the possibility that a legislated minimum wage will produce some unemployment. If this possibility exists, a Chris tian might well wish to examine the findings of positive economics before supporting a proposal of this kind. In supporting the idea of minimum wage laws, the Chris tian may well be causing problems for precisely those people he wishes to help, and be giving aid and comfort to a more fortunate worker-employer group which ben efits by being freed of the competi tion of lower-wage firms. I repeat, good Christian intentions are not enough!

Trade Unions Similar questions might well be raised about the second line of at tack on our special problem of poverty - that of encouraging the development of a trade union to protect this ·worker. A union-induced increase in wage rates in the plant or store where this man works could lead to his losing his job altogether, just as in the other case. If he is a member of a mi nority race, the chances of this will be even higher under the trade union approach, because of the long-established discrimina tory practices of many of the im portant unions. For example, in 1962, there were only three Negro apprentices in the union-dominated electrical trades in all of New York City and only one Negro apprentice plumber. Here again the Ben Rogge ver sion of positive economics could be wrong, but again the important questions are those of positive economics and not of good intent. At least one additional question might be raised. In granting spe cial privileges, immunities, and en couragement to trade unions, we would be sanctioning an activity that when undertaken by business men can lead to their being put in jail. As an economic institution (and a trade union is more than an economic institution), a union is a cartel; that is, it is a collusive arrangement among otherwise in dependent sellers of the services of labor, for the purpose of manipu lating market prices to their own advantage. It is precisely the same in operation as the activities of the sales executives of the large elec1965 CHRISTIAN ECONOMICS: MYTH OR REALITY? 11 trical manufacturing companies that led to their being sent to prison a year or two ago. In en couraging workers (and farmers) to do that which we forbid busi nessmen, we seem to be violating a rather old concept of justice that of equality before the law. In a very real sense we have encour aged the blindfolded Goddess of Justice to peek, and she now says.

with the jurists of the ancient re gimes, "First tell me who you are and then I'll tell you what your rights are." To encourage trade unionism may be wise or unwise economic policy but surely the Christian cannot escape some con cern for a policy that deliberately creates a double standard of right and wrong. Social Security We turn now to the third of the responses to our problem, that of social security. Let us force such people to contribute to a program to tide them over such emergencies. This may be wise or unwise econ omic policy but at least it will as sure some minimal flow of income to the family for some period of time. In other words, it does work. Some Christians might be dis turbed to know that as the system now works in this country, low income Negroes are being taxed to support high-income whites. How does this come about?A low-income but fully employed Negro will pay into the fund almost as much mon ey as will the high-income white.

But the average life span of the Ne gro beyond age 65 is significantly less than that of the white, and the Negro can thus expect to draw less in total benefits. I present this odd circumstance, not as a criticism of social security per se, because the law could be changed to elimi nate this feature, but as further evidence of the need for the well intentioned person to examine policy proposals, not only in the large, but in detail as well. But clearly, within certain lim its, social security does work; it does provide much needed help to many in real need. Surely the Christian can find no dilemma here. No? What, then, of the Mennonites and the Amish who have fiercely resisted any partici pation in this program? Of course, these are patently queer people, who wear funny-looking clothes and have other peculiar ideas, but they do call themselves Christians; in fact, they say that it is because they are Christians that they must refuse to involve themselves in so cial security.

How could this possibly be? Let us go back to our precepts of the religion and see what we can find. Suppose we interpret the brother hood of man, individual responsi bility, and freedom to choose as 12 THE FREEMAN December meaning that each man should be free to choose, even in economic life; that if he chooses wrongly he is responsible and should seek him self to solve the problems he has created for himself; and that, if this proves impossible, it then be comes the responsibility of his fel low Christians, as a voluntary act of brotherhood, to come to his as sistance. Surely, this line of rea soning cannot be immediately la beled as un-Christian - even if it would confront us with the embar rassing challenge of doing some thing indi vid ually, directly and out of our own pockets for this family in Valparaiso, Indiana, of which we have personal knowledge. Take "freedom to choose." Does this apply only in questions of pure religion or does it constitute a gen eral Christian presumption in fa vor of freedom of the individual?

If the latter, then the Christian faces a dilemma. Social security tells a man that he must pay into the fund, how much he must pay at a minimum, and in what form the fund will be held. Whether on balance this is good or bad, it is clearly a denial of freedom. In the words of the English philoso pher, Isaiah Berlin, in discussing this general type of dilemma: But a sacrifice is not an in~rease in what is being sacrificed, namely freedom, however great the moral need or the compensation for it. Everything is what it is: liberty is liberty, not equality or fairness or justice or human happiness or a quiet conscience. . . . This (loss) may be compensated for by a gain in justice or in happiness or in peace, but the loss remains, and it is nothing but a confusion of values to say that al though my 'liberal,' individual free dom may go by the board, some other kind of freedom - 'social' or 'eco nomic' - is increased. (Isaiah Berlin, Two Concepts of Liberty, 1958, p. 10).

Here then is a typical dilemma of the Christian as he approaches economic policy; his concern for his brother leads him to favor a measure that will help his brother (such as social security) but, to be really effective, it requires that he also reduce his brother's freedom to choose. I note, somewhat sadly, that given this choice, the majority of Christian peoples have usually chosen to sacrifice their own free dom and the freedom of others in the interest of compelling people to do what all good Christians know they should do. This mayor may not be the right decision on the question of social security, but let no Christian say yes, it is the right decision, with a feeling that no sacrifice of any principle is in volved. Redistribution of Income The last two approaches, retrain ing the worker and providing him with direct relief, are but two 1965 CHRISTIAN ECONOMICS: MYTH OR REALITY? 13 forms of the same thing and r shall treat them as a unit. Government provided relief is a forced redis tribution of income from one group of people to another group of peo ple. Subsidized retraining is simply a form of redistributive payment that the beneficiary can receive only if he takes it in a given form, that is, in the form of tuition-free schooling, combined with subsist ence payments. Whether redistri bution is more efficient if the uses of the money by the beneficiaries are directed by the government (as in retraining programs, govern ment housing, school lunch provi sions, and the like) than if the money is simply turned over to the beneficiaries to be used as they wish, is a complex question and one tha t r don't have time to examine.

r would point out only that he who pays the piper, whether he be a pri vate person or a government agent, will usually be strongly tempted to call the tune. In other words, as a matter of sociological probability, most schemes for redistributing income will usually involve some directing of the uses to which the beneficiaries may put the funds. Whatever form the payments may take, relief provided by the state does work; it does provide as sistance to the needy. It does pro vide food for the hungry, clothing and shelter for the cold, and medi cine for the sick. Surely, here at last the Christian can relax, se cure in the knowledge that in sup porting such measures he is recog nizing the obligations imposed upon him by the fact of human brotherhood in God. Perhaps - but perhaps not. As I understand it, these obligations rest upon each individual to be acted upon as a matter of con science. As I remember the para ble, the Good Samaritan was not acting upon an order of govern ment in performing his good deed, nor was he a paid official of a local welfare agency, drawing on local tax funds. Does Christian virtue consist in passing a law to force oneself to do what is charitable and right? Given man's imperfect na ture, this might be a tenable posi tion. Unfortunately, though, the law must apply to all; and thus many, who, for whatever reason, do not wish to give up what is theirs for the use of others, are physically compelled to do so.

Under Which Christian Precept Can Force Be Justified? Ah, but you say, they Sho1,tld wish to do so. Of course they should, but if they don't, is the Christian then authorized to use force to compel them to do so? If so, under which of the precepts of Christianity? Aquinas apparently had found such a precept when he wrote, 14 THE FREEMAN > December The superfluities of the rich be long by right to the poor.... To use the property of another, taking it secretly in case of extreme need, can not, properly speaking, be character ized as theft. (Thomas Aquinas, Summa Theologica, 2a, 2ae, quaestiao 66, art. 7) Others might be troubled, though, by the apparent conflict be tween this interpretation and the commandment, Thou shalt not steal. Perhaps it should read, Thou shalt not steal, except to give to the poor. Under this interpretation, King Ahab and Jezebel would have been justified in seizing Naboth's vine yard, if their purpose had been to distribute its fruits among the poor.

It is interesting to note the way in which these questions are han dled in the thirty-eighth of the Articles of Religion of the Protes tant Episcopal Church in the United States: The Riches and Goods of Chris tians are not common, as touching the right, title, and possession of the same; as certain Anabaptists do falsely boast. Notwithstanding, every lnan ought, of such things as he pos sesseth, liberally to give alms to the poor, according to his ability. It would seem possible to de velop what might be called a Chris tian position on this issue that would strike against all public charity and make assistance to the needy a response of the individual conscience. This is in fact a posi tion taken by certain denomina tional groups in the country today. The Personal Practice of Freedom Am I really saying that I think the vast responsibilities for as sistance to the needy in our mod ern, complex society could be en trusted to pri vate indi vid uals and voluntary welfare agencies; do I really think that, undersuch a sys tem, no one would be left out, no child would ever die of hunger or cold? I honestly don't know what the consequences would be of such an arrangement. I only know that the Christian who enthusiastically embraces coercive, collective char ity may very possibly be deriving his mandate from some source other than his own religion. For example, such an approach fits very well with a psychological in terpretation of man as a helpless victim of his environment, as a creature not to be held responsible for his own successes or failures.

If you answer the question, "Who's to blame ?", not with "Mea Culpa," but with "Society," you need not hesitate to turn to the central agency of organized society, the state, to solve any and all prob lems. It is of course as presumptuous of me to talk of Christian doctrine as it might be for some of you to 1965 CHRISTIAN ECONOMICS: MYTH OR REALITY? 15 talk of technical economics; but I must confess that my own personal interpretation of Christianity does not fit well with most of the ap proaches to social and economic problems of official Christendom in this country today. Today's Chris tian economics seems to me to be neither good Christianity nor good economics. But my function' here is not to offer you advice on what to accept and what to reject. That I have done so, both directly and by im plication, lends further credence to the thesis of one of my favor ite modern philosophers, Charlie Brown of the Peanuts comic strip, who was once led to remark, "This '''orId is filled with people who are anxious to function in an advisory capacity."

If Economists Disagree, Let Christians Se Tolerant My function here has been to discuss the topic, Christian Econ omics; Myth or Reality? I have argued that the word, Christian, cannot and must not be used as a modifier to economics as a pure sci ence. To do so is to indulge in the ancient sin of trying by appeal to revelation to answer certain ques tions that were meant to be an swered by man himself with the use of his God-given reason. I have argued as well that, in spite of its present state of imperfection, economics as a pure sci ence, that is, positive economics, has much to offer to those who are interested in questions of economic policy. As a matter of fact, I think myself that much of the diversity of opinion antong economists, both amateur and pr'ofessional, on ques tions of public policy stems not from disagreement over ultimate goals or values but from disagree ment over the findings of positive economics. In a sense this is en couraging, because it implies that these disagreements can be reduced over time by improvement in the science itself. Disagreements over ultimate values cannot be resolved; they can only be fought over or ig nored. Disagreements over ques tions of fact and analysis are con ceptually open to solution.

I have also argued that there can be a Christian economics at the normative level; the Christian can combine his Christian ethics and Christian assumptions about the nature of man with his knowledge of positive economics to decide whether any given proposal should be approved or condemned. The combination can very properly be called Christian economics. Unfortunately, because of dis agreements at the level of which positive economics to accept and at the level of which interpretation of Christian values to accept, there is no single set of conclusions on 16 THE FREEMAN December economic policy that can be said to be the definitive and unique Chris tian economics. The socialist and the free enterpriser, the interven tionist and the noninterventionist, the business spokesman and the labor spokesman, the Mennonite farmer and the Episcopalian Presi dent of the United States, Ben Rogge and John Kenneth Galbraith - each will argue that his answers are the ones most nearly in accord with true Christian economics. In this lies the challenge to the Chris tian.

The only advice I can offer the now thoroughly confused Christian is that he avoid hasty judgment and that he think with his head as well as with his heart. He must learn what he can from positive economics and carefully examine precisely what values are imposed upon him by the fact that he is a Christian. In the meantime, he can draw some comfort from the knowl edge that the professional econo mists and the ministers of the Christian churches are but little less confused than he. ~ GREAT MYTHS OF AGRICULTURAL POLICY: NO.1 Reprinted from Successful Farming magazine, Augttst 1965. DON PAARLBERG THE ELEMENTof truth which gives this myth its appeal is the simple, observable fact that the govern ment can legislate and administer a price for wheat or cotton which is different from the price that would otherwise prevail in the market. In fact, it has done so. The price of wheat has been dropped, through Washington ac tion, from $2 to $1.40 per bushel.

To the degree that farm prices are Dr. Paarlberg is Hillenbrand Professor of Ag riculturalEconomics at Purdue University. made in Washington they are un made at the same address. The element of untrubh which makes the myth dangerous is the belief, implicit in the statement, that a government sympathetic to agriculture could establish any price it wished. It infers that Washington is responsible for \vhatever level of prosperity or dif ficulty agriculture is experiencing. This untruth is greater than the fragment of fact which the state ment contains.

1965 "FARM PRICES ARE MADE IN WASHINGTON" 17 If one accepts and repeats the myth that farm prices are made in Washington, he reveals his belief that decision-making has been transferred from the individual to his government and' that central ized authority has replaced the market system. In short, he has written off the competitive econ omy and replaced it, in his mind, \vith a regimented society. For if Washington is to take over the job of establishing the price, Washing ton n1ust also take over the jobs that price does. That is, Washing ton must regulate production, reg iment the marketing process, su pervise consumption, and take re sponsibility for the level of income. A more accurate statement is: "Prices of certain farm products are influenced, within limits, by legislation enacted in Washing ton." But what this statement gains in truth, it loses in simplic ity. As is so often true, the myth has more appeal than the fact.

What makes price? If prices are not made in Washington, how are they made? Supply and Demand To find out, you must know eco nomic lesson No. 1. It's so basic that if you understand it, all else in economics becomes comprehen sible. It concerns the laws of de mand, supply, and price. The law of demand is this: Other things equal, the quantity purchased will move in the oppo site direction from price. Thus, if the price is raised and other things remain the same, a smaller quan tity will be purchased. And in versely: People win clean out a grocer's steaks if he lowers them from 98¢ to 28¢ a pound. The law of supply is this: Other things equal, the quantity offered for sale will vary directly with the price. Thus, if the price of soy beans goes up and other things re main the same, you'll try to pro duce more and the supply will be larger. When supply and demand inter act in a competitive market, price becomes established to equalize the two. Supply equals demand and the market clears. There is no "surplus" or "shortage." The price may be high or low, depending upon the respective levels of de mand and supply.

If the price is low, the market is telling farmers to produce less and telling consumers to buy more. If the price'is high, the opposite signal is being given. This is the mechanism by which the people jointly determine how land and labor and capital should be used. It is a remarkably orderly process, and functions effectively for the most part. True, government may stimu late demand, as, for example, 18 THE FREEMAN December through Public Law 480. And it may retard supply by land retire ment programs. These operations may and do affect prices. But the range within which price may thus be manipulated is not as wide as many think. Unhappiness Prevails No one is completely happy with the market system. Farmers wish the price was higher. The stand ard definition of a fair price, as the farmer defines it, is "10 per cent more." Conversely, the consumer's definition of a fair price is "10 per cent less."

So the subject of prices is con troversial. It always has been, and it always will be, because produc ers and consumers contend. with one another. If the market is com petitive, they contend in the mar ket place. If the price is legislated, they contend in the halls of Con gress. If one says "farm prices are made in Washington," he is really saying that the competitive mar ket has disappeared and that we now have a government-made market. This is a gross exaggera tion. Prices of livestock, poultry, most fruits, and vegetables are made competitively in the market place. These products bring in roughly 50 per cent of the farm income. Commodities whose prices are, to a degree, "made in Washing ton" bring in only about half of the farm income. And even for those commodities whose price is "made in Washington," the limits within which Washington can set the price are rather narrow. An Administration and a Congress dedicated to high price supports has had to reduce support levels for tobacco, wheat, cotton, and others. The market forces are powerful.

But the myth persists. Like an old Greek myth, it is more a re flection of a state of mind than an accurate portrayal of the real world. • ©Meredith Publishing Company, 1965. All rights reserved. The Price of Pig The price of pig Is something big; Because its corn, you'll understand, Is high-priced, too; Because it grew Upon the high-priced farming land. If you'd know why That land is high, Consider this; its price is big Because it pays Thereon to raise The costly corn, the high-priced pig! Quoted in Economics of Enterprise by H. J. D A V E N PO R T 15. Remaking the Minds of Men CLARENCE B. CARSON In the third place, the administrator . .. will realize that public education is essentially education of the public: di1'ectly, through teachers and students in the school; indirectly, through communicating to others his own ideals and standards, inspiring others with the enthusiasm of himself and his staff for the function of intelligence and character in the transformation of society.

-JOHN DEWEY, 1937 A new public mind is to be created. How? Only by creating tens of millions of new individual minds and welding them into a new social mind. Old stereo types must be broken up and new "climates of opinion" formed in the neigh borhoods of America. But that is the task of the building of a science of society for the schools. -HAROLD RUGG, 1933 ... The young should receive careful training in mutual unde1·takings, in organizational work, and in social planning so that they may form the de sired habits and dispositions. -GEORGE s. COUNTS, 1952 NOTHING is so unlikely as that the established institutions in a society should be used to trans form and reconstruct society. After all, the institutions derive their reason for being and support from the· existing order, if they Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books.

are not anachronisms. They exist to perpetuate and serve that order. In a word, they are conservative. Certainly, this has almost always been true of such fundamental in stitutions as the home, the church, and the school. The home has tra ditionally been the place where the child has been civilized, has been taught rudimentary manners, has been taught how to get along with 20 THE FREEMAN December others, has been nurtured and trained in manners and morality. This training derives largely from the experience of the parents, what. they have been taught, and what understanding they have of the world in which they live. The school has been the place for the teaching of the accumulated knowl edge from the past, and the church has been the rock which served to anchor man in the enduring as he tended to adapt himself to the winds of change. These are con servative functions, for by them the experience, heritage, knowl edge, and .Revelation are passed from one generation to another.

Yet, in this century, a concerted attempt has been made to under mine and/or direct these institu tions to the ends of social recon struction. Religion,as has been shown, was drawn into the stream of social reform by the social gos pel. Parents have yielded much of their responsibility for the up bringing of their children to var ious social agencies, notably the schools. And, whether they have or not, the authority which they formerly wielded has been re stricted by new doctrines on child rearing, by the assaults upon cus tom and tradition, by the loss of confidence in the wisdom embed ded in the· heritage, and by the wedge that has been driven be tween the old and the young by the "peer group" orientation and conformity. The parents most af fected by these changes probably fall into two categories (with some overlapping): the "best ed ucated" - that is, those who have spent the most years in school and those who are glad enough to avail themselves of the irresponsi bility that is involved.

That some people should revel in their irresponsibility requires no explanation - though why they should be encouraged to do so does. But that those who should be best educated are inept in approp riating and using their heritage is a matter warranting careful consideration. This consideration brings us to the subject of this article: the undermining of educa tion, the transformation of the schools, and the instrumentation of education for melioristic re form. Perverting the Tradition There are few possibilities more remote than that the schools should be made into instruments of reform. It required great in genuity and imagination to bring it off - a concerted effort over an extended period of time by men dedicated to the task. The reason for such difficulties is not far to seek. Schools have for their task the education of children. Educa tion has, at least historically, been 1965 REMAKING THE MINDS OF MEN 21 concerned with conveying knowl edge; or, at any rate, it has been associated with the acquisition of knowledge. Such knowledge con sists of the skills, methods, and information which has been learned· in times past. To put it another way, knowledge is of what is and what has been. There is no knowledge, in particulars, of what will be in the future, though much may be deduced from a knowledge of the universe and what has happened as to what can and cannot be in the future, but even this is only knowledge of what is and has happened.

But the educational reformers proposed to use schooling as prep aration for building a different society for the future. That is, they were futuristic, oriented to what would be rather than to what was and had happened. In short, they proposed to use the schools as breeding grounds for social change rather than for education. Theirs was, and is, a flight from the reality of knowledge upon which education is supposedly based. Insofar as such education is focused upon the future, it is usually an uninhibited exercise of the imagination. Insofar as it is an attempt to implant some ideo logical version of what the future should be like, it is nothing but propaganda. Insofar as it is con cerned with rooting out traditional ideas and beliefs, it is brain washing. Insofar as schooling has been turned from imbuing with knowledge to social reconstruc tion, it has been turned from a solid task to sentimental hopes and vague visions of the future.

(But, it may be objected, educa tion is to prepare one for living in the future. So it is. It is for the future [or the extended pres ent], but it is of the past and what now is. If there is aught of value to be learned, in school or elsewhere, it has to be of the-past and what is.) Explaining What Happened There is general agreement that education has been transformed in America in the twentieth cen tury. Those who have described it, however, have focused upon differ ent things. Some have emphasized the great increase in numbers in the schools and the larger propor tion of the young who have stayed in school much longer. Indeed, it is a cliche of the educationists that this accounts mainly for the changes in content and method. It is alleged that education was formerly aristocratic in emphasis and that in the twentieth century it was adjusted to the generality of the young. Some emphasize the impact of new developments in education and the attempts to make it scientific. Others focus 22 THE FREEMAN December upon leaders, movements, and as sociations.

This account will focus upon three major developments in edu cation: (1) the undermining of ed ucation, (2) the reorientation of schooling and its instrumentation to social reform, and (3) the cen tralizing of control over education. Attention will be centered on the educational reformers, their aims and accomplishments. It should be clear that this results in only a partial account of what has hap pened in education. The reformers have quite often been thwarted in their aims by determined class room teachers, by resisting ad ministrators, and by the tendency of people to continue established methods. Still, the reformers have succeeded, much more than they have been inclined to admit, in transforming the schools. Progressive Education The main impetus to educational reform and the central tendency of it came from the Progressive Education movement. The chief proponent, and later patron saint, of Progressive Education was John Dewey. As early as 1897 he declared that "education is the fundamental method of social progress and reform."! In The 1 Quoted in Lawrence A. Cremin, The Transformation of the School (New York: Alfred A. Knopf, 1961), p. 100.

School and Society (1899), "the school is cast as a lever of social change ... , educational theory ... becomes political theory, and the educator is inevitably cast into the struggle for social reform."2 He was to follow this with many articles and books on education, and the theme of reform is always there, either in the forefront or as assumption. As has been pointed out before, Dewey was a central figure for reform in gen eral. He had come under the in fluence of a new conception of reality and was an indefatigable worker in trying to bring this world into conformity with it. Dewey would, and did, put the matter otherwise: he had per ceived the underlying direction that things were taking and used his energies to try to persuade men to make the appropriate ad justments and changes so that they might stay in the stream of history. He was a monist, a melio rist, an antitraditionalist, a, social analyst, an environmentalist (mod ified) , an equalitarian, a demo cratist, a historicist - in short, a Progressive.

Dewey was under the sway of a new conception of reality. What was real to him was change, soci ety, and psyche. His ideas stem from William James, from G. W. F. Hegel, from Charles Darwin, 2 Ibid., p. 118.

1965 REMAKING THE MINDS OF MEN 23 from Lester Frank Ward, and from the gradualist revision of Marx ism. His conception of change had the mystical overtones conferred upon it by Hegelianism, Darwin ism, and the reform Darwinists. It was something produced by such "forces" as industrialization; it was not to be denied, but it could be controlled and directed by human ingenuity. What was important to him was society. It was the firm reality in terms of which one acted, wrought changes, and made improvements. He wrote much about the individual, about individual freedom, about the in dividual child, but the reality within which the individual moved and had his being was always so ciety. The psyche was both the obstacle to reform and the means by which reform was to be brought about. Dewey was not so much an in novator as a prodigiously produc tive amplifier. He was in a stream of American reformers - Henry George, Edward Bellamy, Lester Frank Ward, Henry ·Demarest Lloyd, and so forth - which goes back into the nineteenth century, and which broadened and became more numerous in the twentieth.

Moreover, many of these conceived of this social function for educa tion. To Lester Frank Ward, ac cording to one historian, "educa tion was the 'great panacea' -for political as for all others evils."3 Albion Small, a disciple of Ward, declared in the 1890's, "Sociology knows no means for the ameliora tion or reform of society more rad ical than those of which teachers hold the leverage .... The teacher who realizes his social function will not be satisfied with passing chil dren to the next grade. He will read his success only in the record of men and women who go from the school . . . zealous to do their part in making a better future."4 In 1911, Charles A. Ellwood wrote that the schools should be used as "the conscious instrument of so cial reconstruction."5 A few years later, Ernest R. Groves proclaimed that "society can largely deter mine individual characteristics, and for its future well-being it needs more and more to demand that the public schools contribute significantly and not incidentally to its pressing needs by a social use of the influence that the schools have over the individual in his sensitive period of immaturity."6 Dewey was by no means alone, even at the beginning, but he was a central figure. He went to Co3 Henry S. Commager, The American Mind (New Haven: Yale University Press, 1950), p. 214.

4 Quoted in Cremin, Ope cit., p. 99. 5 Quoted in Edward A. Krug, The Shaping 0/ the American High School (New York': Harper & Row, 1964), p. 254. 6 Ibid., p" 254.

24 THE FREEMAN December lumbia University to profess phi losophy in 1904, and taught there until his retirement in 1930. Teachers College at Columbia University became the center from which so many of the doctrines of Progressive Education were spread to the rest of the country. Many of the most intruen tial of its spokemen held forth there: William H. Kilpatrick, Harold Rugg, George S. Counts, and others. 7 One historian, though eager to disclaim any untoward implications, points up the influ ence of William H. Kilpatrick, a student and disciple of Dewey: In all he taught some 35,000 stu dents from every state in the Union at a time when Teachers College was training a substantial percentage of the articulate leaders of American education. Any competent teacher occupying the senior chair of phi losophy of education at the College between 1918 and 1938 would have exerted a prodigious inft.uence on educational, theory and practice. In the hands of the dedicated, compel ling Kilpatrick, the chair became an extraordinary strategic rostrum for the dissemination of a particular version of progressive education .... 8 Others spread the word from ros trums in other uni versi ties: Boyd Henry Bode at Ohio State Univer1 See Augustin G. Rudd, Bending the Twig (Chicago: Heritage Foundation, 1957), pp. 235-37.

8 Cremin, op. cit., p. 220. sity, Theodore Brameld at the Uni versi ty of Minnesota, and many lesser known names in hundreds of departments and schools of educa tion in American colleges and uni versi ties. The Rise of Relativism Before the New Education, or New Schooling as it should be called, could be installed, however, the old education had to be dis credited and displaced. The dis crediting of the old has gone on for many years and at many levels. The deepest level of attack was the philosophical, and at this level it was an attack upon the possibil ity of knowledge. Throughout a long career John Dewey carried on a running attack upon abso lutes - that is, upon all claims to truth, to established knowledge, to any fixity in the universe. Dewey was a rela tivist, as have most of the Progressives been. The following are examples of Dewey's own avowal of relativity: Reference to place and time in what has just been said should make it clear that this view of the office of philosophy has no commerce with the notion that the problems of phi losophy are "eternal." On the con trary, it holds that such a view is obstructive ....

This movement is charged with promotion of "relativism" in a sense in which the latter is identified with lack of standards .... It is true that 1965 REMAKING THE MINDS OF MEN 25 the movement in question holds since the problems and issues of philosophy are not eternal they should link up with urgencies that impose them selves at times and in places. 9 Dewey was, of course, a master of answering criticism by mis contruing the objections to his philosophy. Surely no one was taking him to task for dealing with contemporary issues, or deny ing that what interests men may change from time to time. The question was rather of whether or not there are enduring principles and laws in terms of which ques tions may be settled. Dewey did not believe that there are. He af firmed his relativism in what was for him a rare lack of ambiguity in the following words: In the second place, liberalism is committed to the idea of historic relativity. It knows that the content of the individual and freedom change with time; that this is as true of so cial change as it is of individual de velopment from infancy to maturity.

The positive counterpart of opposi tion to doctrinal absolutism· is ex perimentalism. The connection be tween historic relativity and experi mental method is intrinsic. Time signifies change .. The. sig'nificance of individuality with respect to social policies alters with change of the conditions in which individuals live. IO 9 John Dewey, Probletns of Men (New York: Philosophical Library, 1946), p. 12. 10 Ibid., pp. 136-37. In short, everything is continually changing. Other Progressives attacked the belief in established truth and proclaimed their relativism. Note the disd~in which William H. Kil patrick had for those who believe in truth: When people have interests they wish to hold undisturbed, they fall naturally into this older Platonic logic and, as if they had some pri vate access to absolute truth which establishes beyond question the posi tions they wish to uphold, call all new ideas ... subvertive and pel"vel" tive. These people in their hearts re j ect freedom of speech and freedom of study because they themselves al ready have "the truth" and these freedoms might if followed "subvert"

their "truth."ll Boyd Henry Bode asks us ... to consider the nature of an edu cational system which centers on the cultivation of intelligence, rather than submission to authority. Such a system recognizes no absolute or final truths, since these always rep resent authority in one form or an other, and since they impose arbitra ry limits on social progress and the continuous enrichment of experi ence.l~ 11 William H. Kilpatrick, ed., The Teacher and Society (New York: D. Appleton-Century, 1937), p. 36. 12 Joe Park, Selected Readinus in the Philosophy of Education (New York: Macmillan, 1963), p. 153.

26 THE FREEMAN December The Tradition Undermined The relativism of the Progres sives is a crucial point for their educational theories. If there is no truth, it is appropriate to inquire what education is about. Why should children be sent to school? Why should there be a huge edu cational establishment? The Pro gressives had answers to these questions which satisfied them, but their answers will be told at the proper place below. The point here is that the relativistic posi tion served as the point of de parture for the undermining of traditional education. If there is no truth, the teacher who lectures to his class is indoctrinating or propagandizing them. If nothing is established, the giving and grading of examinations is a spurious undertaking. If there is nothing enduring, the teaching of subject matter is surely a waste of time. The assault upon education was not usually carried on in so blunt a fashion; had it been, it is doubt ful that it would have been as suc cessful as it was. It was conducted on a more piecemeal basis, until Inany of the traditional courses and methods had been discredited.

The traditional schools were charged with being aristocratic, with perpetuating inequalities and being unsuited to the generality. Educational reformers parodied the idea of mental discipline and held their distortion of it up to scorn. Many of the subjects were virtually useless, they claimed; for example, Latin, higher mathe matics, and various other "cul tural" courses. (At the beginning of the twentieth century, "culture" did not have its present high standing among "democrats.") Drilling in facts was deplored, along with emphasis upon content itself. The teacher who exercised authority was castigated as an autocrat. In short, they tended to undermine the authority of the teacher, discredit the courses of study, deplore the imparting of information, and assail disciplin ary techniques. 13 The traditional was disparaged and conservatives denounced by Progressives. For example, Dewey declared that the "traditional scheme is, in essence, one of im position from above and from out side. It imposes adult standards, subject-matter, and methods upon those who are only growing slowly toward maturity.l4 Kilpatrick claimed that there were many conditions hampering the schools from performing their social func tion. "Most obvious among such hindering conditions stands the common tradition ... that the 13 For examples of such criticisms, see Krug, op. cit., PP. 278-82.

14 Park, op. cit., p. 135.

1965 REMAKING THE MINDS OF MEN 27 work of the school is properly limited to a few simple and formal school subjects, the assigning of lessons in these, and hearing the pupils recite what had been as signed." In short, "the traditional school was thus a place where lessons were assigned and recited .... To each question asked there was al ways one and only one right an swer. Subject-matter was, on this theory, the kind of thing that could be assigned and then re quired under penalty. If the as signment were not recited pre cisely as required, the pupil could be held responsible. . . ."15 Dewey called for the "modification of tra ditional ideals of culture, tradi tional subjects of study and tra ditional methods of teaching and discipline .... "16 Thinking Undermined Dewey spoke favorably of rea son and intelligence, but the tra ditional modes for training and sharpening these were largely displaced from the schools. One historian points out that the acad emies, and presumably many of the other types of high schools as well, used to teach, among other things, political economy, ethics, 15 Kilpatrick, op. cit., pp. 26-27.

16 John Dewey, Democracy and Edu cation (New York: Macmillan, 1916), p.114. moral philosophy, mental philos ophy, mental science, and logic. 17 Undoubtedly, there was much that was open to criticism in the older education, as there is with all hu man undertakings. But Bernard Iddings Bell makes some informa tive points about it. "L.atin and Greek did teach language 'qua lan guage. There was almost no in struction in English, but young people who learned how to use other languages found themselves surprisingly proficient in the use of their own." Moreover, "the use of symbols and graphs in algebra and geometry and trigonometry and the insistence upon the su premacy of logic in mathematics did make for sound abstract think ing." He concludes that those "who advocate the new subjects seem to suppose that their critics are vexed merely because they are no longer willing to teach the ancient languages or some other particu 1ar course sanctioned by tradi tion. This is not the real source of criticism. The point is that the older schools taught their students to think and that the newer schools mostly do not."IS My larger point, which the above tends to bear out, is that the ad vocates of Progressive Education 17 Krug, Ope cit., p. 4.

18 Bernard I. Bell, Crisis in Education (New York: Whittlesey House, 1-949), pp. 48-49.

28 THE FREEMAN December were undermining education it self. This will become clearer· by ex amining what they proposed to substitute for the older education. It should be clear that the Pro gressives did not believe that there was any body of knowledge to be purveyed in the schools. There was no enduring reality, on their view, to which such a body of knowledge could refer. Nor were they overly enthusiastic about skills and methods, for these, too, would change with changing conditions. Two things might be worthy of study, in the manner in which learning has been conceived traditionally: contempo rary conditions and the historical forces and trends at work. Conditioning the Child for Social Reconstruction There was a twofold purpose of education: (1) training the child to adjust to changing condi tions, and (2) developing in the student a favorable attitude toward and ways of thought suited to continuous social recon struction. These two purposes were not separate; rather, they were intertwined. Taken together, virtually all of the recommenda tions and programs of Progres sive Education can be subsumed under them. The programs that are a part of the adjustment motif also fit into a larger pat tern.

Education should be child cen tered, not subject matter centered, they said. They were able to evoke with this slogan a great deal of sentimentality which people have come to lavish upon children. Moreover, the rationale for child centeredness in education had a rather long, if not respected, his torical background. It went back to Rousseau, to Froebel, to Pesta lozzi, and came down through E. L. Thorndike and John Dewey. Fundamentally, it held that chil dren are naturally good, that each of them has his own little person ality which unfolds as he grows up (maturation was the scien tistic term applied to this), that if he is allowed to develop freely and spontaneously the natural (and good) product will emerge, and that the teacher should be a kind of midwife in the process. These doctrines, like most others, can probably be traced back to Plato. Dewey and his disciples sub sumed the residues of these ideas into their ideology and turned them to the purpose of socializing the child. Child-centered school ing, in this framework, takes the authority away from the teacher for imposing an order upon the experience and from teaching certain things. It vests the deter mination of this in the children.

1965 REMAKING THE MINDS OF MEN 29 Many methods were devised for doing this: the discussion method in class, in which each child "ex presses" himself; the curving of grades, which places the "stand ard" in the class rather than with the teacher; social promotion, by which a child is 'kept with those of his same age regardless of achievement. Child-Centered Socialism The Progressives talked much about the individual child, and many have supposed that this was the central concern. Some may have supposed this was the aim, and adopted it as their own, but the child-centered method does not individualize; it socializes. The facts are these: a child is not a fully developed individual; usually, he does not know what he wants; he has only a very limited number of ideas to express; his will is undisciplined; he does not know what to do in most circum stances. In short, he turns to those around him for guidance and for standards. If the teacher, or an adult, does not direct him, he turns, perhaps gladly and some times initially, to the other chil dren. John Dewey knew this. He said: The conclusion is that in what are called the new schools, the primary source of social control resides in the very nature of the work done as a social enterprise in which all in dividuals have an opportunity to con tribute and to which all feel a re sponsibility. Most children are nat urally "sociable." A genuine com munity life has its ground in this natural sociability.l9 What Dewey was saying was that the new schools would bring the child under the social control of the group because of the nat ural "sociability" of children. The teacher need not be excluded en tirely from the process, of course.

As Dewey said: . . . When pupHs were a cla~s rather than a social group, the teach er necessarily acted largely from the outside, not as a director of proc esses of exchange in which all had a share. When education is based upon experience and educative ex perience is seen to be a social proc ess, the situation changes radically. The teacher loses the position of ex ternal boss or dictator but takes on that of leader of group activities.:20 A cheer leader, one supposes, by which the uninformed utterances of children are encouraged and rewarded! The process would be one, in eluctably, of adjustment of the child to the group. More broadly, however, the group would be ad justing to the contemporary situ19 Park, op. cit., p. 143. 20 Ibid., p. 144.

30 THE FREEMAN December ation, or, at any rate, shifting to every wind that blew. Children, so untaught, would have nothing upon which to base their actions but what other children did; all would likely follow the line of least resistance by yielding to whatever pressure was exerted upon them from whatever quar ter. They would know nothing but the momentary, would see no far ther than the end of their collec tive nose, would be, in a word, conformers and adjusters. This would fit them for the larger, and ultimate, purpose of Progressive Education - social re construction. Children who have little besides their shared ignor ance upon which to base their ideas can be readily drawn into the orbit of social visionaries. They can be, and have been, filled with notions of the goodness of people, of how everybody de serves this or that, of how unjust certain things are, and so on. They would have no clear notion of the limiting character of the universe, of cause and effect, of an order which makes things turn out the way they do. They would have been encouraged to assert their wills ("express" themselves) and have no reason to suppose that the way they (collectively) think that things ought to be would not be the way they could be. In short, they would be admirably fitted out with the pre tensions of social reformers.

Changing the Social Order There can be no valid reason for doubting that the Progressive Education leaders conceived of so cial reconstruction as the prime function of schooling. This strain runs through their writings from the earliest to the latest. They have differed from time to time as to the bluntness with which they stated it (it reached its ap ogee in the 1930's), but it has been a continual refrain. Dewey declared at the outset that "the teacher always is the prophet of the true God and the usherer in of the true kingdom of God."21 Many years later he proclaimed the view that "the schools will surely as a matter of fact and not of ideal share in the building of the social order of the .future .... They will of necessity ... take an active part in determining the social or der .... 22 George S. Counts said, "In the collectivist society now emerging the school should be regarded . . .

as an agency for the abolition of all artificial social distinctions and of organizing the energies of the nation for the promotion of the 21 Quoted in Cremin, op. cit., p. 100. 22 Quoted in John H. Snow and Paul W. Shafer, The Turning of the Tides (New York: Long House, 1956), p. 30.

1965 REMAKING THE MINDS OF MEN 31 general welfare. . . . Throughout the school program the develop ment of the social order rather than the egoistic impulses should be stressed; and the motive of personal aggrandizement should be subordinated to social ends."23 Harold Rugg maintained that changes that have occurred neces sitate "the scrapping of the formal school and setting up of a thor oughly new one." The reason for this is that "the climates of opin ion of American communities, those now dictated by the domi nant groups that own and control the economic system, must be made over .... 24 In order to use the schools in this way, the habits and training of teachers had to be changed, for, above all, it was the teachers who could assure this employment of the schools. Harold Rugg de scribed one aspect of the program in this way: Sunlming the matter up, then, I see the necessary strategy of the educator in educational and social reconstruction as that of (1) creat ing intelligent understanding in a large minority of the people, (2) practicing them continually in mak ing group decisions concerning their local and national issues, and (3) having them constantly exert pres sure upon legislators and executives 23 Ibid., p. 29.

24 Quoted in Rudd, op. cit., p. 68. in government to carry out their de cision. 25 Goodwin Watson gives these pointers to teachers on how to develop social reform habits: . . . When the young student goes to visit the tenements of crowded slum areas, he is working on the first level. ... When he joins a hous ing movement or association ... , he begins pa1·ticipation. As he begins to accept committee assignments, he enters the third stage .... When he goes out into a community back ward in its housing and succeeds in starting some effective action, his development has reached the stage where he can initiate on his own responsibility .... Activity in aid ing unemployed youth, in consumer's cooperatives, inter-racial good will, world peace, public health, parent education, political parties ... will follow a similar course. 26 Harold Rugg held that "the teachers should deliberately reach for power and then make the most of their conquest .... To the ex tent that they are permitted to fashion the curriculum and the procedures of the school they will definitely and positively influence the social attitudes, ideals, and behavior of the coming genera tion." 27 25 Harold Rugg, American Life and the School Curriculum (Boston: Ginn, 1936), p. 455.

26 Kilpatrick, op. dt., p. 315. 27 Park, op. cit., pp. 187-88.

32 THE FREEMAN DecembeT By force, If Necessary The character of the social re construction which Progressives had in mind should not be left in doubt. Though they may have differed as to the extent to which society should be reconstructed and as to how this should be done, they did not differ in believing that it would involve radical change. John Dewey said, "In or der to endure under present con ditions, liberalism must become radical in the sense that, instead of using social power to amelio rate the evil consequences of the existing system, it shall use power to change the system."28 An ex amination of the writings of a goodly number of these men indi cates that they favored a direc tion which is generically known as socialism. As a matter of fact - and it is a hard and enduring fact - people do not generally want to be made over. They do not want themselves and their society (for a given so ciety is all the people in it) re constructed according to some body's blueprint. Certainly, par ents do not want their children used as instruments of such re construction nor the schools turned into social reform institutes. Par ents, insofar as they give such matters thought, want children to be made into adults for the society 28 Dewey, Problems of Men, p. 132.

in which they live. The Progres sives faced tremendous obstacles all along the way. Parents wanted the old education, at least in sub stance; school boards resisted their innovations; teachers persisted in teaching as if they had some knowledge to purvey. Instruments of the State The schools were, however, an attractive target for social re formers from the outset. Many of them were tax supported by the beginning of the twentieth cen tury, and by then or within a few years all of the states compelled attendance. Early in the twentieth century, David Snedden noted that the schools were "the only educa tional institutions which society, in its collective and conscious ca paci ty, acting thru the state, is able to control." In these, an edu cation could be introduced which proceeded "from the broadest pos sible conception of society recon structing itself."29 But this was easier said than done. Schools were usually locally controlled, frequently locally financed, under the keeping and direction of local boards of trustees. These were resistant to the innovations that the Progressives advanced.

To accomplish the ends which they sought, the schools had to be brought under their power and 29 Krug, op. cit., p. 253.

1965 REMAKING THE MINDS OF MEN 33 control. The effort to accomplish this was conducted on many fronts, always under such rubrics as "efficiency," "modernization," and "progress." Subtle attacks upon "reactionary" boards, com munities, and parents were carried on. Patriotic groups were de famed. 3o More to the point, con trol of the schools was shifted away from local control. States be gan to supplement the income of schools, certify teachers, provide normal schools and schools of edu cation, and to specify courses of study. School districts were con solidated, and school buildings located away from many commu nities. Courses in "education" were required for teachers in the pub lic schools, which usually brought them under the influence of Pro gressives. Teachers were given tenure, which tended to remove them from the disciplinary power of local communities. Various and sundry slogans and ideas were promulgated to render the resist ance of the patrons of the schools of no effect. If parents object to some book being used in the schools, they are accused of "cen sorship" and "book burning." If they object to what is being taught, they are accused of violat ing the "academic freedom" of the teachers. That Progressives were 30 See Dewey, Problems o/Men, p. 91; Kilpatrick, op. cit., pp. 29-37.

frequently aware of precisely what they were doing should be clear from this / statement by John Dewey: In short, the social significance of academic freedom lies in the fact that without freedom of inquiry and freedom on the part of the teachers and students to explore the forces at work in society and the means by which they may be directed, the habits of intelligent action that are necessary to the orderly development of society cannot be created. 3 ! In short, academic freedom is necessary so that the schools may be used for social reconstruction. Another device developed by the educationists for protection of themselves from the "vulgar" is a scientistic jargon. Methods and Results of Progressivism Summarized A complete account of how· pro gressi vism entered the schools would call attention to the changes in the curriculum, to the sub mergence of such disciplinary stud ies as history and geography in something called "social studies,"

to the introduction of the problem solving technique (which is an imaginative way to get students to become reformist minded), to the writing of textbooks informed in the new ethos, and so on. But 31 Dewey, Problems of Men, p. 79.

34 THE FREEMAN December enough has been told to suggest the character of the rest. The Progressives have not suc ceeded, of course, in completely undermining education. Many ded icated teachers have persisted in teaching fundamentals, at least in the lower grades. Many admin istrators and boards of education have limited the extent to which changes were made. Even so, the Progressives succeeded much bet ter than most of them have ever admitted. They have managed to introduce group-consciousness and ideas of adjustment into the very heart of the schooling process. They have convinced many young people that the welfare state is inevitable, that it is democratic to advance social reforms, and~ that there is little to nothing to be learned from the past. Their effort has resulted in a tendency for the young (in their "peer groups") to be oblivious to adults, for schools to be separated from com munities, for children to be ignorant of or contemptuous of their heritage and tradition, and for childhood to be perpetuated beyond its normal years.

Thus have young minds been shaped to strange ends, and thus have Americans proceeded on their flight from reality. To what end? Bernard Iddings Bell summed it up felicitously, if fearfully, some years ago: When men or nations get tired of dodging fundamental questions in a multitude of distractions, they turn to a search for something else that will, so they suppose, give them the sense of significance which they know they lack. . . . If they remain adolescent in their approach to life they are frequently tempted to seek meaning for themselves and for their nation in terms of coercive power. They develop a Messianic complex. They seek to live other people's lives for them, ostensibly for the good of those other. people but really in the hope of fulfilling themselves. 32 ~ 32 Bell, Ope cit., p. 20. T he next wrticle in this set·ies will discuss the transition "Ft'otu Ideology to Mythology-I."

"No ORDINARY MISFORTUNE, no or dinary misgovernment will do so much to make a nation wretched as the constant progress of phys ical knowledge and the constant effort of every man to better him self will do to make a nation pros perous. It has often been found that profuse expenditure, heavy taxation, absurd commercial re strictions, corrupt tribunals, dis astrous wars, seditions, persecu tions, conflagrations, inundations, have not been able to destroy capi tal as fast as the exertions ofpri vate citizens have been able to create it." So, in the mid-nineteenth cen tury, wrote Thomas Babington Macaulay in the chapter of his famous History of England de scribing the state of the country in 1685. It could easily be proved, he went on, that the national wealth of England had been almost un interruptedly increasing for at least the six preceding centuries. For example, "in spite of malad ministration, of extravagance, of • • • • HENRY HAZLITT public bankruptcy, of two costly and unsuccessful wars, of the pes tilence and of the fire, it was greater on the day of the death of Charles the Second than on the day of his Restoration." And this economic progress had be,en pro ceeding during the nineteenth cen tury with "accelerated velocity."

Claiming the Credit Macaulay was calling attention to a fact of the first importance, but one that is constantly over looked. It is systematically ignored today by nearly all governments, who are, at least by implication, constantly claiming for their own policies all the credit for all the economic improvement during their term of office. This has been especially true since gross-national-product sta tistics have been compiled. Spokes•men for the Truman Administra tion boasted that the GNP in creased from $211 billion in 1944 to $347 billion in 1952. Spokesmen for President Eisenhower pointed to the increase to $503 billion in 35 36 THE FREEMAN December 1960; spokesmen for President Kennedy to the increase to $584 billion in 1963; and spokesmen for President Johnson to the increase to $670 billion in 1965. But it re mains to be determined to what extent these increases (even after allowance is made for a constant rise of dollar prices) were because or in spite of the government poli cies followed.

Most European governments boast an even faster "economic growth," since the end of World War II, in their countries than in our own. But by far the greatest part of the credit for this growth must be given to the efforts of private citizens of these countries to improve their own condition. If the governments also deserve some credit, it is chiefly because they did not put too many restrictions and deterrents in the way. Usual and Expected The great fact that Macaulay emphasized, "the constant effort of every man to better himself," is important not only as it affects the question of who or what should receive the main credit for eco nomic progress. It is the tremen dously reassuring fact that all of us would do well to keep in mind as we read our daily newspapers. Too many of us become dis heartened anew every morning as we read the sorry record of accidents, divorces, quarrels, un employment, diseases, deaths, bur glaries, muggings, murders, riots, looting, racial violence, strikes, fires, revolts, revolutions, and war, as well as droughts, floods, and other natural disasters. We forget that the newspapers print the "news," and that the news means the unusual and unexpected.

We do not pick up our news paper and read such items as "Strange case of virtue in the Bronx" or "More than 70 million people all over the United States went to their jobs yesterday morn ing, working in factories, offices, and on farms till late afternoon. The police did not interfere." We do not read such items because they are the usual and the ex pected. The normal thing, in short, is not merely that most people are leading peaceable lives, but that most people are daily working and prod ucing. Many are producing just enough to meet their current living expenses, hut others are able to save something - in brief, to accumulate the capital, the money to create the new tools and equipment, that will make not only themselves but later genera tions constantly more produc tive. ~ Copyright Newsweek, Inc., September 27, 1965, and Henry Hazlitt.

"AS A MANTHiNKS " V. ORVAL WATTS As WE THINK, SO do we act. We act in ways which we believe will give us what we think we need or what we imagine we will enj oy : particular foods, kinds of clothing, types of shelter, forms of romance, popularity with certain persons, leisure, security, or adventure. "A human being always acts and feels and performs in accordance with what he im,agines to be true: about himself and his environment."l In this respect animals differ from humans. A beaver fells trees and builds a dam by instinct. In herited instinct directs birds to build nests, badgers to burrow, and bees to make honey. We humans 1 Maxwell Malz, Psycho-Cybernetics (New York, Prentice-Hall, Inc., 1960). have no such built-in directives. We would quickly perish if we tried to rely for guidance on our few inherited urges or ill-defined in stincts. For better or worse, hu mans live only by virtue of what each individual learns during his own lifetime.

For this learning process, man has nature's most highly developed nervous system. Still more impor tant, this nervous system is sub ject to the control by faculties of a forebrain that puts man, so scien tists tell us, as far beyond the high est ape as the ape is above the amoeba. This forebrain records impres sions. From these it forms and stores the ideas which ultimately 37 38 THE FREEMAN December govern human conduct, and it ap pears to have virtually unlimited storage capacity for every sort of information brought to it by the senses. But it is much more than a re corder or storehouse. It possesses also the faculty of mind, which uses and directs the brain and nervous system. This mind, or conscious ness, has the unique power to select from the recorded impressions and ideas those which it will permit to stimulate the nervous system and activate our muscles. This power to select the control ling ideas is what we mean by "free will," or "freedom of choice,"

which only humans, so far as we know, possess. Because of it, hu mans have the power of self-con trol, or self-government. It makes man responsible for his acts in that he can choose to act or to re frain from acting as instinct-guid ed animals cannot do. Your Ideas Control You As students of cybernetics put it, the human nervous system op erates as a "servo-mechanism" to achieve goals set for it by the mind. These goals are mental images which our minds create by use of imagination. Your nervous system cannot tell the difference between an imagined experience and a 'real' experience. In either case, it reacts automatically to information which you give to it from your forebrain. Your nervous system reacts appropriately to what 'you' think or imagine to be true. 2 This means that humans can con trol their own learning process as animals cannot. They can learn what they choose to learn. By se lecting their own goals they can learn to direct their own "educa tion."

Increasingly, moreover, individ uals must acquire this ability if they.are to hold their relative posi tions in a progressive society. For, as humans progress in cooperation, they make their social environ men~s more complex and more sub ject to a rapid change. Schools can not supervise the details of educa tion and re-education necessary to keep pace with changes in the oc cupational requirements and non occupational opportunities in pro gressive societies. Hence, members of such societies must develop in itiative and skill in the techniques of teaching themselves. The aim of the schooling process, says Pro fessor Jacques Maritain, should be, therefore, "to guide man in the evolving dynamism through which he shapes himself as a human per son - armed with knowledge, strength of judgment, and moral virtues - while at the same time conveying to him the spiritual heri tage of the nation and the civiliza2 Psycho-Cybernetics; p. 29.

1965 "AS A MAN THINKS .•••" 39 tion in which he is involved, and preserving in this way the century old achievements of generations."3 Aims 01 Education A sketchy list of what we should look for in education, therefore, includes: 1. Skills a. Manual skills, e.g., sucking, eating, walking, talking, read ing, occupational techniques, sports, artistic proficiencies. b. Personality skills necessary for winning approval and co operation of fellow humans, e.g., skills in expressing plea sure, gratitude, disapproval, concern for the feelings and interests of others. 2. Moral Traits: habits of indus try, thrift, initiative, fidelity, honor and honesty, courage, self reliance, regard for interests and feelings of others. 3. Wisdom and Foresight: under standing of cause-and-effect re lationship in the animate and inanimate realms, including the realm of one's own physiology and psychology as well as that of social relationships.

4. Learning Ability: adaptability, ability to gain and use new knowledge and to acquire new skills; resourcefulness. 3 Education at the Crossroads, p. 10, (emphasis added). Humans have progressed so far in developing these skills, it is' said, that every individual must acquire in his own lifetime more knowl edge and skill in living than all other creatures have acquired in the form of instinct during the two billion or more years of plant and animal evolution before the most primitive form of man ap peared on the scene one or two million years ago. Moreover, humans can never, apparently, stop learning. They make for themselves an environ ment that is vastly more dynamic than that to which animals must learn to adapt, for this human en vironment includes the actions of their fellows and the dynamic realm of intellectual and nervous change within each individual. This means that humans must acquire the ability to teach them selves so that they can maintain their equilibrium in these two ever-changing worlds. They must learn how to learn, and they must acquire the ability to direct their own learning. They must plan to continue developing and exercis ing this skill, moreover, long after their physical powers have begun to decline.

This learning process can in crease until "cerebral accidents" seriously impair the functioning of the brain. That is, a man of sixty or seventy who knows three 40 THE FREEMAN December or four key foreign languages should learn a new language faster than a youth of 18 who knows only his native tongue. A 60-year old economist should be able to master the intricacies of the ac counting profession faster than a 20-year-old undergraduate, other things (e.g., original 1. Q.) being equal. In this connection, teachers should ponder this paradoxical statement by Jaques Maritain: "In order to reach self-determination, for which he is made, he [man] needs discipline and tradition, which will both weigh heavily on him and strengthen him so as to enable him to struggle against them - which will enrich that very tradition - and the enriched tradition will make possible new struggles .... " 4 Passion lor Objectivity What shall we say, then, of the notion that the teacher should not take sides on "controversial" ques tions - and what questions in the "social sciences" are not contro versial today? Should the teacher merely collect and present all pos sible opinions on these topics, with complete objectivity and with no attempts to help the student make a good choice between the conflict ing views?

In what has been called the 4 Education at the Crossroads, p. 2. "modern, mad passion for objec tivity" many teachers and schools recoil from a religious, poetical, or moral approach in pedagogy and scholarship. They propose to appeal only to the intellect lest they arouse emotions that, so they fear, may inhibit understanding and misdirect the mind. But psychologists tell us that the mind cannot function without emotion, and that understanding, consequently, cannot exist without appraisal, or evaluation. Emotions are necessary to stimulate mental activity and the flow of ideas. Ideas, in turn, arouse and alter emotions. All action, including mental activity, is prompted by desire, ambition, purposes, pref erences, likes, and dislikes which are evidences of emotion. Objec tive observation and thought are not unemotional. Instead, they yield significant results only to the extent that emotions inspire the individual to make the effort of concentration necessary to get a clear view of the relevant facts.

The emotions to be ruled out, or suppressed, are those which pre vent this concentration and accu rate interpretation. But the strength of the emotions which prompt the concentrated effort to observe and understand must cor respond to the intensity of the concentration and other effort, mental or muscular.

1965 "AS A MAN THINKS .•.•" 41 And, because ideas play so large a role in determining human be havior, humans must learn to dis tinguish the true from the false, the useful from the useless or harmful, the good from the evil, the beautiful from the ugly. They must acquire the habit of choosing the one and spurning the other. They are needlessly handicapped in this learning and retarded in acquiring wisdom if teachers mere ly present conflicting opinions and profess their own inability or re Iuctance to choose between them. Here is the way one writer deals with this doctrine that edu cators should "present both sides" so evenly weighted that the stu dent may easily decide that either or neither is valid: That concept is endorsed by the overwhelming majority of persons who arrange the education and in formation programs for colleges, ser vice clubs, discussion groups, busi ness organizations, and others. They believe in presenting the case for so cialism along with the case for the free market. Challenge them and they will reply: "Objectivity and fairness demand that we present the argu ments for government ownership even though we ourselves don't be lieve in it."

Do objectivity and fairness demand that they present the case for coin clipping? They say no. Then why do they arrange for speakers and teach ers who endorse the monetization of debt? After all, the device of mone tizing debt is merely a modern ar rangement of the old idea of clipping coins. Objectivity and fairness aren't the real reasons a person arranges for the presentation of both sides. The primary reason is this: The person hasn't made up his own mind! He doesn't arrange for a defense of coin clipping. He arranges to have the case for monetization of debt pre sented because he himself hasn't yet repudia ted that method of financing governmen t. When a person voluntarily ar ranges for the presentation of social istic ideas along with free market ideas, you may be sure of this: He hasn't completely repudiated social ism; he hasn't completely accepted the ideas of the market and of gov ernment restricted to the equal pro tection of the life, liberty, and hon estly acquired property of everyone.

Here is a truism: If the evidence clearly indicates that an idea or policy is untrue or evil, no fair and objective person will voluntarily ar range to have it presented as valid. 5 The Myth of Neutrality Because it is a physical impos sibility to depict all facts and opinions in any book, class, or course, every educational effort must be selective. No historian could record everything that hap pened in any period of time, how5 Cliches of Socialism, No. 22 (Irving ton, N. Y.: The Foundation for Economic Education, 1962).

42 THE FREEMAN December ever short. Insofar as the author of a history has only the educa tional value of his work in mind, he selects for presentation those facts and supposed relationships which he believes will be espe cially significant for certain read ers and students. The teacher, simi larly, insofar as he has only the educational usefulness of his work' in mind, will select for recom mended or "required" reading by his students, not all available books and articles on the period, but those few which he considers likely to be most effective in pro ducing certain student reactions. The same holds true for authors and teachers in other fields. In practice, of course, authors of textbooks seldom consider only educational values as they decide what facts and interpretations to present or ignore. Instead, they commonly select facts to support opinions held by the publishers' editorial advisers, school boards, politicians, teachers, and others who help select textbooks. By the same token, they omit from thei 1"

accounts any mention of facts and relationships which might support opposing views. Teachers, too, in selecting readings and in their class discussions of the readings must consider the opinions of school boards, superintendents, principals, parents, deans, presi dents, and trustees. We should recognize also that both authors and teachers are prone to economize time and effort by following tradition and to con tinue presenting facts and opin ions long after these have ceased to be significant for new genera tions of students or accepted as valid by leading authorities in the fields. Probably no teacher can pre sent "both sides" of a controversy without bias unless he believes either that the controversy is un important or that he cannot or dares not "take sides." But if he believes that the controversy is unimportant, he can scarcely arouse the interest of his students in it; and if he shows that he cannot or dares not differentiate between the true or false, he fails to inspire in his students the atti tudes and qualities necessary for human progress.

Northwood Trains for Voluntary Enterprise One of the primary duties of a teacher is that of inculcating, by precept and example, the convic tion that there is right and wrong, truth and error, beauty and ugli ness, and that it is a matter of life and death for students to learn to choose between them. He should in spire faith that there is truth, goodness, and beauty , that it is worthwhile to seek them, and that 1965 "AS A MAN THINKS .••." 43 it is possible to find them. To qual ify as an effective teacher, there fore, the individual himself must possess and display, to an excep tional degree, this high regard for truth, virtue, and beauty. Northwood Institute has been established to train students to function efficiently in private busi ness, or "free enterprise." We should assume that those who founded it, who send their chil dren to it, and who contribute funds for its support believe that employment in private business is a good way to make a living; they believe that the typical operations of banking, finance, advertising, retailing, and the like do not re quire lying, cheating, stealing, or maiming one's fellow men. They expect Northwood courses to teach ho,v such operations are carried on. More than this, the thoughtful liberal must surely recognize and teach tha t only in the voluntary association for the exchange of services-that is, only in volun tary activities of free-enterprise ind ustry, finance, commerce, and the professions - do humans de velop those qualities which most distinguish them from animals.

We know, however, that a host of industrious and widely respect ed authors and professional schol ars teach that private business operations - the operations of buy ing and selling in free marketsare dishonest, predatory, and de moralizing to all who take part in them. They teach that, in free markets, the rich get rich at the expense of the poor, so tha t the rich get richer while the poor be come more wretched and numer ous. They teach that employers underpay their employees and that overproduction and unemployment result from the workers' inabiI ity to buy the products of their own labor. Merchants regularly and necessarily cheat their cus tomers in free markets, according to these anticapitalist scholars, and most consumers are so stupid that competition among profes sional merchants regularly gives greater rewards to the sellers of shoddy goods, poisons, narcotics, and obscene literature than to pro ducers of better-quality articles, nutritious foods, and wholesome publications. These supposed schol ars contend that the poor and the common wage earners, consumers, and small producers can get econ omic justice only if men like them selves acquire and use the coercive power of the state to regulate pro duction and to set the terms of exchange.

Effects of Anti-Business Propaganda These illiberal ideas have gained increasing acceptance du'ring the past century, and they have had consequences in the return to re44 THE FREEMAN December actionary policies and political in stitutions, together with growing disrespect for morality and "The Law." The parallel between an cient and modern civilizations in regard to individual freedom and the rise of empire is too striking to escape notice by thoughtful his torians. Degenerative influences are al ways present in every society, and moral philosophers have called at tention to them, generation after generation. Sometimes these Cas sandra-like warnings may have helped to reverse the trend, so that constructive ideas and actions overcame the demoralizing forces. Humans progress only as they learn to recognize and avoid the mistakes of their forebears. The American scholar or teacher wor thy of the title, I believe, must share some of the sentiments and experiences of prophets in other times and places.

It is not without significance that the "modern era" dates from the centuries during which schol ars and pedants in the Western world won a measure of release from support and control by em perors, princes, and other political functionaries. Nor is it mere coin cidence that reactionary political trends have set in with the revival of political control over teachers, textbook writers, radio, televi sion, and scientific research, a control that takes many forms: pub lic schools, state universities, gov ernmental subsidies for research, and governmental controls over the broadcasting industries. Means Mistaken for Ends Scholars, teachers, parents, and politicians have increasingly mis taken certain useful tools and tech niques - books, scientific instru ments, school buildings, and class meetings - for education. They have come to believe that, given enough of these tools and tech niques, education of the young must necessarily follow. Then, in the belief that the end justified any means, they have proposed and instituted increasing coercion - legal but effective - to finance the printing of books, the purchase of scientific equipment, the build ing of schools, and the hiring of teachers. At the same time they have resorted to increasing coer cion to exclude the young from productive enterprise and to herd them into the costly buildings and classrooms by means of child labor laws, wage-hour laws, restrictions on tasks young persons may per form, and truancy laws. As a re sult, the young are getting more schooling but less and less educa tion.

Moreover, if free enterprise cannot supply the services of edu cation, why should we count on it 1965 "AS A MAN THINKS .•••" 45 to supply adequately the .services we want from our fellow men in transportation, agriculture, indus try, or commerce? Scholars who mistrust the good sense and initia tive of their fellow men in educat ing the young are likely to expect little but folly and bovine inertia from "the masses" in their other activities. They find it easy to be lieve, therefore, that the same le gal coercion that they advocate in schooling the young is necessary to assure right conduct on the part of their elders in the prod uc tion and distribution of other goods. Scholars and pedagogues who work in intellectual and· financial partnership with politicians in education and research tend to join in movements to increase political intervention in every field of human endeavor. In fact, poli ticians demand this political sup port in return for the tax sub sidies paid to writers and teachers in public schools and universities.

As Henry Adams said, "All State education is a sort of dynamo machine for polarizing the popular mind: for turning and holding its lines of force in the direction supposed to be most effective for State purposes."6 As a further result of these statist tendencies in thought and 6 The Education of Henry Adams, Modern Library edition, p. 78. action, we find a spreading tenden cy among scholars in state institu tions to belittle or deny the facts of individual responsibility for hu man action. Faulty Rationale For this denial of mankind's powers - the powers of reason and self-direction - the statist schol ars supply more than one ration ale. Proponents of the Marxian rationale (materialistic determin ism) reject the Freudian rationale (the libido and the subconscious) in Soviet culture even as they make use of it in their efforts to subvert and dominate thought and morality outside the borders of their own empire.

The pseudo-liberals of Ameri can politics often reject the idea of individual responsibility, it ap pears, merely for the purpose of arguing for the particular nos trum which their favorite politi cians happen to propose at the moment. When their political lead ers are campaigning for Federal aid to education, they proclaim lack of schooling to be the condi tion that holds the downtrodden masses in poverty and immorality. This lack they attribute, of course, to the greed or indifference of pri vate enterprise, which has failed to supply the necessary school fa cilities. When the politicians make slum clearance the political issue, 46 THE FREEMAN December the statist intellectuals find lack of proper housing to be the cause of crime, poverty, ill-health, and ignorance. But always in this view, it is some "social condition" that determines indi vid ual con duct, not individual choice and ac tion that make the social condi tions.

No single idea, I believe, is more demoralizing, more discouraging to human effort, than this notion that the individual is not respon sible for his acts, that he cannot be responsible for them, and that he should not, therefore, be held accountable for them. Springing from this dehumanizing satanism is the general mistrust of individ ual freedom to be found in the arguments for political nostrums advocated as remedies for the supposed evils or shortcomings of voluntary enterprise. Humans Are Responsible It may be that the faculty for self-control is itself "merely" an idea or complex of ideas, together with the corresponding develop ment of the autonomic nervous sys tem. But it can transform a life, and as it is associated with under standing of oneself and other hu mans, as well as of inanimate na ture, it has increasing survival value for the individual and for all whom he cherishes.

The demoralizing notion of "social responsibility" and expositions of the "failures of free enter prise," however, permeate the text books which public schools and state universities adopt and use in economics, history, and other so cial studies. Therefore, the institu tion which seeks to inculcate un derstanding of private business and enthusiastic dedication to the ideals and :virtues necessary for efficiency in voluntary enterprise cannot use such textbooks except as collateral reading assigned as "horrible examples" of political in terference with thought and schol arship. Yet, we must recognize that choice among nonstatist textbooks is limited and those which are available may be inadequate in various ways. What to do? In my opinion, we should regard this lack of suitable textbooks as a challenge and an opportunity. In fact, we can recognize the inade quacy of the statist books or of the alternatives only as we become aware of the need and opportunity for something better. That recog nition is itself the beginning of ,visdom which must make us more effective teachers. But more than this, it should inspire us to take the lead in providing textbooks and using classroom techniques neces sary to achieve the success in edu cation which every true teacher covets. ~ SUDHA R. SHENOY l THE ESSENCE of the argument for "social" justice is that the same rules that apply to everyone else need not be applied to one minority -the "rich." The rich, because they are rich, ought to be called upon to pay differential rates of taxa tion-both on income and on wealth.

Where compensation for some state activity is involved, it is generally agreed that full market prices need not be paid, especially if the indi viduals involved are wealthier than others. In the case of strikers, it is agreed that they should not be held liable for acts against property (and persons) that in other contexts would result in stiff penalties. All this represents a very great change of attitude from, say, about fifty years ago - and it goes under the heading of the achievement of social justice. Miss Shenoy, from Ahmedabad, India, is a B.Sc. (Econ.) student at the London School of Economics. I wonder, though, whether these advocates of "one law for the poor and another law for the rich," real ize that they are adopting, in es sence, the basic principle of all to talitarian regimes everywhere? The essence of the South African argument for apartheid is an at tempted justification for applying different rules to blacks and whites.

In Hitler's Germany, it was agreed that since the Jews were different, it was justifiable to treat them ac cording to rules that did not apply to the non-Jews. In the communist countries, the people singled out for differential treatment are gen erally termed "capitalist exploit ers" or "landlords" (which is why so many Western intellectuals find it difficult, really, to condemn com munism in its entirety). And in a host of new recruits to the totali tarian camp, from Ghana to Indo nesia, it is an accepted principle that authority may deal with the 47 48 THE FREEMAN December "enemies of the state" or the "ene mies of the people" as they see fit and that the rules that normally apply to other people need not ap ply to these individuals. But observe the inconsistency here: if Jews are subjected to different rules from those apply ing to the non-Jews, this is called anti-Semitism; if blacks are sub jected to different rules from the whites, this is called racism; but if the groups against whom dif ferential rules are to apply are designated as "the rich," "capital ists," "landlords," and the like then it is no longer discrimina tion: it is social justice!

The essence of justice, however, as opposed to "social" pseudo jus tice, is that the same rules should apply to all: the wrongness of the act should be defined in terms of the act and not in terms of who does it. The application of the rules must be defined independ ently of the circumstances of those to whom the rules are intended to apply . Yet it is of the essence of the concept of "social justice" that we must know who a person is before we can determine what rules to apply to him. Before as sessing tax liability or the pay ment of compensation, the income and wealth of the individual must be known (is he "rich" or "poor"?). If those committing crimes against person and prop erty are strikers, they cannot be treated as others doing the same acts would be treated. The prin ciple is the same as that of Hit ler's Germany: before we know what rules apply, we must know whether the subject is a Jew or not. Or of Verwoerd's South Af rica: is the man black or white?

Or, indeed, of the communist coun tries: is the culprit one of the "pro letariat" or does he belong to the "exploiting classes"? Again, the notion of "social jus tice" embodies a principle which, if applied in our daily life, we would have no hesitation in term ing immoral. What would a father have to say if his son came home with his friend's book, and ex cused his action thus, "Oh, it's all right, Dad - he can afford it!"? Yet, how many of us lend sanc tion to a progressive income tax or to confiscatory death duties on the grounds, "They can afford it."? "Social justice," in short, seems to be simply a way of providing a respectable cloak for the basic principle of injustice. ~ GERMANS VOTE ECONOMIC FOR FREEDOM WILLIAM HENRY CHAMBERLIN FOR LUDWIG ERHARD, principal au thor of the German economic mir acle, the result of the recent Ger man national election must have been one of his finer hours. It had long been clear that his bold wager on freedom from state con trols as the surest road to eco nomic and social recovery had paid off in perhaps the most stunning national success story of the postwar period. The rotund, cigar-smoking Prime Minister, who succeeded Konrad Adenauer as Chancellor, or head of the ad ministration, in 1962, had every right to consider the outcome of the election as a striking personal victory and a national endorse ment of the economic principles with which his name will always be associated.

Mr. Chamberlin is a skilled observer and re porter of economic and political conditions at home and abroad. His recent writings include The German Phoenix (New York: Duell, Sloan & Pearce. 1963). Prominent among these are the rule of the free market, maximum freedom in international trade re lations, wider diffusion of private property, and prosperity through competition. The people of a Euro pean country of key political, eco nomic, and military importance have shown conclusively in a free election that they know when they are well off, that they reject all forms of extremism (procommu nists got about 1.3 per cent of the vote, ultranationalists about 2.6 per cent), and that they are prepared to contribute their full share to the political stability· and economic prosperity of the West ern world. At first sight, to be sure, the election figures may seem to indi cate little change. Erhard's party, the CDU (Christian Democratic Union), increased its percentage of the total vote from 45.5 to 47.5, falling just short of possessing 50 THE FREEMAN December an absolute majority in the new Bundestag (Parliament). The So cial Democrats, the principal op position party, also increased their share of the vote, falling just short of 40 per cent. But, when one considers five appreci able political and psychological handicaps which Erhard faced in the campaign, the magnitude of his success is impressive. These may be listed as follows, not neces sarily in the order of their im portance.

Various Handicaps Faced and Overcome 1. The CDU, alone or in com bination with a much smaller mod erate conservative group, the Free Democrats (FDP), has been in power for sixteen years, a much longer period than is usually re quired for an administration to wear out its welcome. Almost in evitably a government in power does some unpopular things and makes more opponents than sup porters. Hence, the normal swing of the pend ulurn between two main parties in free countries. 2. On some issues, especially in foreign policy, the CDU leader ship has not been speaking with a united voice. Virtually all Ger mans in the Federal Republic rec ognize their debt to America for defense against the now latent but ever-present threat of Soviet aggression. There is similar unan imity of sentiment in favor of burying forever the old hatchet with France. But when American and French ideas about the neces sities of European defense are sharply divergent, as they have been during the last few years, some delicate footwork on Ger many's part is required to avoid offending either country.

And this leads to differences of emphasis and priorities. Foreign Minister Schroeder, for instance, has been less sympathetic to de Gaulle, more attached to the Amer ican orientation. Some influential CDU leaders, including former Chancellor Adenauer and the Christian Social Union leader, Franz Josef Stra uss, of the Ba varian wing of the CDU, have stressed the necessity for keeping on the best possible terms with General de Gaulle. To be sure, de Gaulle has made it difficult for his would-be German friends. As a shrewd German journalist re marked to me recently: "Adenauer, Strauss, and others thought de Gaulle would be another John Fos ter Dulles, with a harder line to ward Moscow. But he is nothing of the kind." However, such actions of the French President as his diplo matic flirtation with the Soviet Union, his abandonment in ad vance of the German legal claim 1965 GERMANS VOTE FOR ECONOMIC FREEDOM 51 to territory east of the Oder Neisse frontier, his refusal to give Germany any say in a possible European nuclear deterrent, his suggestion that only Germany's continental neighbors should de cide the terms of a German peace settlement, have produced a disil lusioning effect in Germany. Still, the hope for some form of closer West European union, with France and Germany as the nucleus, dies hard. This explains in part Aden auer's sharp attack on the ne gotiations in Geneva looking to a ban on proliferation of nuclear weapons. This attack somewhat embarrassed Erhard during the campaign.

There have also been differences of opinion within the CDU about the desirability of creating a so called "big coalition" of the CDU and the Social Democrats, the type of political set-up that ex ists in neighboring Austria. Er hard set his face like flint against any such arrangement. The elec tion, he insisted, offered the voters a choice between his principles and those of his socialist opponent. A hybrid coalition government would obscure the issues and dam age the whole idea of represen ta tive democracy. In summary, Erhard's political position was more vulnerable be cause of fissions and cleavages in the ranks of his own party. 3. This was the first German national election in which the CDU standard-bearer was not the legen dary Konrad Adenauer, the leader of the new Germany, based on political and personal freedom and private enterprise, which emerged from the wreckage left by the Nazis and the crushing military defeat. Erhard's life experience had been in economics, not in politics; after three years in office as Chancellor he had to stand on his own political record. And in this record there was some fum bling and bumbling, notably in dealing with Egyptian dictator Nasser's attempts at blackmail in connection with the visit to Cairo of Walther Ulbricht, head of the Soviet puppet regime in the So viet Zone of Germany. Adenauer, with the bluntness of age and long tenure of power, had never made any secret of his distaste for Er hard as a successor; he only ac quiesced reluctantly when it be came clear that no other candidate commanded an equal measure of popularity. So Erhard faced the double handicap of being the first CDU standard bearer after the in vincible Adenauer and of not re ceiving the cordial support of his mighty predecessor.

4. Erhard was not the choice of the German intellectual commun ity; he probably ran second in the "egghead" vote. Some leading Ger52 THE FREEMAN December man novelists, such as Gunther Gras and Heinrich Boll, went on speaking tours for his opponent, Willy Brandt. Erhard was the butt of derogatory articles and car toons ridiculing his type of cam paigning, which was to hammer in a few basic ideas and principles with a supporting foundation of facts and figures. 5. The Social Democrats put on a tremendous drive to prove their respectability, their fitness to gov ern, at least in a coalition. Since 1959 they had deleted from their party program the former de mands for nationalization of the coal, iron, and steel industries and for comprehensive state planning of the economy. Pictures of Karl Marx and red flags vanished from their conventions. So did appeals to class struggle and class hatred.

In an atmosphere of booming pros perity and full employment the old Marxist dogma had lost all sense, all relevance to reality. They had put up as their can didate Willy Brandt, Mayor of West Berlin, who had never been a doctrinaire Marxist and who might be expected to possess some of the glamor attached to the de fense of the freedom of West Ber lin. And Brandt ran a very care ful, cautious campaign which seemed designed to convince the German voters tha t the Social Democrats had evolved from a class party, committed to state control of the economy, into a progressive "people's party," al most indistinguishable from the CDU, except for the infusion of a few new ideas on internal re forms. Free Market Preferred Given this background of handi caps for Erhard, the pre-election polls indicating a neck-and-neck race - even the Social Democratic predictions that they would emerge from the polls as the strongest party-did not seem altogether un reasonable. But, when the votes were counted, the people had de cided otherwise. They preferred the tried and true champion of the free market economy to those who professed a late conversion to the idea that might have been dic tated by electoral opportunism.

They preferred the proved achieve ments of the past to promises for the future. They placed the seal of a national plebiscite on a com mitment to free private enterprise which has been of inestimable ben efit to the German people them selves, and to the whole free world. The proved, observable experi ence of Germany since the end of the war remains the shining exam ple to which those who believe in the creative value of economic freedom may point. It is hard to imagine less favorable circum1965 GERMANS VOTE FOR ECONOMIC FREEDOM 53 stances than those in which Er hard, as German director of eco nomic affairs under the occupation military government which ex isted in 1948, made his historic wager on freedom of economic en terprise. The German cities were in ruins. Hunger was widespread. The new currency, introduced after the increasingly worthless marks of the war and first post war years had been removed from circulation, was a large question mark. The country was flooded with penniless refugees, Germans and people of German origin dri ven from their homes in the eastern provinces of Germany and from various countries in eastern and southeastern Europe.

Price Controls Abandoned The Germans had not been ac customed to a free economy for fifte~n years: for one Nazi institu tion the occupation powers took over was a rigid system of wage and price controls, which may have been admirable on paper, but produced no consumer goods. The favored method of trade was bar ter~ the preferred medium of cur rency was cigarettes. The German authorities at that time did not possess the right to change a single fixed price or \vage. But there was a loophole, of which Erhard was quick to take advantage. The cumbersome, unworkable system could be dis carded as a whole. And this is what Erhard did, in July, 1948. When the American military gov ernor, General Lucius Clay, called up Erhard to inform him that all the American economic advisers were gravely concerned by this step, Erhard replied: "So are mine." But General Clay, himself a believer in free enterprise, let the experiment stick and, after some initial difficulties, the suc cess was beyond the most opti mistic expectations.

The cities were rebuilt and bloomed again. What had been bare shop windows filled up, as if by magic, not only with neces sities, but with luxury goods that served as incentives. The currency, backed by ever larger gold re serves, became probably the hard est in Europe, after the Swiss franc. The refugees, who at first seemed a cruel, almost hopeless social burden, proved a tremen dous economic asset. On this point, in various trips to Germany, I found a multitude of concrete ex amples. In Dusseldorf, capital of the in dustrial state, North Rhine-West phalia, I met a prominent busi nessman, Mr. Schroeder, owner of a flourishing cosmetics factory. He had owned a similar plant in Dresden, in the Soviet Zone. Real izing that private business in the 54 THE FREEMAN December Soviet Zone was doomed, he packed up his business blueprints, took with him a few trained specialists, and moved to Dusseldorf. (This, of course, occurred before the Berlin Wall was built.) His new factory is returning a good profit; his plant in Dresden is declining, as he hears from some of his old workers, for lack of efficient man agement and technical know-how.

As in countless similar cases, the loss of the Soviet Zone has been the gairi of the Federal Republic. Another example of the "brain drain" that led to the erection of the Wall was given by a German young woman whom I met in an Austrian mountain resort. She spoke excellent English and spent part of her vacation time reading American and British authors. She remarked that, of her entire high-school graduating class in a town in East Germany, all but one, who felt the obligation to care for an invalid mother, had gone to West Germany in search of more attractive opportunities. Multiply the experience of this girl and of businessman Schroeder many thousand times and one has found not the least of the reasons why the Federal Republic is a good ten or fifteen years ahead of the Soviet Zone in the pace_ of recovery and expansion, even though the people on the two sides of the zonal boundary are Germans, with the same language and educational standards.

Some Problems Remain It would be misleading exag geration to represent the economic history of the Federal Republic as an unbroken series of successes. As Minister of Economics and as Chancellor, Erhard has been obliged at times to make conces sions to pressure groups, to busi ness groups, farmers, trade-un ions. And the very success of the German "economic miracle," para doxically enough, has created some unforeseen difficulties and prob lems. Letting people alone to make as much money as they honestly can has proved a marvelous formula for eliminating unemployment. It is accurate to say that in West Germany today there are no un employed, only unemployables. Not only has all the normal unemploy ment in West Germany been ab sorbed; some 12 million refugees who arrived penniless and desti tute from East Germany, from the Soviet Zone, the Sudeten area of Czechoslovakia, and other for eign lands have been swallowed up in the demand for manpower of expanding industry and foreign trade. More than that, about 1.2 million foreign immigrant work ers, Italians, Spaniards, Portu guese, Greeks, Turks, and others, 1965 GERMANS VOTE FOR ECONOMIC FREEDOM 55 have come to Germany. And there is still a labor shortage.

Despite a tradition of hard work, Germans are only human. They are apt to slack off a little when they know that they can not be fired or, if they are, can easily find another job around the corner. And the shortage of labor has helped to slow down the phen omenally fast growth rates of the nineteen fifties. freedom a Powerful Tonic But on balance, and in compari son with neighboring countries, Dr. Erhard's special brand of four-freedoms-med icine (free markets, free trade, free consum er choice, freedom of currency ex change) has been a most stimulat ing tonic for his countrymen. Foreign correspondents and other observers may have found a little dull Erhard's reiterated listing of statistics illustrating the enor mous growth of German output and foreign trade to a point where the Federal Republic has a far bigger foreign trade than the whole of the United Germany of pre-war times and has passed Great Brit ain to become the second largest trading nation of the world.

But the German voters were not bored at all, because those of them who were old enough to re member the dark drab years of war and early postwar occupation could relate this account of na tional well-being to their own im provement in individual well-be ing: first motor-cycles, then Gars, travel in foreign countries on an unsurpassed scale, more educa tional possibilities for their chil dren. They gave Erhard a re sounding vote of confidence; and this vote, in the outside world, should inspire satisfaction as a proof of German political matur ity .and resolution to continue on a path that has led to political stability and economic prosperity. On Law and Freedom THE END of law is not to abolish or restrain, but to preserve and enlarge freedom. For in all states of created beings capable of laws, where there is no law there is no freedom. For liberty is to be free from restraint and violence from others, which cannot be where there is not law ....

JOHN LOCKE, Two Treatise.~ on Civil Government (1690) A REVIEWER'S NOTEBOOK GEORGE TERBORGH, author of The Automation Hysteria (Machinery and Allied Products Institute, Washington, D.C., 1965, $6), is one of those rarest of creatures, a man of inspired common sense. It was he more than anyone else who disposed of the so-called "secular stagnationists" a genera tion ago by ridiculing their claims that our "mature" economy had reached its limits of growth. His book, The Bogey of Economi,c Ma turity, is a classic. Now he notes that the alarmists are taking an entirely different tack: they are worried lest automation, directed by the computer, should produce a growth so uncontrolled that hu man beings won't be able to keep up with it. For example, the Ad Hoc Com mittee on the Triple Revolution, which received the front-page blessing of the New' York Times, fears a "cybernated system" in which "potentially unlimited out put can be achieved by systems of 56 machines which will require little cooperation from human beings ... the men who are displaced be come dependent on minimal and unrelated government measures unemployment insurance, social security, welfare payments."

"Cybernation" is a coined word for what happens when machines take over both communication and control in automatic industries. George Terborgh does not deny that "cybernation" is here to stay. He does not deny that the com puter can take over many func tions of human beings and per form them at incredible speeds. But he insists that the alarmists, who see millions of jobs disappear ing as a Frankenstein monster moves into our shops and banks, are guilty of blurring the time factor in a most unrealistic way. Moreover, it is a mistake to as sume that more than a small per centage of industrial processes can ever be organized on a continuous flow or a mass basis.

1965 THE BOGEY OF AUTOMATION 57 Mr. Terborgh's breakdown of the nature of our economy is at the heart of his critique of the "automation hysteria." Some proc esses are admirably adapted to automation; the flow of liquids, the dispatch of paper work in offices and banks, the movement of cars along a Detroit production line, come immediately to mind. But Mr. Terborgh wonders how "cybernation" can really take over in agriculture. "The geographical dispersion of operations, and their seasonal character," he says, "pre vent alike the concentration and continuity of work required for computer control." The Limits of Automation Automation can do wonders to keep the railroads in business; the New York Central, for instance, can verify the whereabouts of any freight car at a moment's notice; and the loading and unloading of bulk commodities are now pretty much push-button affairs. But Mr. Terborgh notes that it will be a long time before trains, buses, ships, and aircraft move without direct human control. The con struction industry can make use of factory-assembled walls, floors, and ceilings, but men must still truck the stuff to the building site and help put the elements of a house together. As for the service industries, Mr. Terborgh says that "merchandizing, restaurants, re pair shops, recreation, entertain ment, education, health, personal services, and what have you" will continue to present "an intractable area for computer control because of dispersion and the small size of individual operations .... "

Even in manufacturing there are limits to the achievement of "fully integrated, self-regulating flow production." Most companies produce "such a multiplicity of prod ucts - types, sizes, models, etc. - that they cannot effectively use mass-production layouts and techniques." Mr. Terborgh quotes John Diebold, who, with Del Harder of the Ford Motor Com pany, was a co-inventor of the word "automation," to show that 80 per cent of American industry "produces in lots of twenty-five or fewer individual pieces." It is a slow business, says Mr. Terborgh, to apply "systems engineering ... with or without computers" to job shops that engage in what is es sentially batch production. Since manufacturing employs only a fourth of the total labor force, and since a great part of our manufac turing technology is "discontinu ous" in its very nature, the march of the Frankenstein monsters is bound to be far less precipitate than the Ad Hoc Committee on the Triple Revolution supposes.

Mr. Terborgh finds it difficult 58 THE FREEMAN December to separate the automation scare from the general fears about mechanization. Practically every generation has had its Luddite Nervous Nellies. Walter Hunt, the man who anticipated Elias Howe in inventing the sewing machine, allowed his daughter to persuade him that he would only be putting good seamstresses out of work if he were to patent his secret, so he dropped it and turned to other in ventions. But this did not keep automation from coming to the needle trades - and today the In ternational Ladies Garment Work ers Union and the Amalgamated Clothing Workers are powers in the land. Mechanization has al ways created more employment than it has destroyed, and, to the extent that it can be used, "cyber nation" will hardly change things. New Jobs Displace Old Undoubtedly the computer can be. spectacular in its "job destruc tion" within narrow confines. But history, so Mr. Terborgh notes, has always been a "boneyard" of lost jobs. The displacement of clerks from shops and banks is hardly different from the displace ment of canal boys, coachmen, elec tric railway motormen, gas lamp lighters, silk hosiery workers, pick-and-shovel coal miners, bug gy whip factory workers, and so on. The fact is that nobody knows what either product innovation or process innovation will do to affect job displacement and replacement in the future. But if history is any guide, the displaced clerk will be come a motel keeper, a librarian, or a first grade teacher before too much time has passed.

If our automated "progress" is indeed to blame for our 3 to 4 per cent unemployment rate, then how does one explain some of the sta tistical tables that are printed in Mr. Terborgh's book? The gain in "output per man hour" in the "total private economy" of the United States picks up in recovery phases of the business cycle, but over the years it averages about the same. If anything, we were do ing better in the first half of the postwar period than we have been doing recently. So mechanization, including cybernation, is taking no dramatic leaps. In Germany, the increase in output per worker in the 1952-62 period has been at 50 per cent as compared to 21 per cent for the United States. Yet Germany today has over-full em ployment, and the United States still has a marginal unemployment problem. If it were true that mechanization creates net unem ployment, wouldn't things be the other way around in the two coun tries?

Mr. Terborgh addresses himself to one final fear, that cybernation 1965 THE BOGEY OF AUTOMATION 59 and automation create a need for a higher order of worker intelli gence. The high school dropout, it is said, just can't keep up with what is demanded of a person in modern industries. But if it is easier to punch an adding machine than it is to add up a column of figures on paper, how can it be said that the former act takes more intelligence than the latter? It may be entirely true that the average dropout can't look for ward to getting a job with a big corporation. But this is one of those "self-fulfilling" prophecies. The dropout can't get a job for one reason: nobody will hire him. This doesn't mean that he neces sarily lacks the ability to work and learn on the job; it could merely mean that our large corporations are following stupid hiring prac tices. I would guess that the aver age job makes less of a demand on the brain than it did in my grand father's time. Yet many a man in my grandfather's day rose to be the head of a corporation without even so much as a high school diploma to back him.

If we would lower the minimum wage for boys and girls in the apprentice stage of life and let up on our insistence on high school and college diplomas as a job re quirement, we, too, might have a full-employment economy. And the "automation hysteria" would not need a George Terborgh to kill it. ~ Reprints Available of Recent Articles Let's First Mend Tommy's Trousers . . W. A. PATON 3¢ Is the U.N. Really Necessary? . . WILLIAM H. CHAMBERLIN lO¢ The Mobility of Labor . . . . . . • DEAN RUSSELL 2¢ "The Government Is All of Us". . . • LEONARD E. READ 2¢ Forty-Eight Thousand Dollars! . PAUL L. POIROT 2¢ The Individual and the State . .. WILLIAM H. PETERSON 2¢ Winner Take All . . . •. .. E. A. OPITZ lO¢ The State. . . . . . . .. . FREDERIC BASTIAT lO¢ No Special Privilege for Anyone. . . . LEONARD E. READ 2q~ The Gold Problem. . . . .. . LUDWIG VON MISES 3~· A Hole in the Dike . . . . . . • . DONALD L. REPP 2<"Every Employee Is Entitled to a Fair Wage" . . . . . . . . . . G. W. ANDERSON 2¢ Back to Gold? . . . . . . . HENRY HAZLITT 1O~!Can Wage and Price Controls Cure Inflation? . . . . . . . . . F. A. HARPER lO¢ For the Birds? . . . . . . . W. M. CURTISS 3<"Under Public Ownership, We, the People, Own It". . . . . . . . . LEONARD E. READ 2¢ THE FREEMAN, Volume 15, January-December1965 Prepared by VERNELIA A. CRAWFORD of the Foundation staff' NOTE: In page references, the number preceding the colon designates the month; the number following the colon refers to pages.

All Book Reviews are listed in a separate section on page 64 according to the title of book. A American Dream, An. By C. Carson, 3:40 Anderson, C. W. "Every Employee Is Entitled to a Fair Wage," 9:38 Anderson, Robert B. Process of Inflation, The; quote, 5: 64 Angle, Paul M. Icarians at Nauvoo, The, 9:40 "As a Man Thinks .... " By V. Watts, 12:37 Associated Industries of Missouri Lifetime Job SecUl'ity, 1:27 B Back to Gold? By H. Hazlitt, 10: 3 Banks, Dean From Eden to Paradise: Choice vs. Compul sion, 2 :46 Barger, Melvin D. Freedom of Maturity, The, 4:27 More Lessons of Lost Weekends, 6:56 Bastiat, Frederic Perpetual Revolution; quote, 11: 66 State, The, translated by M. Cross, 4: 10 To the Democrats, 8: 58 Be Responsible. By A. Carney, 9: 13 Beans. From Insight and Outlook, 5:51 Beyond Majority Rule. Quote from U.S. Supreme Court, Board vs. Barnett, 7: 66 Blair, James E. Regarding the Minimum Wage, 7:13 Board vs. Barnett Beyond Majority Rule, 7: 66 Braley, Berton Hang the Expense - It's Worth It to Me, 5:36 Brandt, Karl Failure of International Commodity Agree ments, The, 3: 12 Britain Returns to Mercantilism. By G.

Winder, 2:34 Brown, Harold O. J. Business Implications of the "New Moral ity," 6:20 Brown, Wendell J. Defining Liberty: An Analysis of Its Three Elements, 7:28 60 Business Implications of the "New Morality." By H. Brown, 6: 20 c Can Wage and Price Controls Cure Inflation? By F. Harper, 10:15 Capturing the Hearts of Men. By C. Carson, 11 :6 Care of Souls, The. Quote by J. Locke, 2: 66 Carney, Alexander S. Be Responsible, 9: 13 Carson, Clarence B. Flight from Reality, The (4) Cutting Loose from Reality, 1: 45 (5) Utopian Vision, The, 2: 20 ( 6) American Dream, An, 3: 40 (7) Pragmatic Sanction of Flux, The, 4:40 (8) Deactivation of History, The, 5:20 (9) New Reality, The, 6:38 (0) New Creativity, The, 7:45 ( 11) Domestication of Socialism, The, 8:29 (2) Democratic Illusion, The, 9:23 (13) "Democratic" Elite, The, 10: 44 ( 14) Capturing the Hearts of Men, 11: 6 (5) Remaking the Minds of Men, 12:19 Carver, Thomas Nixon Economic Competition; quote, 6: 66 Causes of Violence, The. By F. Mahaffy, 11:3 Central Planning: Side Door to Slavery. By R. Thornton, 9: 48 Chamberlin, William Henry Germans Vote for Economic Freedom, 12 :49 Great Communist Schism, The,7: 37 Groping for the Secret of Fire, 5: 42 Is God a Keynesian? 2: 38 Is the U.N. Really Necessary? 1: 19 Moral Code for Rational Man, A, 3: 9 Musical Forced Feeding, 6: 11 Wisdom of Bastiat, The, 4:3 Chance to Escape, The. By D. Shorock, 6: 9 Christian Economics: Myth or Reality? By B. Rogge, 12:3 Coin of Freedom, The. By D. Westerholm, 5:52 Coleson, Edward P.

Frontier Is Freedom, The, 3: 54 1965 INDEX 61 Cross, Mallory Self-Discipline: Free Choice: Responsibility, 4:56 Currency Reform. By H. Sennholz, 9: 17 Curtiss, W. M. For the Birds? 11 :37 Cutting Loose from Reality. By C. Carson, 1:45 D Danger to a Free Press. By J. Merrill, 6: 52 Davenport, H. J. Price of Pig, The; quote, 12: 18 Deactivation of History, The. By C. Carson, 5:20 DeArmond, Fred Fallacies in the Current Cult of Progress, 2:12 Defining Liberty: An Analysis of Its Three Elements. By W. Brown, 7:28 "Democratic" Elite, The. By C. Carson, 10: 44 Democratic Illusion, The. By C. Carson, 9: 23 Do Our Best. Quote by W. Feather, 2:16 Domestication of Socialism, The. By C. Carson, 8:29 Double Standard. Quote by L. Mason, 2: 11 Durrette, Wyatt B., Jr. Will to Be Free, The, 5: 34 E Economic Competition. Quote by T. Carver, 6:66 Effort of Every Man, The. By H. Hazlitt, 12: 35 Equality and Justice. Quote by A. Jackson, 1:66 Evanoff, Alexander Libertarian Movement and Its Propaganda, The, 9:55 "Every Employee Is Entitled to a Fair Wage,"

By C. Anderson, 9: 38 F Failure of International Commodity Agree ments, The., By K. Brandt, 3: 12 Fallacies in the Current Cult of Progress. By F. DeArmond, 2:12 "Farm Prices Are Made in Washington." By D. Paarlberg, 12:16 Feather, William Do Our Best; quote, 2: 16 First Step to Progress; quote, 9: 16 First Step to Progress. Quote by W. Feather, 9:16 Flight from Reality, The. By C. Carson, 1 :45, 2:20, 3:40, 4:40, 5:20, 6:38, 7:45, 8:29, 9:23, 10:44, 11:6, 12:19 Flying Socialism. By S. Husbands, Jr., 2:17 "Focus on Consumer Needs." By P. Poirot, 4:32 For the Birds? By W. Curtiss, 11: 37 Force or Reason. Quote by A. Herbert, 6: 64 Formation and Function of Prices, The. By H. Sennholz, 2: 3 Fortier, Ed In Tribute to an Unsung Hero, 8: 11 Forty-eight Thousand Dollars! By P. Poi rot, 2:44 Freedom of Maturity, The. By M. Barger, 4:27 Freedom of the Press. By D. Russell, 4:35 Freedom's Uneasy Conscience. By G. Mav rodes, 8:3 From Eden to Paradise: Choice vs. Compul sion. By D. Banks, 2:46 Frontier Is Freedom, The. By E. Coleson, 3: 54 Fruits of Capitalism, The. Quote by L. Mises, 9:54 Fundamental Doctrine, A. Quote by A. Nock, 10:40 G Gerda's Empire. By R. West, 4:55 Germans Vote for Economic Freedom. By W.

Chamberlin, 12: 49 Gold Problem, The. By L. Mises, 6: 3 "Government Is All of Us, The." By L. Read, 2:9 Government's First Duty. Quote by Chief Justice Maxey, 4:17 Great Communist Schism, The. By W. Cham berlin, 7:37 Great Difference, The. By P. Poi rot, 1: 39 Greaves, Percy L., Jr. How Much Money? 5:3 Groping for the Secret of Fire. By W. Cham berlin, 5:42 Grossly Underpaid, 7: 21 Gulliver and the Planners. By H. Smith, 10:41 H Hang the Expense-It's Worth It to Me. By B. Braley, 5: 36 Harper, F. A. Can Wage and Price Controls Cure Infla tion? 10: 15 Unpredictable Progress; quote, 10: 66 Hazlitt, Henry Back to Gold? 10: 3 Effort of Every Man, The, 12: 35 Height of Irresponsibility, The. Quote by K. Marx, 12:66 62 THE FREEMAN December Herbert, Auberon Force or Reason; quote, 6: 64 Hole in the Dike, A. By D. Repp, 8: 27 Hoover, Herbert Individual Mind, The; quote, 9: 60 How Much Money? By P. Greaves, Jr., 5:3 How to Advance Liberty. Quote by L. Read, 5:16 Human Progress. Quote by H. Weaver, 8:66 Husbands, Sam H., Jr.

Flying Socialism, 2: 17 I Icarians at Nauvoo, The. By P. Angle, 9: 40 If I Had the Power. By J. Sparks, 7:22 I'll Respect Your Life. By P. Poirot, 3: 3 Impatience Undermines Freedom. By J. Sparks, 10: 26 In Tribute to an Unsung Hero. By E. Fortier, 8:11 Individual and the State, The. By W. Peter son, 2:58 Individual Mind, The. Quote by H. Hoover, 9:60 Inequality - A Blessing! By R. Scott, 6: 26 Inflation. By J. Keynes, 4: 36 Inflation. By T. Rose, 11:23 Inflation During the French Revolution. Quote by R. Stourm, 6: 60 Insight and Outlook Beans, 5:51 Is God a Keynesian? By W. Chamberlin, 2:38 Is the U.N. Really Necessary? By W. Cham berlin, 1: 19 Isaiah's Job. Quote by A. Nock, 5:66 It All Depends. Quote by D. Stignani, 3: 66 J Jackson, Andrew Equality and Justice; quote, 1: 66 K Kershner, Howard Legalized Coveting, 11: 21 Keynes, John Maynard Inflation, 4: 36 Knowing That We Know Not. By L. Read, 10:11 L Labor Drives for "Total Security." By P.

Vincent, 5: 17 Legalized Coveting. By H. Kershner, 11: 21 Let's First Mend Tommy's Trousers. By W. Paton, 1:12 Let's Not Save the World. By E. Opitz, 1: 3 Libertarian Movement and Its Propaganda, The. By A. Evanoff, 9: 55 Liberating Arts, The. By E. Opitz, 10:31 Lifetime Job Security. From Associated In dustries of Missouri, 1 :27 Light Brings Forth the Eye. By L. Read, 3: 34 Locke, John Care of Souls, The; quote, 2: 66 Long, Wellington "People's Shares" in Volkswagen, 6: 30 M Mahaffy, Francis E. Causes of Violence, The, 11: 3 Man's Priceless Heritage. By M. Osterhaus, 11:28 Marx, Karl Height of Irresponsibility, The; quote, 12: 66 Mason, Lowell B. Double Standard; quote, 2: 11 Mavrodes, George I. Freedom's Uneasy Conscience, 8: 3 Maxey, Chief Justice Government's First Duty; quote, 4: 17 Merrill, John C. Danger to a Free Press, 6: 52 Mises, Ludwig von Fruits of Capitalism, The; quote, 9: 54 Gold Problem, The, 6: 3 Mobility of Labor, The. By D. Russell, 1: 17 Monetary Crisis. Trans. from Thiel'S' History of the French Revolution, 9: 22 Moral Code for Rational Man, A. By W. Cham berlin, 3:9 More Lessons of Lost Weekend~. By M.

Barger, 6:56 Musical Forced Feeding. By W. Chamberlin, 6:11 N New Creativity, The. By C. Carson, 7:45 New Liberalism, The. By H. Spencer, 11:42 New Reality, The. By C.Carson, 6:38 N ewell, Robert K. Self-Government, 8: 44 No Special Privilege for Anyone. By L. Read, 4:30 N ock, Albert J. Fundamental Doctrine, A; quote, 1~: 40 Isaiah's Job; quote, 5: 66 Nor Oysters from the Desert Sands. By J. Sparks, 3: 30 o On Freedom and Order. By L. Read, 1: 29 On Power and Corruption. By L. Read, 8:47 Opitz, Edmund A. Let's Not Save the World, 1:3 Liberating Arts, The, 10:31 Winner Take All, 3: 22 1965 INDEX 63 Osterhaus, Muriel Man's Priceless Heritage, 11: 28 p Paarlberg, Don "Farm Prices Are Made in Washington," 12:16 Part of the Problem, A. By P. Poirot, 5: 40 Paton, W. A. Let's First Mend Tommy's Trousers, 1: 12 Pearson, Glenn L. Religion and "The Law," 4: 18 People Are Not Goldfish. By D. Westerholm, 6:18 "People's Shares" in Volkswagen. By W.

Long, 6:30 Perpetual Revolution. Quote by F. Bastiat, 11:66 Peterson, William H. Individual and the State, The, 2: 58 Planning Experiments in Britain. By G. Winder, 8:23 Poirot, Paul L. "Focus on Consumer Needs," 4:32 Forty-eight Thousand Dollars! 2:44 Great Difference, The, 1: 39 I'll Respect Your Life, 3: 3 Part of the Problem, A, 5: 40 Social Security Re-examined, 11: 53 Pragmatic Sanction of Flux, The. By C. Carson, 4: 40 Price of Pig, The. Quote by H. Davenport, 12:18 Private Morality. Quote by G. Washington, 4:66 Process of Inflation, The. Quote by R. Ander son, 5 :64 Profits. By H. Sennholz, 8: 15 R Read, Leonard E. "Government Is All of Us, The," 2: 9 How to Advance Liberty; quote, 5:16 Knowing That We Know Not, 10: 11 Light Brings Forth the Eye, 3: 34 No Special Privilege for Anyone, 4:30 On Freedom and Order, 1:29 On Power and Corruption, 8:47 "Under Public Ownership, We, the People, Own It," 11: 50 Water Famine on the Hudson, 9:3 Regarding the Minimum Wage. By J. Blair, 7:13 Religion and "The Law." By G. Pearson, 4: 18 Remaking the Minds of Men. By C. Carson, 12:19 Re,pp, Donald L.

Hole in the Dike, A, 8: 27 Rogge, Benjamin A. Christian Economics: Myth or Reality? 12: 3 Rose, Tom Inflation, 11: 23 Why Automation? 7:3 Russell, Dean Freedom 1)f the Press, 4: 35 Mobility of Labor, The, 1: 17 Why Social Security Must Fail, 2: 55 s Scott, Richard T. Inequality - A Blessing! 6:26 Selective Justice. By S. Shenoy, 12:47 Self-Discipline: Free Choice: Responsibility. By M. Cross, 4: 56 Self-Government. By R. Newell, 8:44 Seiinholz, Hans F. Currency Reform, 9: 17 Formation and Function of Prices, The, 2:3 Profits, 8: 15 TVA Reports, 5: 56 Who Fixes Wages? 11:30 Shenoy, Sudha R. Selective Justice, 12:47 Shorock, Donald Walter Chance to Escape, The, 6: 9 Smith, Harry L. Gulliver and the Planners, 10:41 So, Be Discouraged! Quote by R. Wells, 2: 64 Social Security Re-examined. By P. Poirot, 11:53 Sparks, John C. If I Had the Power, 7: 22 Impatience Undermines Freedom, 10:26 Nor Oysters from the Desert Sands, 3:30 Spencer, Herbert New Liberalism, The, 11: 42 State, The. By F. Bastiat; tr. by M. Cross.

4:10 Stignani, David A. It All Depends; quote, 3:66 Stourm. Rene Inflation During the French Revolution; quote, 6:60 T Thiel'S, Louis Monetary Crisis, 9: 22 Thornton. Robert M. Central Planning: Side Door to Slavery. 9:48 Threat of Competition. The. By S. Yankus. 7:11 To the Democrats. By F. Bastiat. 8:58 TVA Reports. By H. Sennholz. 5: 56 64 THE FREEMAN December U Under a Gum Tree. By S. Yankus, 5:14 "Under Public Ownership, We, the People, Own It." By L. Read, 11: 50 U. S. Supreme Court, Board vs. Barnett Beyond Majority Rule, 7: 66 Unpredictable Progress. Quote by F. Harper, 10:66 Utopian Vision, The. By C. Carson, 2: 20 v Vincent, Pat Labor Drives for "Total Security," 5: 17 W Washington, George Private Morality; quote, 4: 66 Water Famine on the Hudson. By L. Reed, 9:3 Watts, V. Orval "As a Man Thinks .... ," 12: 37 Weaver, Henry Grady Human Progress; quote, 8: 66 Webster, Daniel What Do They Mean? quote, 9:66 Wells, Robert Dolling So, Be Discouraged! quote, 2: 64 West, Rebecca Gerda's Empire, 4: 55 Westerholm, D. M.

Coin of Freedom, The, 5: 52 People Are Not Goldfish, 6:18 What Do They Mean? Quote by D. Webster, 9:66 Who Fixes Wages? By H. Sennholz, 11: 30 Why Automation? By T. Rose, 7:3 Why Social Security Must Fail. By D. Russell, 2:55 Will to Be Free, The. By W. Durrette, Jr., 5:34 Winder, George Britain Returns to Mercantilism, 2: 34 Planning Experiments in Britain, 8: 23 Winner Take All. By E. Opitz, 3: 22 Wisdom of Bastiat, The. By W. Chamberlin, 4:3 y Yankus, Stanley Threat of Competition, The, 7: 11 Under a Gum Tree, 5: 14 BOOK REVIEWS American Colonial Mind and the Classical Tradition. By R. Gummere. Reviewed by R. Thornton, 7: 63 The Automation Hysteria. By G. Terborgh. Reviewed by J. Chamberlain, 12:56 Cold Friday. By W. Chambers. Reviewed by R. Thornton, 4: 63 Compulsory Mis-Education. By P. Goodman. Reviewed by J. Chamberlain, 5:60 Conquest of the United States by Spain and Other Essays, The. By W. Sumner, ed. by M. Polner. Reviewed by J. Chamberlain, 6:61 Essays on Liberty, Vol. XII. By FEE. Re viewed by J. Chamberlain, 11: 60 Foundations of Morality, The. By H. Hazlitt.

Reviewed by J. Chamberlain, 1: 59 Free Market and Its Enemy, The. By L. Read. Reviewed by J. Chamberlain, 9:61 Great Society, The. By G. Wallas. Reviewed by J. Chamberlain, 3: 59 If You Don't Mind My Saying So. By J. Krutch. Reviewed by R. Thornton and E. Opitz, 7:61 John Randolph of Roanoke; A Study in Amer ican Politics. By R. Kirk. Reviewed by J. Chamberlain, 7: 58 Mainspring of Human Progress, The. By H. Weaver. Reviewed by J. Chamberlain, 8:61 Merchants Make History. By E. Samhaber. Reviewed by R. Thornton, 10: 62 Mind and Art of Albert Jay Nock, The. By R. Cruden. Reviewed by R. Thornton, 3: 62 Nature of the American System, The. By R. Rushdoony. Reviewed by R. T'hornton, 11: 63 Other American; Poverty in the United States, The. By M. Harrington. Reviewed by E. Opitz, 1 :62 Rebirth of Britain. By The Institute of Eco nomic Affairs in Great Britain. Reviewed by J. Chamberlain, 4:60 Reclaiming the American Dream. By R. Cor nuelle. Reviewed by J. Chamberlain, 10:59 Theological Interpretation of American His tory, A. By C. Singer. Reviewed by R.

Thornton, 5: 63 U. S. Economy, The. By J. Davenport. Re viewed by J. Chamberlain, 2:61 University Economics. By A. Alchian and W. Allen. Reviewed by G. Wattles, 10: 63

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Title: The Freeman 1965

Author: Foundation for Economic Education

First published: 1950

Series: The Freeman, volume 15

Source file: The Freeman 1965.pdf

Source page: https://freecapitalists.org/books/the-freeman-1965/

Converted: 2026-08-09 by The Liberty Archive (freecapitalists.org), converter v6

Table of Contents

The Freeman 1965

- Let's Not Save the World; E. Optiz

- Let's First Mend Tommy's Trousers; W.A. Paton

- The Mobility of Labor; D. Russell
- Is the UN Really Necessary? W.H. Chamberlin
- Lifetime Job Security
- On Freedom and Order; Leonard E. Read
- The Great Difference; P.L. Poirot

- The Flight from Reality. 4. Cuttling Loose from Reality; C. R. Carson

- Book Reviews

February

- Formation and Function of Prices: H. Sennholz

- The Government Is All of Us; L.E. Read
- Cult of Progress; F. DeArmond
- Flying Socialism; S. Husbands, Jr.

- The Flight from Reality: 5. The Utopian Vision; C. Carson

- Britain Returns to Mercantislm; G. Winder
- Is god a Keynesian? W. Chamberlin
- $48,000; P.L. Poirot

- From Eden to Paradise: Choice versus Compulsion: D. Banks

- Why social Security Must Fail; D. Russell
- The Individual and the State; W. Peterson
- Book Reviews

March

- I'll Respect Your Life: P.L. Poirot

- A Moral Code for Rational Man; W. Chamberlin

- The Failure of International Commodity Agreements; K. Brandt

- Winner Take All! E. Opitz

- Nor Oysters from the Desert Sands; J. Sparks

- Light Brings Forth the Eye; L.E. Read

- The Flight From Reality: 6. An American Dream; C. Carson

- The Frontier is Freedom; E. Carson

- Book Reviews

April

- The Wisdom of Bastiat; W. Chamberlin
- The State; F. Bastiat
- Religion and "The Law" G. Pearson
- Th Freedom of Maturity; M. D. Barger
- No Special Privilege for Anyone; L. E. Read
- Focus on Consumer Needs; P.L. Poirot
- Freedom of the Press; D. Russell
- Inflation; J. M. Keynes

- The Flight from Reality: 7. The Pragmatic Sanction of Flux; C. Carson

- Gerda's Empire; R. West

- Self-Discipline: Free Choice: Responsibility; M. Cross

- Book Reviews

May

- How Much Money? P.L. Greaves

- Under a Gum Tree; S. Yankus

- Labor Drives for "Total Security" P. Vincent

- The Flight From Reality: 8. The Deactiviation of History; C. Carson

- The Will to be Free; W. B. Durrette, Jr.

- Hang the Expense; B. Braley

- Subsidy: A Part of the Poroblem; P.L. Poirot

- Groping for the Secret of Fire; W. Chamberlin

- The Coin of Freedom; D. M. Westerholm
- Reports; H. Sennholz
- Book Reviews

June

- The Gold Problem; L.v. Mises
- The Chance to Escape; D. Shodrock
- Musical Forced Feeding; W. Chamberlin
- People are Not Goldfish; D. Westerholm

- Business Implications for the New Morality; H. O.J. Brown

- Inequality: a Blessing; R. Scott

- People's Shares in Volkswagon; W. Long

- Flight from Reality: 9. The New Reality; C. Carson

- Danger to a Free Press; J. C. Merrill
- More Lessons of Lost Weekends; M. Barger
- Book Reviews

July

- Why Automation? T. Rose
- The Threat of Competition; S. Yankus
- Regarding the Minimum Wage; J. Blair
- If I Had the Power; J. Sparks
- Defining Liberty; W. Brown
- The Great Communist Schism; W. Chamberlin

- The Flight from Reality: 10. The New Creativity; C. Carson

- Book Reviews

August

- Freedom' Uneasy Conscience; G. Mavrodes
- An Unsung Hero; E. Porter
- Profits; H. Sennholz
- Planning Experiments in Britain; G. Winder
- A Hole in the Dike; D. Rett

- The Flight from Reality: The Domestication of Socialism; C. Carson

- Self-Government; R. Newell
- On Power and Corruption; L.E. Read
- To the Democrats; F. Bastiat
- Book Reviews

September

- Water Famine on the Hudson; L.E. Read
- To Be Responsible; A. S. Carney
- Currency Reform; H. Sennholz

- The Flight from Reality; 12. The Democratic Ilusion; C. Carson

- Every Employee is Entitled to a Fair Wage; C.W. Anderson

- The Icarian Community of Nauvoo

- Central Planning: Side Door to Socialism; R. M. Thornton

- The Libertarian Movement; A. Evanoff

- Book Reviews

October

- Back To Gold? H. Hazlitt

- Knowing that we Know Not. L.E. Read

- Can Wage and Price Controls Cure Inflation; F.A. Harper

- Impatience Undermines Freedom; J.C. Sparks
- The Liberating Arts; E. Opitz
- Gulliver and the Planners; H. Smith

- The Flight from Reality 13: The Democratic Elit; C. Carson

- Book Reviews

November

- The Causese of Violence; F. E. Mahaffy

- The Flight from Reality 14: Capturing the Hearts of Men; C. Carson

- Legalized Coveting; H. Kershner
- Inflation; T. Rose
- Man's Priceless Heritage; Muriel Osterhaus
- Who Fixes Wages? H. Sennholz
- The New Liberalism; H. Spencer
- Under Public Ownership; L.E. Read
- Social Security Re-examined; P.L. Poirot
- For the Birds
- Book Reviews

December

- Christan Economics; B.a. Rogge

- Farm Prices Are Made in Washington; D. Parrlberg

- The Flight From Reality 15: Remaking the Minds of Men; C. Carson

- The Effort of Every Man; H. Hazlitt
- As a Man Thinks..." V. O. Watts
- Selective Justice; Sudha Shenoy

- Germans Vote for Economic Freedom; W. Chamberlin

- Book Reviews

Index
Book Revies
About this edition